83_FR_12562 83 FR 12506 - Small Business Size Standards; Alternative Size Standard for 7(a), 504, and Disaster Loan Programs

83 FR 12506 - Small Business Size Standards; Alternative Size Standard for 7(a), 504, and Disaster Loan Programs

SMALL BUSINESS ADMINISTRATION

Federal Register Volume 83, Issue 56 (March 22, 2018)

Page Range12506-12508
FR Document2018-05787

SBA is seeking public input to assist in establishing a permanent alternative size standard for its 7(a) and 504 Loan Programs. SBA also invites suggestions on sources of relevant data and information that SBA should evaluate in developing a permanent alternative size standard and assessing its impact. Finally, SBA also seeks input from interested parties on a potential proposal to apply the permanent alternative size standard as an alternative to using industry based size standards for small business applicants under its Economic Injury Disaster Loan (``EIDL'') Program.

Federal Register, Volume 83 Issue 56 (Thursday, March 22, 2018)
[Federal Register Volume 83, Number 56 (Thursday, March 22, 2018)]
[Proposed Rules]
[Pages 12506-12508]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-05787]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 121

RIN 3245-AG16


Small Business Size Standards; Alternative Size Standard for 
7(a), 504, and Disaster Loan Programs

AGENCY: U.S. Small Business Administration.

ACTION: Advance notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: SBA is seeking public input to assist in establishing a 
permanent alternative size standard for its 7(a) and 504 Loan Programs. 
SBA also invites suggestions on sources of relevant data and 
information that SBA should evaluate in developing a permanent 
alternative size standard and assessing its impact. Finally, SBA also 
seeks input from interested parties on a potential proposal to apply 
the permanent alternative size standard as an alternative to using 
industry based size standards for small business applicants under its 
Economic Injury Disaster Loan (``EIDL'') Program.

DATES: SBA must receive comments to this ANPRM on or before May 21, 
2018.

ADDRESSES: You may submit comments, identified by RIN 3245-AG16 by one 
of the following methods: (1) Federal eRulemaking Portal: 
www.regulations.gov, following the instructions for submitting 
comments; or (2) Mail/Hand Delivery/Courier: Khem R. Sharma, Ph.D., 
Chief, Office of Size Standards, 409 Third Street SW, Mail Code 6530, 
Washington, DC 20416.
    SBA will post all comments to this ANPRM on www.regulations.gov. If 
you wish to submit confidential business information (CBI) as defined 
in the User Notice at www.regulations.gov, you must submit such 
information either by mail to the U.S. Small Business Administration, 
Khem R. Sharma, Ph.D., Chief, Office of Size Standards, 409 Third 
Street SW, Mail Code 6530, Washington, DC 20416, or by email to 
sizestandards@sba.gov. Highlight the information that you consider to 
be CBI and explain why you believe SBA should hold this information as 
confidential. SBA will review your information and determine whether it 
will make the information public. Requests to redact or remove posted 
comments cannot be honored and the request to redact/remove posted 
comments will be posted as a new comment.

FOR FURTHER INFORMATION CONTACT: Khem R. Sharma, Office of Size 
Standards, by phone at (202) 205-7189 or by email at 
sizestandards@sba.gov.

SUPPLEMENTARY INFORMATION: SBA establishes small business size 
definitions, commonly known as ``size standards,'' for private sector 
industries in the United States to determine eligibility for Federal 
small business assistance programs, including the SBA's 7(a) and 504 
Loan Programs (``Business Loan Programs''). These size standards are 
established by 6-digit North American Industry Classification System 
(NAICS) industry, typically based either on average annual receipts or 
on average number of employees. SBA uses financial assets and refining 
capacity to measure the size of a few specialized industries. See, 13 
CFR part 121, Small Business Size Regulations.
    On September 27, 2010, the Small Business Jobs Act of 2010 (``Jobs 
Act'') was enacted (Pub. L. 111-240). Section 1116 of the Jobs Act 
added a new Section 3(a)(5) to the Small Business Act that directed SBA 
to establish an alternative size standard using maximum tangible net 
worth and average net income for applicants of the SBA's Business Loan 
Programs. The Jobs Act also established for applicants for the SBA's 
Business Loan Programs a temporary alternative size standard of not 
more than $15 million in tangible net worth and of not more than $5 
million in the average net income after Federal income taxes (excluding 
any carry-over losses) of the applicant for the 2 full fiscal years 
before the date of the application (referred to as ``Interim Rule''), 
and it provided that this temporary statutory alternative size standard 
would remain in effect until such time as SBA established a new 
alternative size standard for the Business Loan Programs through 
rulemaking. 15 U.S.C. 632(a)(5). Prior to that, SBA had a lower 
permanent regulatory alternative size standard that applied to the 504 
Loan Program, and temporarily applied, for the period beginning on May 
5, 2009 and ending on September 30, 2010, to the 7(a) Loan Program. 13 
CFR 120.301(b)(2).
    On September 29, 2010, SBA issued Information Notice 5000-1175 
(available at https://www.sba.gov/sites/default/files/files/bank_5000-1175_0.pdf) providing that, effective September 27, 2010, the new 
statutory temporary alternative size standard applied to its Business 
Loan Programs, thereby replacing and superseding the lower existing 
alternative size standard of $8.5 million in tangible net worth and $3 
million in average net income, set forth in 13 CFR 121.301(b)(2). The 
Information Notice further stated that the new statutory alternative 
size standard would remain in effect until such time as SBA established 
a permanent alternative size standard for the Business Loan Programs 
through rulemaking. The Information Notice also stated that SBA's 
disaster loan program, surety bond guarantee program, small business 
investment company program, and small business development and 
contracting programs, as well as other federal programs utilizing SBA's 
industry based size standards were not affected by the temporary 
statutory alternative size standard, and the current standards for 
those programs in 13 CFR part 121 remained in effect.
    Because of the difficulty of obtaining relevant data, SBA has not 
yet established a new permanent tangible net worth and net income based 
alternative size standard for its Business Loan Programs, so the Agency 
continues to use the temporary statutory

[[Page 12507]]

alternative size standard (referred to in the Jobs Act as the ``Interim 
Rule'') to determine eligibility for a small business concern under 
SBA's Business Loan Programs, in addition to using the industry based 
size standards. Under the Interim Rule, a Business Loan Program 
applicant is eligible either under its industry based size standard or 
if it meets the temporary statutory alternative size standard of $15 
million in tangible net worth and $5 million in average net income.
    SBA is statutorily authorized to provide access to capital to small 
businesses that do not have credit available elsewhere from non-Federal 
sources on reasonable terms and conditions. Aiming to expand credit 
opportunities for small businesses under the distressed credit 
conditions in the aftermath of the 2007-2009 Great Recession, Congress, 
through the Jobs Act, temporarily increased by statute the level of the 
existing regulatory alternative size standard for the Business Loan 
Programs by raising the maximum thresholds of tangible net worth from 
$8.5 million to $15 million and of average net income from $3 million 
to $5 million, and it provided that the temporary statutory alternative 
size standard would remain in effect for the Business Loan Programs 
until such time as SBA established a new permanent alternative size 
standard.
    A review of SBA's internal data on its Business Loan Programs shows 
that the temporary statutory alternative size standard may have enabled 
some small businesses that were not otherwise eligible under their 
industry based size standards to receive 7(a) or 504 Loans (``Business 
Loans''). However, SBA's internal data systems for its Business Loan 
Programs lack the necessary detailed electronic data that would allow 
for an assessment of the exact impact of the Interim Rule on small 
business loan applicants. Since the Agency's electronic systems only 
include data regarding the number of employees and the NAICS industry 
for loan applicants, but not data regarding average annual receipts, 
tangible net worth or average net income, SBA is not easily able to 
calculate the exact number of businesses that qualified under the 
temporary statutory alternative size standard that otherwise could not 
have qualified under their industry based size standards. Similarly, 
due to electronic data limitations, SBA cannot easily identify 
industries or industry sectors in which the temporary statutory 
alternative size standard helped small businesses the most or the least 
in accessing SBA Business Loans.
    Again, due to the lack of relevant electronic data, SBA is also not 
in a position to determine whether the Interim Rule is appropriate 
under the current economic environment or needs to be modified when SBA 
establishes a permanent alternative size standard.
    In an effort to establish a permanent alternative size standard for 
its Business Loan Programs as mandated by the Jobs Act, SBA has taken 
steps to gather the information and data necessary to develop an 
analysis to support the creation of a new permanent alternative size 
standard based on tangible net worth and average net income. However, 
the Economic Census data that SBA examines to establish the industry 
based size standards does not contain information on tangible net worth 
or average net income by industry. Furthermore, while SBA collects and 
maintains limited relevant electronic data on applicants for its 
Business Loan Programs (such as the number of employees for each loan 
recipient, but not average annual receipts, tangible net worth, or 
average net income), SBA's electronic internal data does not show 
whether an applicant for its Business Loan Programs was determined to 
be eligible under its industry based size standard or under the 
alternative size standard. Similarly, the electronic data does not 
include information on the numbers or amounts of loan approvals that 
were issued under the industry based size standard or under the 
temporary statutory alternative size standard.
    As such, the only electronic data on size for small business 
applicants approved for loans through the SBA's Business Loan Programs 
available for review are the number of employees and the NAICS 
industry. In an effort to estimate the percentage of loans that were 
approved under the temporary statutory alternative size standard, SBA 
examined its electronic internal data on its Business Loan Programs for 
the three most recent fiscal years (FY 2015 through FY 2017). For this 
analysis, SBA converted industry based receipts-based size standards to 
the equivalent number of employees using the receipts-to-employees 
ratios from the special tabulations of the 2012 Economic Census (http://www.census.gov/econ/census/). If the data showed that the number of 
employees of a loan recipient exceeded its industry based employee size 
standard (or employee equivalents in the case of receipts-based size 
standards), SBA deemed for the purposes of this analysis that the loan 
was approved under the temporary statutory alternative size standard. 
Conversely, if the loan recipient's number of employees was equal to or 
less than the industry based size standard, it was deemed for the 
purposes of this analysis that the loan could have been approved under 
the industry based size standard.
    Based on the results obtained from this analysis, SBA estimates 
that about 1.3% of the 207,161 total loan approvals issued during FY 
2015-2017 went to firms that exceeded their industry based size 
standard, thereby implying that these firms were most likely qualified 
only under the temporary statutory alternative size standard. SBA 
estimates the total value of these loans to be $3.1 billion, or 3.6% of 
$86.9 billion in total loans approved during that period. Such a small 
percentage of loan approvals issued to firms that exceeded their 
industry size standard (1.3%) suggests that a vast majority of small 
businesses receiving loans through SBA's Business Loan Programs would 
have qualified under their industry based size standards and would not 
be impacted significantly by a modification, if any, to the Interim 
Rule.
    Although useful, the analyzed data is selective in that it includes 
only those firms that were approved for and received an SBA Business 
Loan, but not those that applied and were not approved nor those 
interested in applying in the future. This data does not allow SBA to 
accurately determine the broader impact of a change to the Interim 
Rule, nor does it provide the Agency with a robust source of 
information from which a new permanent alternative size standard can be 
developed. Furthermore, while SBA has approximated the percentage of 
all loan approvals issued to small businesses that qualified only under 
the Interim Rule, it is not possible to determine the precise impact 
because the available electronic data lacks tangible net worth and 
average net income data for the impacted population of small 
businesses. Data on tangible net worth and average net income for the 
impacted businesses, if available from other sources, may reveal 
additional insights into the results of SBA's analysis of FY 2015-2017 
loan data.
    Additionally, SBA is statutorily authorized to make direct loans 
under the EIDL Program to small businesses that do not have credit 
available elsewhere and that have suffered a substantial economic 
injury as a result of a disaster. 15 U.S.C. 636(b)(2). Historically, 
the size standards applicable to small business concerns that apply for 
loans under the EIDL Program have been the same industry based size 
standards applicable to small

[[Page 12508]]

business applicants for the Business Loan Programs. See, 13 CFR 
123.300(b). Although the temporary statutory alternative size standard 
established by the Jobs Act does not apply to the EIDL Program, SBA is 
considering applying the new permanent alternative size standard 
established for the Business Loan Programs to the EIDL Program as an 
alternative to industry based size standards.

Request for Comments

    Against the above backdrop, in this ANPRM, SBA seeks comment on the 
following issues.
    1. SBA seeks comment on whether or not the level of the temporary 
statutory alternative size standard under the Interim Rule (i.e., $15 
million in tangible net worth and $5 million in average net income) is 
appropriate under the current credit environment and as a new permanent 
alternative size standard. Commenters in support of the level in the 
Interim Rule should provide justification, along with supporting data 
and analysis to support their position. Similarly, commenters who 
believe the level established in the Interim Rule is not appropriate as 
a permanent alternative size standard should suggest, along with 
supporting data and analysis, a different alternative size standard 
which they believe would be more appropriate. The suggested alternative 
size standard must be based on tangible net worth and average net 
income as required by section 3(a)(5) of the Small Business Act. 15 
U.S.C. 632(a)(5).
    2. SBA seeks comment on the impact of using an alternative size 
standard on small businesses seeking loans through its Business Loan 
Programs. Specifically, SBA welcomes information on industries/sectors 
where small businesses benefit the most or do not benefit at all from 
the use of an alternative size standard. Similarly, SBA is also looking 
for data on the number of businesses approved for SBA's Business Loans 
under the temporary statutory alternative size standard that otherwise 
could not have been approved under their industry based size standards.
    3. SBA invites suggestions on sources of relevant data and 
information, especially tangible net worth and average net income of 
applicants to SBA's Business Loan Programs, that SBA can evaluate to 
assess the impact of the Interim Rule on small businesses and use in 
developing a new permanent alternative size standard and in estimating 
the impact of the new permanent alternative size standard.
    4. SBA invites comments from interested parties on the proposal to 
apply the same new permanent alternative size standard established for 
the Business Loan Programs to the EIDL Program as an alternative to 
industry based size standards.
    5. SBA also seeks comment on how the Interim Rule has affected the 
processes used by lenders participating in the Business Loan Programs 
and what effects a permanent alternative size standard would have on 
application processes and processing times.
    6. SBA invites comment on the effects of the Interim Rule on 
conventional small business lending. Specifically, SBA welcomes input 
on whether, and to what extent, if any, SBA Business Loans approved 
under the Interim Rule have substituted for or displaced directly or 
indirectly conventional small business lending, or whether such SBA 
Business Loans played more of a supplementary role in conventional 
small business lending activity.

    Dated: March 14, 2018.
Linda E. McMahon,
Administrator.
[FR Doc. 2018-05787 Filed 3-21-18; 8:45 am]
 BILLING CODE 8025-01-P



                                                 12506                  Federal Register / Vol. 83, No. 56 / Thursday, March 22, 2018 / Proposed Rules

                                                 2010 (Act) required the Bureau to                       its impact. Finally, SBA also seeks input             1116 of the Jobs Act added a new
                                                 prescribe rules establishing such                       from interested parties on a potential                Section 3(a)(5) to the Small Business
                                                 procedures as may be necessary to carry                 proposal to apply the permanent                       Act that directed SBA to establish an
                                                 out hearings and adjudications                          alternative size standard as an                       alternative size standard using
                                                 conducted pursuant to 12 U.S.C. 5563.                   alternative to using industry based size              maximum tangible net worth and
                                                 12 U.S.C. 5563(e). On July 28, 2011, the                standards for small business applicants               average net income for applicants of the
                                                 Bureau published an interim final rule                  under its Economic Injury Disaster Loan               SBA’s Business Loan Programs. The
                                                 seeking comment and prescribing rules                   (‘‘EIDL’’) Program.                                   Jobs Act also established for applicants
                                                 establishing such hearings and                          DATES: SBA must receive comments to                   for the SBA’s Business Loan Programs a
                                                 procedures, with the exception of rules                 this ANPRM on or before May 21, 2018.                 temporary alternative size standard of
                                                 relating to the issuance of a temporary                 ADDRESSES: You may submit comments,                   not more than $15 million in tangible
                                                 cease-and-desist order (TCDO) pursuant                  identified by RIN 3245–AG16 by one of                 net worth and of not more than $5
                                                 to section 1053(c) of the Act. 76 FR                    the following methods: (1) Federal                    million in the average net income after
                                                 45338 (July 28, 2011). The Bureau                       eRulemaking Portal:                                   Federal income taxes (excluding any
                                                 responded to comments received and                      www.regulations.gov, following the                    carry-over losses) of the applicant for
                                                 published a final rule on June 29, 2012.                instructions for submitting comments;                 the 2 full fiscal years before the date of
                                                 77 FR 39058 (June 29, 2012). This rule                  or (2) Mail/Hand Delivery/Courier:                    the application (referred to as ‘‘Interim
                                                 was codified at 12 CFR part 1081,                       Khem R. Sharma, Ph.D., Chief, Office of               Rule’’), and it provided that this
                                                 subparts A–D. The Bureau published an                   Size Standards, 409 Third Street SW,                  temporary statutory alternative size
                                                 interim final rule seeking comment and                  Mail Code 6530, Washington, DC 20416.                 standard would remain in effect until
                                                 prescribing rules on TCDOs on                              SBA will post all comments to this                 such time as SBA established a new
                                                 September 26, 2013. 78 FR 59163 (Sept.                  ANPRM on www.regulations.gov. If you                  alternative size standard for the
                                                 26, 2013). The Bureau received a single                 wish to submit confidential business                  Business Loan Programs through
                                                 comment on this rule. Following                         information (CBI) as defined in the User              rulemaking. 15 U.S.C. 632(a)(5). Prior to
                                                 consideration of the comment, the                       Notice at www.regulations.gov, you                    that, SBA had a lower permanent
                                                 Bureau adopted the interim final rule                   must submit such information either by                regulatory alternative size standard that
                                                 without change on June 18, 2014. 79 FR                  mail to the U.S. Small Business                       applied to the 504 Loan Program, and
                                                 34622 (June 18, 2014). This rule was                    Administration, Khem R. Sharma, Ph.D.,                temporarily applied, for the period
                                                 codified at 12 CFR part 1081, subpart E.                Chief, Office of Size Standards, 409                  beginning on May 5, 2009 and ending
                                                 Collectively, the rules codified at 12                  Third Street SW, Mail Code 6530,                      on September 30, 2010, to the 7(a) Loan
                                                 CFR part 1081 are titled ‘‘Rules of                     Washington, DC 20416, or by email to                  Program. 13 CFR 120.301(b)(2).
                                                 Practice for Adjudication Proceedings’’                 sizestandards@sba.gov. Highlight the                     On September 29, 2010, SBA issued
                                                 (Rules). The Bureau issued a Request for                information that you consider to be CBI               Information Notice 5000–1175
                                                 Information (RFI) related to the Rules on               and explain why you believe SBA                       (available at https://www.sba.gov/sites/
                                                 February 5, 2018, 83 FR 5055, and now                   should hold this information as                       default/files/files/bank_5000-1175_
                                                 extends the period for comments                         confidential. SBA will review your                    0.pdf) providing that, effective
                                                 responding to that RFI.                                 information and determine whether it                  September 27, 2010, the new statutory
                                                                                                         will make the information public.                     temporary alternative size standard
                                                    Authority: 12 U.S.C. 5511(c).                                                                              applied to its Business Loan Programs,
                                                                                                         Requests to redact or remove posted
                                                   Dated: March 16, 2018.                                comments cannot be honored and the                    thereby replacing and superseding the
                                                 Mick Mulvaney,                                          request to redact/remove posted                       lower existing alternative size standard
                                                 Acting Director, Bureau of Consumer                     comments will be posted as a new                      of $8.5 million in tangible net worth and
                                                 Financial Protection.                                   comment.                                              $3 million in average net income, set
                                                 [FR Doc. 2018–05780 Filed 3–21–18; 8:45 am]                                                                   forth in 13 CFR 121.301(b)(2). The
                                                                                                         FOR FURTHER INFORMATION CONTACT:                      Information Notice further stated that
                                                 BILLING CODE 4810–AM–P
                                                                                                         Khem R. Sharma, Office of Size                        the new statutory alternative size
                                                                                                         Standards, by phone at (202) 205–7189                 standard would remain in effect until
                                                                                                         or by email at sizestandards@sba.gov.                 such time as SBA established a
                                                 SMALL BUSINESS ADMINISTRATION                           SUPPLEMENTARY INFORMATION: SBA                        permanent alternative size standard for
                                                 13 CFR Part 121                                         establishes small business size                       the Business Loan Programs through
                                                                                                         definitions, commonly known as ‘‘size                 rulemaking. The Information Notice also
                                                 RIN 3245–AG16                                           standards,’’ for private sector industries            stated that SBA’s disaster loan program,
                                                                                                         in the United States to determine                     surety bond guarantee program, small
                                                 Small Business Size Standards;                          eligibility for Federal small business                business investment company program,
                                                 Alternative Size Standard for 7(a), 504,                assistance programs, including the                    and small business development and
                                                 and Disaster Loan Programs                              SBA’s 7(a) and 504 Loan Programs                      contracting programs, as well as other
                                                 AGENCY: U.S. Small Business                             (‘‘Business Loan Programs’’). These size              federal programs utilizing SBA’s
                                                 Administration.                                         standards are established by 6-digit                  industry based size standards were not
                                                 ACTION: Advance notice of proposed                      North American Industry Classification                affected by the temporary statutory
                                                 rulemaking.                                             System (NAICS) industry, typically                    alternative size standard, and the
                                                                                                         based either on average annual receipts               current standards for those programs in
daltland on DSKBBV9HB2PROD with PROPOSALS




                                                 SUMMARY:    SBA is seeking public input                 or on average number of employees.                    13 CFR part 121 remained in effect.
                                                 to assist in establishing a permanent                   SBA uses financial assets and refining                   Because of the difficulty of obtaining
                                                 alternative size standard for its 7(a) and              capacity to measure the size of a few                 relevant data, SBA has not yet
                                                 504 Loan Programs. SBA also invites                     specialized industries. See, 13 CFR part              established a new permanent tangible
                                                 suggestions on sources of relevant data                 121, Small Business Size Regulations.                 net worth and net income based
                                                 and information that SBA should                            On September 27, 2010, the Small                   alternative size standard for its Business
                                                 evaluate in developing a permanent                      Business Jobs Act of 2010 (‘‘Jobs Act’’)              Loan Programs, so the Agency continues
                                                 alternative size standard and assessing                 was enacted (Pub. L. 111–240). Section                to use the temporary statutory


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                                                                        Federal Register / Vol. 83, No. 56 / Thursday, March 22, 2018 / Proposed Rules                                            12507

                                                 alternative size standard (referred to in                  Again, due to the lack of relevant                 number of employees was equal to or
                                                 the Jobs Act as the ‘‘Interim Rule’’) to                electronic data, SBA is also not in a                 less than the industry based size
                                                 determine eligibility for a small                       position to determine whether the                     standard, it was deemed for the
                                                 business concern under SBA’s Business                   Interim Rule is appropriate under the                 purposes of this analysis that the loan
                                                 Loan Programs, in addition to using the                 current economic environment or needs                 could have been approved under the
                                                 industry based size standards. Under                    to be modified when SBA establishes a                 industry based size standard.
                                                 the Interim Rule, a Business Loan                       permanent alternative size standard.                     Based on the results obtained from
                                                 Program applicant is eligible either                       In an effort to establish a permanent              this analysis, SBA estimates that about
                                                 under its industry based size standard                  alternative size standard for its Business            1.3% of the 207,161 total loan approvals
                                                 or if it meets the temporary statutory                  Loan Programs as mandated by the Jobs                 issued during FY 2015–2017 went to
                                                 alternative size standard of $15 million                Act, SBA has taken steps to gather the                firms that exceeded their industry based
                                                 in tangible net worth and $5 million in                 information and data necessary to                     size standard, thereby implying that
                                                 average net income.                                     develop an analysis to support the                    these firms were most likely qualified
                                                    SBA is statutorily authorized to                     creation of a new permanent alternative               only under the temporary statutory
                                                 provide access to capital to small                      size standard based on tangible net                   alternative size standard. SBA estimates
                                                 businesses that do not have credit                      worth and average net income.                         the total value of these loans to be $3.1
                                                 available elsewhere from non-Federal                    However, the Economic Census data                     billion, or 3.6% of $86.9 billion in total
                                                 sources on reasonable terms and                         that SBA examines to establish the                    loans approved during that period. Such
                                                 conditions. Aiming to expand credit                     industry based size standards does not                a small percentage of loan approvals
                                                 opportunities for small businesses                      contain information on tangible net                   issued to firms that exceeded their
                                                 under the distressed credit conditions in               worth or average net income by                        industry size standard (1.3%) suggests
                                                 the aftermath of the 2007–2009 Great                    industry. Furthermore, while SBA                      that a vast majority of small businesses
                                                 Recession, Congress, through the Jobs                   collects and maintains limited relevant               receiving loans through SBA’s Business
                                                 Act, temporarily increased by statute the               electronic data on applicants for its                 Loan Programs would have qualified
                                                 level of the existing regulatory                        Business Loan Programs (such as the                   under their industry based size
                                                 alternative size standard for the                       number of employees for each loan                     standards and would not be impacted
                                                 Business Loan Programs by raising the                   recipient, but not average annual                     significantly by a modification, if any, to
                                                 maximum thresholds of tangible net                      receipts, tangible net worth, or average              the Interim Rule.
                                                                                                         net income), SBA’s electronic internal                   Although useful, the analyzed data is
                                                 worth from $8.5 million to $15 million
                                                                                                         data does not show whether an                         selective in that it includes only those
                                                 and of average net income from $3
                                                                                                         applicant for its Business Loan                       firms that were approved for and
                                                 million to $5 million, and it provided                                                                        received an SBA Business Loan, but not
                                                                                                         Programs was determined to be eligible
                                                 that the temporary statutory alternative                                                                      those that applied and were not
                                                                                                         under its industry based size standard
                                                 size standard would remain in effect for                                                                      approved nor those interested in
                                                                                                         or under the alternative size standard.
                                                 the Business Loan Programs until such                                                                         applying in the future. This data does
                                                                                                         Similarly, the electronic data does not
                                                 time as SBA established a new                                                                                 not allow SBA to accurately determine
                                                                                                         include information on the numbers or
                                                 permanent alternative size standard.                                                                          the broader impact of a change to the
                                                                                                         amounts of loan approvals that were
                                                    A review of SBA’s internal data on its               issued under the industry based size                  Interim Rule, nor does it provide the
                                                 Business Loan Programs shows that the                   standard or under the temporary                       Agency with a robust source of
                                                 temporary statutory alternative size                    statutory alternative size standard.                  information from which a new
                                                 standard may have enabled some small                       As such, the only electronic data on               permanent alternative size standard can
                                                 businesses that were not otherwise                      size for small business applicants                    be developed. Furthermore, while SBA
                                                 eligible under their industry based size                approved for loans through the SBA’s                  has approximated the percentage of all
                                                 standards to receive 7(a) or 504 Loans                  Business Loan Programs available for                  loan approvals issued to small
                                                 (‘‘Business Loans’’). However, SBA’s                    review are the number of employees and                businesses that qualified only under the
                                                 internal data systems for its Business                  the NAICS industry. In an effort to                   Interim Rule, it is not possible to
                                                 Loan Programs lack the necessary                        estimate the percentage of loans that                 determine the precise impact because
                                                 detailed electronic data that would                     were approved under the temporary                     the available electronic data lacks
                                                 allow for an assessment of the exact                    statutory alternative size standard, SBA              tangible net worth and average net
                                                 impact of the Interim Rule on small                     examined its electronic internal data on              income data for the impacted
                                                 business loan applicants. Since the                     its Business Loan Programs for the three              population of small businesses. Data on
                                                 Agency’s electronic systems only                        most recent fiscal years (FY 2015                     tangible net worth and average net
                                                 include data regarding the number of                    through FY 2017). For this analysis,                  income for the impacted businesses, if
                                                 employees and the NAICS industry for                    SBA converted industry based receipts-                available from other sources, may reveal
                                                 loan applicants, but not data regarding                 based size standards to the equivalent                additional insights into the results of
                                                 average annual receipts, tangible net                   number of employees using the receipts-               SBA’s analysis of FY 2015–2017 loan
                                                 worth or average net income, SBA is not                 to-employees ratios from the special                  data.
                                                 easily able to calculate the exact number               tabulations of the 2012 Economic                         Additionally, SBA is statutorily
                                                 of businesses that qualified under the                  Census (http://www.census.gov/econ/                   authorized to make direct loans under
                                                 temporary statutory alternative size                    census/). If the data showed that the                 the EIDL Program to small businesses
                                                 standard that otherwise could not have                  number of employees of a loan recipient               that do not have credit available
daltland on DSKBBV9HB2PROD with PROPOSALS




                                                 qualified under their industry based size               exceeded its industry based employee                  elsewhere and that have suffered a
                                                 standards. Similarly, due to electronic                 size standard (or employee equivalents                substantial economic injury as a result
                                                 data limitations, SBA cannot easily                     in the case of receipts-based size                    of a disaster. 15 U.S.C. 636(b)(2).
                                                 identify industries or industry sectors in              standards), SBA deemed for the                        Historically, the size standards
                                                 which the temporary statutory                           purposes of this analysis that the loan               applicable to small business concerns
                                                 alternative size standard helped small                  was approved under the temporary                      that apply for loans under the EIDL
                                                 businesses the most or the least in                     statutory alternative size standard.                  Program have been the same industry
                                                 accessing SBA Business Loans.                           Conversely, if the loan recipient’s                   based size standards applicable to small


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                                                 12508                  Federal Register / Vol. 83, No. 56 / Thursday, March 22, 2018 / Proposed Rules

                                                 business applicants for the Business                    apply the same new permanent                          11.43 and 11.45, by any of the following
                                                 Loan Programs. See, 13 CFR 123.300(b).                  alternative size standard established for             methods:
                                                 Although the temporary statutory                        the Business Loan Programs to the EIDL                  • Federal eRulemaking Portal: Go to
                                                 alternative size standard established by                Program as an alternative to industry                 http://www.regulations.gov. Follow the
                                                 the Jobs Act does not apply to the EIDL                 based size standards.                                 instructions for submitting comments.
                                                 Program, SBA is considering applying                       5. SBA also seeks comment on how                     • Fax: 202–493–2251.
                                                 the new permanent alternative size                      the Interim Rule has affected the                        • Mail: U.S. Department of
                                                 standard established for the Business                   processes used by lenders participating               Transportation, Docket Operations, M–
                                                 Loan Programs to the EIDL Program as                    in the Business Loan Programs and what                30, West Building Ground Floor, Room
                                                 an alternative to industry based size                   effects a permanent alternative size                  W12–140, 1200 New Jersey Avenue SE,
                                                 standards.                                              standard would have on application                    Washington, DC 20590.
                                                                                                         processes and processing times.                          • Hand Delivery: Deliver to Mail
                                                 Request for Comments                                       6. SBA invites comment on the effects              address above between 9 a.m. and 5
                                                    Against the above backdrop, in this                  of the Interim Rule on conventional                   p.m., Monday through Friday, except
                                                 ANPRM, SBA seeks comment on the                         small business lending. Specifically,                 Federal holidays.
                                                 following issues.                                       SBA welcomes input on whether, and to                    For service information identified in
                                                    1. SBA seeks comment on whether or                   what extent, if any, SBA Business Loans               this NPRM, contact ATR–GIE Avions de
                                                 not the level of the temporary statutory                approved under the Interim Rule have                  Transport Régional, 1, Allée Pierre
                                                 alternative size standard under the                     substituted for or displaced directly or              Nadot, 31712 Blagnac Cedex, France;
                                                 Interim Rule (i.e., $15 million in                      indirectly conventional small business                telephone +33 (0) 5 62 21 62 21; fax +33
                                                 tangible net worth and $5 million in                    lending, or whether such SBA Business                 (0) 5 62 21 67 18; email
                                                 average net income) is appropriate                      Loans played more of a supplementary                  continued.airworthiness@atr-
                                                 under the current credit environment                    role in conventional small business                   aircraft.com. You may view this service
                                                 and as a new permanent alternative size                 lending activity.                                     information at the FAA, Transport
                                                 standard. Commenters in support of the                                                                        Standards Branch, 2200 South 216th
                                                                                                           Dated: March 14, 2018.
                                                 level in the Interim Rule should provide                                                                      Street, Des Moines, WA. For
                                                                                                         Linda E. McMahon,                                     information on the availability of this
                                                 justification, along with supporting data
                                                 and analysis to support their position.                 Administrator.                                        material at the FAA, call 206–231–3195.
                                                 Similarly, commenters who believe the                   [FR Doc. 2018–05787 Filed 3–21–18; 8:45 am]
                                                                                                                                                               Examining the AD Docket
                                                 level established in the Interim Rule is                BILLING CODE 8025–01–P
                                                 not appropriate as a permanent                                                                                  You may examine the AD docket on
                                                 alternative size standard should suggest,                                                                     the internet at http://
                                                 along with supporting data and analysis,                DEPARTMENT OF TRANSPORTATION                          www.regulations.gov by searching for
                                                 a different alternative size standard                                                                         and locating Docket No. FAA–2018–
                                                 which they believe would be more                        Federal Aviation Administration                       0166; or in person at the Docket
                                                 appropriate. The suggested alternative                                                                        Management Facility between 9 a.m.
                                                 size standard must be based on tangible                 14 CFR Part 39                                        and 5 p.m., Monday through Friday,
                                                 net worth and average net income as                                                                           except Federal holidays. The AD docket
                                                                                                         [Docket No. FAA–2018–0166; Product
                                                 required by section 3(a)(5) of the Small                Identifier 2017–NM–169–AD]                            contains this NPRM, the regulatory
                                                 Business Act. 15 U.S.C. 632(a)(5).                                                                            evaluation, any comments received, and
                                                                                                         RIN 2120–AA64                                         other information. The street address for
                                                    2. SBA seeks comment on the impact
                                                 of using an alternative size standard on                                                                      the Docket Operations office (telephone
                                                                                                         Airworthiness Directives; ATR–GIE                     800–647–5527) is in the ADDRESSES
                                                 small businesses seeking loans through                  Avions de Transport Régional
                                                 its Business Loan Programs.                                                                                   section. Comments will be available in
                                                                                                         Airplanes                                             the AD docket shortly after receipt.
                                                 Specifically, SBA welcomes information
                                                 on industries/sectors where small                       AGENCY: Federal Aviation                              FOR FURTHER INFORMATION CONTACT:
                                                 businesses benefit the most or do not                   Administration (FAA), DOT.                            Shahram Daneshmandi, Aerospace
                                                 benefit at all from the use of an                       ACTION: Notice of proposed rulemaking                 Engineer, International Section,
                                                 alternative size standard. Similarly, SBA               (NPRM).                                               Transport Standards Branch, FAA, 2200
                                                 is also looking for data on the number                                                                        South 216th Street, Des Moines, WA
                                                 of businesses approved for SBA’s                        SUMMARY:  We propose to adopt a new                   98198; telephone and fax 206–231–
                                                 Business Loans under the temporary                      airworthiness directive (AD) for all                  3220.
                                                 statutory alternative size standard that                ATR–GIE Avions de Transport Régional
                                                                                                                                                               SUPPLEMENTARY INFORMATION:
                                                 otherwise could not have been approved                  Model ATR72 airplanes. This proposed
                                                                                                         AD was prompted by a determination                    Comments Invited
                                                 under their industry based size
                                                 standards.                                              that more restrictive maintenance                       We invite you to send any written
                                                    3. SBA invites suggestions on sources                instructions and airworthiness                        relevant data, views, or arguments about
                                                 of relevant data and information,                       limitations are necessary. This proposed              this proposal. Send your comments to
                                                 especially tangible net worth and                       AD would require revising the                         an address listed under the ADDRESSES
                                                 average net income of applicants to                     maintenance or inspection program, as                 section. Include ‘‘Docket No. FAA–
                                                 SBA’s Business Loan Programs, that                      applicable, to incorporate new or                     2018–0166; Product Identifier 2017–
daltland on DSKBBV9HB2PROD with PROPOSALS




                                                 SBA can evaluate to assess the impact                   revised maintenance instructions and                  NM–169–AD’’ at the beginning of your
                                                 of the Interim Rule on small businesses                 airworthiness limitations. We are                     comments. We specifically invite
                                                 and use in developing a new permanent                   proposing this AD to address the unsafe               comments on the overall regulatory,
                                                 alternative size standard and in                        condition on these products.                          economic, environmental, and energy
                                                 estimating the impact of the new                        DATES: We must receive comments on                    aspects of this NPRM. We will consider
                                                 permanent alternative size standard.                    this proposed AD by May 7, 2018.                      all comments received by the closing
                                                    4. SBA invites comments from                         ADDRESSES: You may send comments,                     date and may amend this NPRM based
                                                 interested parties on the proposal to                   using the procedures found in 14 CFR                  on those comments.


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Document Created: 2018-03-22 01:24:58
Document Modified: 2018-03-22 01:24:58
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionAdvance notice of proposed rulemaking.
DatesSBA must receive comments to this ANPRM on or before May 21, 2018.
ContactKhem R. Sharma, Office of Size Standards, by phone at (202) 205-7189 or by email at [email protected]
FR Citation83 FR 12506 
RIN Number3245-AG16

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