83 FR 55224 - Development Company Loan Program-Job Creation and Retention Requirements; Additional Areas for Higher Portfolio Average

SMALL BUSINESS ADMINISTRATION

Federal Register Volume 83, Issue 213 (November 2, 2018)

Page Range		55224-55226
FR Document		2018-24033

The Small Business Administration (SBA) is changing the job creation or retention requirements under its Development Company Loan Program (504 Loan Program) by increasing the dollar amounts used in calculating the number of jobs that must be created or retained for each 504 Project and for the portfolio average of each Certified Development Company. In addition, SBA is designating additional areas for application of the higher portfolio average.

Federal Register, Volume 83 Issue 213 (Friday, November 2, 2018)

[Federal Register Volume 83, Number 213 (Friday, November 2, 2018)]
[Notices]
[Pages 55224-55226]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-24033]


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SMALL BUSINESS ADMINISTRATION

[Docket No.: SBA-2018-0010]


Development Company Loan Program--Job Creation and Retention 
Requirements; Additional Areas for Higher Portfolio Average

AGENCY: U.S. Small Business Administration.

ACTION: Notification of changes to Development Company Program; request 
for comments.

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SUMMARY: The Small Business Administration (SBA) is changing the job 
creation or retention requirements under its Development Company Loan 
Program (504 Loan Program) by increasing the dollar amounts used in 
calculating the number of jobs that must be created or retained for 
each 504 Project and for the portfolio average of each Certified 
Development Company. In addition, SBA is designating additional areas 
for application of the higher portfolio average.

DATES: Applicability Date: The job creation or retention requirements 
and the designation of the additional areas that are described in this 
document will apply to all 504 loans that are approved

[[Page 55225]]

under the 504 Loan Program on or after November 2, 2018.
    Comment Date: SBA must receive comments on or before December 3, 
2018.

ADDRESSES: You may submit comments, identified by Docket No. SBA-2018-
0010, by any of the following methods: (1) Federal eRulemaking Portal: 
https://www.regulations.gov, following the instructions for submitting 
comments; or (2) Mail/Hand Delivery/Courier: Babak Hosseini, Finance 
and Loan Specialist, Office of Financial Assistance, U.S. Small 
Business Administration, 409 3rd Street SW, Washington DC 20416.
    SBA will post all comments on https://www.regulations.gov. If you 
wish to submit confidential business information (CBI) as defined in 
the User Notice at https://www.regulations.gov, you must submit such 
information to U.S. Small Business Administration, 409 3rd Street SW, 
Washington, DC 20416, Attn: Babak Hosseini, Finance and Loan 
Specialist; or send an email to [email protected]. 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.

FOR FURTHER INFORMATION CONTACT: Babak Hosseini, Finance and Loan 
Specialist, Office of Financial Assistance, U.S. Small Business 
Administration; telephone: 202-205-7076; email: [email protected].

SUPPLEMENTARY INFORMATION: The 504 Loan Program is an SBA financing 
program authorized under Title V of the Small Business Investment Act 
of 1958 (the SBIAct), 15 U.S.C. 695 et seq. The purpose of the 504 Loan 
Program is to foster economic development and to create or preserve job 
opportunities in both urban and rural areas by providing long-term 
financing for small business concerns. See section 501(a) of the 
SBIAct, 15 U.S.C. 695(a). Under the 504 Loan Program, loans are made to 
small business applicants by Certified Development Companies (CDCs), 
which are certified and regulated by SBA to promote economic 
development within their community. In general, a project in the 504 
Loan Program (a 504 Project) is financed through: A loan obtained from 
a private sector lender with a senior lien covering at least 50 percent 
of the project cost; a loan obtained from a CDC (a 504 Loan) with a 
junior lien covering up to 40 percent of the total cost (backed by a 
100 percent SBA-guaranteed debenture); and a contribution from the 
Borrower of at least 10 percent equity.
    To qualify for financing under the 504 Loan Program, each 504 
Project must satisfy one of the economic development objectives or 
public policy goals set forth in sections 501(d)(1) through (3) of the 
SBIAct. Under section 501(d)(1), a Project is eligible for 504 
financing if it creates job opportunities within two years of 
completion of the Project or if it preserves jobs attributable to the 
Project. To satisfy this objective under current requirements, each 504 
Project must create or preserve one job for every $65,000 guaranteed by 
SBA; in the case of a small manufacturing Project, the amount is 
$100,000. See section 501(e)(1) of the SBIAct and 74 FR 16432 (April 
10, 2009).
    If the Project is eligible for financing under one of the 
objectives or goals set forth in section 501(d)(2) or (3), the Project 
need not satisfy the job creation or preservation criteria described 
above, but the CDC's overall portfolio of outstanding debentures must 
meet or exceed the job creation or preservation criteria of one job for 
every $65,000 guaranteed by SBA. See section 501(e)(2) of the SBIAct 
and 74 FR 16432 (April 10, 2009). In addition, for projects in Alaska, 
Hawaii, State-designated enterprise zones, empowerment zones and 
enterprise communities, labor surplus areas (as determined by the 
Secretary of Labor), and for other areas designated by SBA, the CDC's 
portfolio may average not more than $75,000 per job created or 
retained. See section 501(e)(3) of the SBIAct; 74 FR 16432 (April 10, 
2009). (Loans for Projects of small manufacturers are excluded from the 
overall portfolio calculations.)
    In the application for a loan under the 504 Loan Program, the 
borrower enters the number of jobs to be created or retained as a 
result of the Project and the CDC verifies that the Project meets the 
job creation or retention requirements. In addition, the job impact 
data is entered into SBA's database, and the application data combined 
with data from annual CDC reports is used to report the total number of 
jobs created or retained.
    The SBIAct authorizes SBA to develop the job creation or job 
preservation criteria that apply to the 504 Loan Program. See section 
501(d) of SBIAct (last freestanding paragraph after paragraph 
501(d)(3)(L)). SBA's regulations provide that ``[a] Project must create 
or retain one Job Opportunity per an amount of 504 loan funding that 
will be specified by SBA from time to time in a Federal Register 
notice.'' 13 CFR 120.861. SBA's regulations also provide that ``[a] 
CDC's portfolio must maintain a minimum average of one Job Opportunity 
per an amount of 504 loan funding that will be specified by SBA from 
time to time in a Federal Register notice.'' 13 CFR 120.829(a).
    The standard of one job for every $65,000 guaranteed by SBA, which 
applies to both individual Projects and to the CDC's overall portfolio 
average, has been in effect since it was adopted in 2009. See section 
504(b) of the American Recovery and Reinvestment Act of 2009, Public 
Law 111-5. In addition, the standards for both (1) Projects of small 
manufacturers, and (2) Projects in Alaska, Hawaii, State-designated 
enterprise zones, empowerment zones and enterprise communities, labor 
surplus areas (as determined by the Secretary of Labor), and other 
areas designated by the Administrator of SBA, have not been changed 
since they were first enacted in 2004 by section 105 of the Small 
Business Reauthorization and Manufacturing Assistance Act of 2004, 
Public Law 108-447. For small manufacturing Projects, the standard is 
one job for every $100,000 guaranteed by SBA; for Projects in Alaska, 
Hawaii and other designated areas, the standard is that the CDC's 
portfolio may average not more than $75,000 per job created or 
retained.
    Although the job creation or retention standards for the 504 Loan 
Program have not been increased since 2009, and in some cases earlier, 
the Consumer Price Index for All Urban Consumers has increased 19% from 
2009 through August 2018 according to the Bureau of Labor Statistics of 
the U.S. Department of Labor. Accordingly, pursuant to 13 CFR 
120.829(a) and 120.861, SBA is modifying the Job Opportunity 
requirements as follows:
    (1) A Project must create or retain one Job Opportunity per $75,000 
guaranteed by SBA except that, in the case of a Project of a small 
manufacturer, the Project must create or retain one Job Opportunity per 
$120,000 guaranteed by SBA;
    (2) For Projects that are eligible under 13 CFR 120.862, ``Other 
economic development objectives,'' a CDC's portfolio must reflect an 
average of one Job Opportunity for every $75,000 guaranteed by SBA; and
    (3) For Projects in Alaska, Hawaii, State-designated enterprise 
zones, empowerment zones and enterprise communities, labor surplus 
areas (as determined by the Secretary of Labor), and for other areas 
designated by SBA, the CDC's portfolio may average not more than 
$85,000 per job created or retained.
    In addition, pursuant to section 501(e)(3) of the SBIAct, 15 U.S.C.

[[Page 55226]]

695(e)(3), SBA is designating ``Opportunity Zones'' as additional areas 
for which the higher portfolio average described in paragraph (3) above 
would apply. An Opportunity Zone is an economically distressed 
community that has been nominated by the State and certified by the 
Secretary of the U.S. Treasury as a community in which new investments, 
under certain conditions, may be eligible for preferential tax 
treatment. More information and a list of Opportunity Zones for all 
States are available at https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx.
    SBA has determined that the changes described in this Notice should 
apply immediately to any 504 Loan that is approved on or after November 
2, 2018 in order to give CDCs and small business applicants the 
benefits of these changes as soon as possible and because neither the 
new job creation/retention requirements nor the additional areas 
designated for application of the higher portfolio average will 
adversely affect either CDCs or their small business applicants.
    SBA invites public comments on these new job creation or 
preservation standards and the designation of additional areas for 
application of the higher portfolio average described above. Please 
clearly identify paper and electronic comments as ``Public Comments on 
504 Loan Program's Job Opportunity Requirements, Docket No. SBA-2018-
0010'' and submit them by one of the methods identified in the 
ADDRESSES section of this document. SBA will consider the comments and 
determine whether any revisions are necessary.

    Authority: 15 U.S.C. 695(d); 13 CFR 120.829(a) and 120.861.

    Dated: October 29, 2018.
Linda E. McMahon,
Administrator.
[FR Doc. 2018-24033 Filed 11-1-18; 8:45 am]
 BILLING CODE 8025-01-P

55224 Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Notices

Kenner, 100 F Street NE, Washington, covering essential information about a displays a currently valid control
DC 20549 or send an email to: PRA_ separate account. Section 5(b) of the number.
Mailbox@sec.gov. Comments must be Securities Act requires that investors be Written comments are invited on: (a)
submitted to OMB within 30 days of provided with a prospectus containing Whether the proposed collection of
this notice. the information required in a information is necessary for the proper
Dated: October 29, 2018. registration statement prior to or at the performance of the functions of the
Eduardo A. Aleman, time of sale or delivery of securities. agency, including whether the
The purpose of Form N–4 is to meet information will have practical utility;
Assistant Secretary.
the filing and disclosure requirements of (b) the accuracy of the agency’s estimate
[FR Doc. 2018–23962 Filed 11–1–18; 8:45 am] the Securities Act and the Investment of the burden of the collection of
BILLING CODE 8011–01–P Company Act and to enable filers to information; (c) ways to enhance the
provide investors with information quality, utility, and clarity of the
necessary to evaluate an investment in information collected; and (d) ways to
SECURITIES AND EXCHANGE a security. The information required to
COMMISSION minimize the burden of the collection of
be filed with the Commission permits information on respondents, including
[SEC File No. 270–282, OMB Control No. verification of compliance with through the use of automated collection
3235–0318] securities law requirements and assures techniques or other forms of information
the public availability and technology. Consideration will be given
Proposed Collection; Comment dissemination of the information. to comments and suggestions submitted
Request The estimated annual number of in writing within 60 days of this
Upon Written Request, Copies Available filings on Form N–4 is 35 initial publication.
From: Securities and Exchange registration statements and 1,326 post- Please direct your written comments
Commission, Office of FOIA Services, effective amendments. The estimated to Charles Riddle, Acting Director/Chief
100 F Street NE, Washington, DC average number of portfolios per filing Information Officer, Securities and
20549–2736 is one, both for initial registration Exchange Commission, C/O Candace
statements and post-effective Kenner, 100 F Street NE, Washington,
Extension: amendments on Form N–4.
Form N–4 DC 20549; or send an email to: PRA_
Accordingly, the estimated number of Mailbox@sec.gov.
Notice is hereby given that, pursuant portfolios referenced in initial Form N–
to the Paperwork Reduction Act of 1995 4 filings annually is 35 and the Dated: October 29, 2018.
(44 U.S.C. 3501 et seq.), the Securities estimated number of portfolios Eduardo A. Aleman,
and Exchange Commission (the referenced in post-effective amendment Assistant Secretary.
‘‘Commission’’) is soliciting comments filings on Form N–4 annually is 1,326. [FR Doc. 2018–23957 Filed 11–1–18; 8:45 am]
on the collection of information The estimate of the annual hour burden BILLING CODE 8011–01–P
summarized below. The Commission for Form N–4 is approximately 278.5
plans to submit this existing collection hours per initial registration statement
of information to the Office of and 197.25 hours per post-effective
Management and Budget for extension SMALL BUSINESS ADMINISTRATION
amendment, for a total of 271,301 hours
and approval. ((35 initial registration statements × [Docket No.: SBA–2018–0010]
The collection of information is 278.5 hours) + (1,326 post-effective
entitled: ‘‘Form N–4 (17 CFR 239.17b) amendments × 197.25 hours)). Development Company Loan
under the Securities Act of 1933 and (17 The current estimated annual cost Program—Job Creation and Retention
CFR 274.11c) under the Investment burden for preparing an initial Form N– Requirements; Additional Areas for
Company Act of 1940, registration 4 filing is $24,858 per portfolio and the Higher Portfolio Average
statement of separate accounts current estimated annual cost burden
organized as unit investment trust.’’ for preparing a post-effective AGENCY: U.S. Small Business
Form N–4 is the form used by insurance amendment filing on Form N–4 is Administration.
company separate accounts organized as $23,561 per portfolio. The Commission ACTION: Notification of changes to
unit investment trusts that offer variable estimates that, on an annual basis, 35 Development Company Program;
annuity contracts to register as portfolios will be referenced in initial request for comments.
investment companies under the Form N–4 filings and 1,326 portfolios
Investment Company Act of 1940 (15 will be referenced in post-effective SUMMARY: The Small Business
U.S.C. 80a–1 et seq.) and/or to register amendment filings on Form N–4. Thus, Administration (SBA) is changing the
their securities under the Securities Act the estimated total annual cost burden job creation or retention requirements
of 1933 (15 U.S.C. 77a et seq.). Section allocated to Form N 4 would be under its Development Company Loan
5 of the Securities Act (15 U.S.C. 77e) $32,111,916 ((35 × $24,858) + (1,326 × Program (504 Loan Program) by
requires the filing of a registration $23,561)). increasing the dollar amounts used in
statement prior to the offer of securities Providing the information required by calculating the number of jobs that must
to the public and that the registration Form N–4 is mandatory. Responses will be created or retained for each 504
statement be effective before any not be kept confidential. Estimates of Project and for the portfolio average of
securities are sold, and Section 8 of the average burden hours are made solely each Certified Development Company.
Investment Company Act (15 U.S.C. for the purposes of the Paperwork In addition, SBA is designating
80a–8) provides for the registration of Reduction Act, and are not derived from additional areas for application of the
investment companies. Pursuant to a comprehensive or even a higher portfolio average.
Form N–4, separate accounts organized representative survey or study of the DATES: Applicability Date: The job
as unit investment trusts that offer costs of Commission rules and forms. creation or retention requirements and
variable annuity contracts provide An agency may not conduct or sponsor, the designation of the additional areas
investors with a prospectus and a and a person is not required to respond that are described in this document will
statement of additional information to, a collection of information unless it apply to all 504 loans that are approved

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Federal Register / Vol. 83, No. 213 / Friday, November 2, 2018 / Notices 55225

under the 504 Loan Program on or after To qualify for financing under the 504 amount of 504 loan funding that will be
November 2, 2018. Loan Program, each 504 Project must specified by SBA from time to time in
Comment Date: SBA must receive satisfy one of the economic a Federal Register notice.’’ 13 CFR
comments on or before December 3, development objectives or public policy 120.829(a).
2018. goals set forth in sections 501(d)(1) The standard of one job for every
ADDRESSES: You may submit comments, through (3) of the SBIAct. Under section $65,000 guaranteed by SBA, which
identified by Docket No. SBA–2018– 501(d)(1), a Project is eligible for 504 applies to both individual Projects and
0010, by any of the following methods: financing if it creates job opportunities to the CDC’s overall portfolio average,
(1) Federal eRulemaking Portal: https:// within two years of completion of the has been in effect since it was adopted
www.regulations.gov, following the Project or if it preserves jobs attributable in 2009. See section 504(b) of the
instructions for submitting comments; to the Project. To satisfy this objective American Recovery and Reinvestment
or (2) Mail/Hand Delivery/Courier: under current requirements, each 504 Act of 2009, Public Law 111–5. In
Babak Hosseini, Finance and Loan Project must create or preserve one job addition, the standards for both (1)
Specialist, Office of Financial for every $65,000 guaranteed by SBA; in Projects of small manufacturers, and (2)
Assistance, U.S. Small Business the case of a small manufacturing Projects in Alaska, Hawaii, State-
Administration, 409 3rd Street SW, Project, the amount is $100,000. See designated enterprise zones,
Washington DC 20416. section 501(e)(1) of the SBIAct and 74 empowerment zones and enterprise
SBA will post all comments on FR 16432 (April 10, 2009). communities, labor surplus areas (as
https://www.regulations.gov. If you wish If the Project is eligible for financing determined by the Secretary of Labor),
to submit confidential business under one of the objectives or goals set and other areas designated by the
information (CBI) as defined in the User forth in section 501(d)(2) or (3), the Administrator of SBA, have not been
Notice at https://www.regulations.gov, Project need not satisfy the job creation changed since they were first enacted in
you must submit such information to or preservation criteria described above, 2004 by section 105 of the Small
U.S. Small Business Administration, but the CDC’s overall portfolio of Business Reauthorization and
409 3rd Street SW, Washington, DC outstanding debentures must meet or Manufacturing Assistance Act of 2004,
20416, Attn: Babak Hosseini, Finance exceed the job creation or preservation Public Law 108–447. For small
and Loan Specialist; or send an email to criteria of one job for every $65,000 manufacturing Projects, the standard is
babak.hosseini@sba.gov. Highlight the guaranteed by SBA. See section one job for every $100,000 guaranteed
information that you consider to be CBI 501(e)(2) of the SBIAct and 74 FR 16432 by SBA; for Projects in Alaska, Hawaii
and explain why you believe SBA (April 10, 2009). In addition, for projects and other designated areas, the standard
should hold this information as in Alaska, Hawaii, State-designated is that the CDC’s portfolio may average
confidential. SBA will review your enterprise zones, empowerment zones not more than $75,000 per job created
information and determine whether it and enterprise communities, labor or retained.
will make the information public. surplus areas (as determined by the Although the job creation or retention
Secretary of Labor), and for other areas standards for the 504 Loan Program
FOR FURTHER INFORMATION CONTACT:
designated by SBA, the CDC’s portfolio have not been increased since 2009, and
Babak Hosseini, Finance and Loan in some cases earlier, the Consumer
may average not more than $75,000 per
Specialist, Office of Financial Price Index for All Urban Consumers
job created or retained. See section
Assistance, U.S. Small Business has increased 19% from 2009 through
501(e)(3) of the SBIAct; 74 FR 16432
Administration; telephone: 202–205– August 2018 according to the Bureau of
(April 10, 2009). (Loans for Projects of
7076; email: babak.hosseini@sba.gov. small manufacturers are excluded from Labor Statistics of the U.S. Department
SUPPLEMENTARY INFORMATION: The 504 the overall portfolio calculations.) of Labor. Accordingly, pursuant to 13
Loan Program is an SBA financing In the application for a loan under the CFR 120.829(a) and 120.861, SBA is
program authorized under Title V of the 504 Loan Program, the borrower enters modifying the Job Opportunity
Small Business Investment Act of 1958 the number of jobs to be created or requirements as follows:
(the SBIAct), 15 U.S.C. 695 et seq. The retained as a result of the Project and (1) A Project must create or retain one
purpose of the 504 Loan Program is to the CDC verifies that the Project meets Job Opportunity per $75,000 guaranteed
foster economic development and to the job creation or retention by SBA except that, in the case of a
create or preserve job opportunities in requirements. In addition, the job Project of a small manufacturer, the
both urban and rural areas by providing impact data is entered into SBA’s Project must create or retain one Job
long-term financing for small business database, and the application data Opportunity per $120,000 guaranteed by
concerns. See section 501(a) of the combined with data from annual CDC SBA;
SBIAct, 15 U.S.C. 695(a). Under the 504 reports is used to report the total (2) For Projects that are eligible under
Loan Program, loans are made to small number of jobs created or retained. 13 CFR 120.862, ‘‘Other economic
business applicants by Certified The SBIAct authorizes SBA to development objectives,’’ a CDC’s
Development Companies (CDCs), which develop the job creation or job portfolio must reflect an average of one
are certified and regulated by SBA to preservation criteria that apply to the Job Opportunity for every $75,000
promote economic development within 504 Loan Program. See section 501(d) of guaranteed by SBA; and
their community. In general, a project in SBIAct (last freestanding paragraph after (3) For Projects in Alaska, Hawaii,
the 504 Loan Program (a 504 Project) is paragraph 501(d)(3)(L)). SBA’s State-designated enterprise zones,
financed through: A loan obtained from regulations provide that ‘‘[a] Project empowerment zones and enterprise
a private sector lender with a senior lien must create or retain one Job communities, labor surplus areas (as
covering at least 50 percent of the Opportunity per an amount of 504 loan determined by the Secretary of Labor),
project cost; a loan obtained from a CDC funding that will be specified by SBA and for other areas designated by SBA,
(a 504 Loan) with a junior lien covering from time to time in a Federal Register the CDC’s portfolio may average not
up to 40 percent of the total cost (backed notice.’’ 13 CFR 120.861. SBA’s more than $85,000 per job created or
by a 100 percent SBA-guaranteed regulations also provide that ‘‘[a] CDC’s retained.
debenture); and a contribution from the portfolio must maintain a minimum In addition, pursuant to section
Borrower of at least 10 percent equity. average of one Job Opportunity per an 501(e)(3) of the SBIAct, 15 U.S.C.

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Document Created: 2018-11-02 01:09:54
Document Modified: 2018-11-02 01:09:54

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Notices
Action		Notification of changes to Development Company Program; request for comments.
Dates		Applicability Date: The job creation or retention requirements and the designation of the additional areas that are described in this document will apply to all 504 loans that are approved under the 504 Loan Program on or after November 2, 2018.
Contact		Babak Hosseini, Finance and Loan Specialist, Office of Financial Assistance, U.S. Small Business Administration; telephone: 202-205-7076; email: [email protected]
FR Citation		83 FR 55224