[Federal Register Volume 85, Number 97 (Tuesday, May 19, 2020)]
[Rules and Regulations]
[Pages 29845-29847]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10649]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 120
[Docket Number SBA-2020-0026]
RIN 3245-AH41
Business Loan Program Temporary Changes; Paycheck Protection
Program--Requirements--Extension of Limited Safe Harbor With Respect to
Certification Concerning Need for PPP Loan Request
AGENCY: U.S. Small Business Administration.
ACTION: Interim final rule.
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SUMMARY: On April 24, 2020, the U.S. Small Business Administration
(SBA) posted an interim final rule relating to promissory notes,
authorizations, affiliation, and eligibility in connection with the
implementation of a temporary new program, titled the ``Paycheck
Protection Program.'' The Paycheck Protection Program was established
under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act
or the Act). This interim final rule revises the interim final rule
posted on April 24, 2020, by extending the date by which certain
Paycheck Protection Program borrowers may repay their loans from May 7,
2020 to May 14, 2020, in order to avail themselves of a safe harbor
with respect to a certification required by the Act, and makes other
conforming changes. This interim final rule supplements SBA's
implementation of the Act and requests public comment.
DATES:
Effective date: This rule is effective May 19, 2020.
Applicability date: This interim final rule applies to borrowers
who applied for loans under the Paycheck Protection Program.
Comment date: Comments must be received on or before June 18, 2020.
ADDRESSES: You may submit comments, identified by number SBA-2020-0026
through the Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments. SBA will post all
comments on www.regulations.gov. If you wish to submit confidential
business information (CBI) as defined in the User Notice at
www.regulations.gov, please 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 the
information and make the final determination whether it will publish
the information.
FOR FURTHER INFORMATION CONTACT: A Call Center Representative at 833-
572-0502, or the local SBA Field Office; the list of offices can be
found at https://www.sba.gov/tools/local-assistance/districtoffices.
SUPPLEMENTARY INFORMATION:
I. Background Information
On March 13, 2020, President Trump declared the ongoing Coronavirus
Disease 2019 (COVID-19) pandemic of sufficient severity and magnitude
to warrant an emergency declaration for all States, territories, and
the District of Columbia. With the COVID-19 emergency, many small
businesses nationwide are experiencing economic hardship as a direct
result of the Federal, State, tribal, and local public health measures
that are being taken to minimize the public's exposure to the virus.
These measures, some of which are government-mandated, are being
implemented nationwide and include the closures of restaurants, bars,
and
[[Page 29846]]
gyms. In addition, based on the advice of public health officials,
other measures, such as keeping a safe distance from others or even
stay-at-home orders, are being implemented, resulting in a dramatic
decrease in economic activity as the public avoids malls, retail
stores, and other businesses.
On March 27, 2020, the President signed the Coronavirus Aid,
Relief, and Economic Security Act (the CARES Act or the Act) (Pub. L.
116-136) to provide emergency assistance and health care response for
individuals, families, and businesses affected by the coronavirus
pandemic. The Small Business Administration (SBA) received funding and
authority through the Act to modify existing loan programs and
establish a new loan program to assist small businesses nationwide
adversely impacted by the COVID-19 emergency. Section 1102 of the Act
temporarily permits SBA to guarantee 100 percent of 7(a) loans under a
new program titled the ``Paycheck Protection Program.'' Section 1106 of
the Act provides for forgiveness of up to the full principal amount of
qualifying loans guaranteed under the Paycheck Protection Program. On
April 24, 2020, the President signed the Paycheck Protection Program
and Health Care Enhancement Act (Pub. L. 116-139), which provided
additional funding and authority for the PPP.
II. Comments and Immediate Effective Date
This interim final rule is effective without advance notice and
public comment because section 1114 of the Act authorizes SBA to issue
regulations to implement Title I of the Act without regard to notice
requirements. In addition, SBA has determined that there is good cause
for dispensing with advance public notice and comment on the ground
that it would be contrary to the public interest. Specifically, SBA, in
consultation with the Department of the Treasury, intends to issue
additional guidance with regard to the safe harbor and extending the
safe harbor deadline from May 7 to May 14 will afford Paycheck
Protection Program borrowers time to review the forthcoming SBA
guidance and decide whether to avail themselves of the safe harbor. SBA
previously announced this intended extension in nonbinding guidance
published on May 5, 2020. Advance notice and public comment would
defeat the purpose of this interim final rule given the timeline for
the existing safe harbor and short-term, temporary nature of this
program. These same reasons provide good cause for SBA to dispense with
the 30-day delayed effective date provided in the Administrative
Procedure Act.
Although this interim final rule is effective immediately, comments
are solicited from interested members of the public on all aspects of
the interim final rule, including section III below. These comments
must be submitted on or before June 18, 2020. SBA will consider these
comments and the need for making any revisions as a result of these
comments.
III. Paycheck Protection Program Requirements for Extension of Safe
Harbor With Respect to Certification Concerning Need for PPP Loan
Request
The CARES Act was enacted to provide immediate assistance to
individuals, families, and organizations affected by the COVID-19
emergency. Among the provisions contained in the CARES Act are
provisions authorizing SBA to temporarily guarantee loans under the
Paycheck Protection Program (PPP). Loans under the PPP are 100 percent
guaranteed by SBA, and the full principal amount of the loans and any
accrued interest may qualify for loan forgiveness. The Act requires
each applicant applying for a PPP loan to certify ``that the
uncertainty of current economic conditions makes necessary the loan
request to support the ongoing obligations'' of the applicant. On April
24, 2020, SBA posted on its website an interim final rule (the Fourth
PPP Interim Final Rule), which also was published in the Federal
Register on April 28, 2020 (85 FR 23450), to provide relief to PPP
borrowers who applied for and received PPP loans based on a
misunderstanding or misapplication of the required certification
standard. The Fourth PPP Interim Final Rule provides that any borrower
that applied for a PPP loan and repays the loan in full by May 7, 2020,
will be deemed by SBA to have made the required certification in good
faith. SBA, in consultation with the Department of the Treasury, will
issue additional guidance before May 14, 2020 concerning how SBA will
review the required certification to help PPP borrowers evaluate
whether they may have misunderstood or misapplied the statutory
certification standard.\1\ Based on this upcoming guidance, SBA, in
consultation with the Department of the Treasury, determined that it is
necessary and appropriate to extend the safe harbor deadline for
repaying PPP loans from May 7, 2020 to May 14, 2020.
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\1\ This guidance is available at https://www.sba.gov/sites/default/files/2020-05/Paycheck-Protection-Program-Frequently-Asked-Questions_05%2013%2020_2.pdf.
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Limited Safe Harbor With Respect to Certification Concerning Need for
PPP Loan Request
Consistent with section 1102 of the CARES Act, the Borrower
Application Form requires PPP applicants to certify that ``[c]urrent
economic uncertainty makes this loan request necessary to support the
ongoing operations of the Applicant.'' Any borrower that applied for a
PPP loan and repays the loan in full by May 14, 2020 will be deemed by
SBA to have made the required certification in good faith. The
Administrator, in consultation with the Secretary, determined that this
safe harbor is necessary and appropriate to ensure that borrowers
promptly repay PPP loan funds that the borrower obtained based on a
misunderstanding or misapplication of the required certification
standard.
The extension of the safe harbor requires a corresponding date
change to the interim final rule that SBA posted on its website on
April 28, 2020, which was published in the Federal Register on May 4,
2020 (85 FR 26321), regarding PPP loan disbursements. Specifically,
Part III.1.b. provides that Lenders must electronically upload SBA Form
1502 information within 20 calendar days after a PPP loan is approved
or, for loans approved before the availability of the updated SBA Form
1502 reporting process, by May 18, 2020. 85 FR 26321, 26323. Because of
the extension of the safe harbor deadline, SBA is extending the
deadline for the submission of the initial SBA Form 1502 from May 18,
2020 to May 22, 2020.
Additional Information
SBA may provide further guidance, if needed, through SBA notices
that will be posted on SBA's website at www.sba.gov. Questions on the
Paycheck Protection Program may be directed to the Lender Relations
Specialist in the local SBA Field Office. The local SBA Field Office
may be found at https://www.sba.gov/tools/local-assistance/districtoffices.
Compliance With Executive Orders 12866, 12988, 13132, 13563, and 13771,
the Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Regulatory
Flexibility Act (5 U.S.C. 601-612).
Executive Orders 12866, 13563, and 13771
This interim final rule is economically significant for the
purposes of Executive Orders 12866 and 13563, and is considered a major
rule under the Congressional Review Act. SBA, however, is proceeding
under the emergency provision at Executive Order
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12866 Section 6(a)(3)(D) based on the need to move expeditiously to
mitigate the current economic conditions arising from the COVID-19
emergency. This rule's designation under Executive Order 13771 will be
informed by public comment.
Executive Order 12988
SBA has drafted this rule, to the extent practicable, in accordance
with the standards set forth in section 3(a) and 3(b)(2) of Executive
Order 12988, to minimize litigation, eliminate ambiguity, and reduce
burden. The rule has no preemptive or retroactive effect.
Executive Order 13132
SBA has determined that this rule will not have substantial direct
effects on the States, on the relationship between the National
Government and the States, or on the distribution of power and
responsibilities among the various layers of government. Therefore, SBA
has determined that this rule has no federalism implications warranting
preparation of a federalism assessment.
Paperwork Reduction Act, 44 U.S.C. Chapter 35
SBA has determined that this rule will not impose new or modify
existing recordkeeping or reporting requirements under the Paperwork
Reduction Act.
Regulatory Flexibility Act (RFA)
The Regulatory Flexibility Act (RFA) generally requires that when
an agency issues a proposed rule, or a final rule pursuant to section
553(b) of the APA or another law, the agency must prepare a regulatory
flexibility analysis that meets the requirements of the RFA and publish
such analysis in the Federal Register. 5 U.S.C. 603, 604. Specifically,
the RFA normally requires agencies to describe the impact of a
rulemaking on small entities by providing a regulatory impact analysis.
Such analysis must address the consideration of regulatory options that
would lessen the economic effect of the rule on small entities. The RFA
defines a ``small entity'' as (1) a proprietary firm meeting the size
standards of the Small Business Administration (SBA); (2) a nonprofit
organization that is not dominant in its field; or (3) a small
government jurisdiction with a population of less than 50,000. 5 U.S.C.
601(3)-(6). Except for such small government jurisdictions, neither
State nor local governments are ``small entities.'' Similarly, for
purposes of the RFA, individual persons are not small entities. The
requirement to conduct a regulatory impact analysis does not apply if
the head of the agency ``certifies that the rule will not, if
promulgated, have a significant economic impact on a substantial number
of small entities.'' 5 U.S.C. 605(b). The agency must, however, publish
the certification in the Federal Register at the time of publication of
the rule, ``along with a statement providing the factual basis for such
certification.'' If the agency head has not waived the requirements for
a regulatory flexibility analysis in accordance with the RFA's waiver
provision, and no other RFA exception applies, the agency must prepare
the regulatory flexibility analysis and publish it in the Federal
Register at the time of promulgation or, if the rule is promulgated in
response to an emergency that makes timely compliance impracticable,
within 180 days of publication of the final rule. 5 U.S.C. 604(a),
608(b). Rules that are exempt from notice and comment are also exempt
from the RFA requirements, including conducting a regulatory
flexibility analysis, when among other things the agency for good cause
finds that notice and public procedure are impracticable, unnecessary,
or contrary to the public interest. SBA Office of Advocacy guide: How
to Comply with the Regulatory Flexibility Act, Ch.1. p.9. Accordingly,
SBA is not required to conduct a regulatory flexibility analysis.
Jovita Carranza,
Administrator.
[FR Doc. 2020-10649 Filed 5-18-20; 8:45 am]
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