[Federal Register Volume 85, Number 105 (Monday, June 1, 2020)]
[Rules and Regulations]
[Pages 33010-33015]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-11533]


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SMALL BUSINESS ADMINISTRATION

13 CFR Part 120

[Docket Number SBA-2020-0033]
RIN 3245-AH47


Business Loan Program Temporary Changes; Paycheck Protection 
Program--SBA Loan Review Procedures and Related Borrower and Lender 
Responsibilities

AGENCY: U.S. Small Business Administration.

ACTION: Interim final rule.

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SUMMARY: On April 2, 2020, the U.S. Small Business Administration (SBA) 
posted an interim final rule announcing the implementation of the 
Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The 
CARES Act temporarily adds a new program, titled the ``Paycheck 
Protection Program,'' to the SBA's 7(a) Loan Program. The CARES Act 
also provides for forgiveness of up to the full principal amount of 
qualifying loans guaranteed under the Paycheck Protection Program 
(PPP). The PPP is intended to provide economic relief to small 
businesses nationwide adversely impacted by the Coronavirus Disease 
2019 (COVID-19). SBA posted additional interim final rules on April 3, 
2020, April 14, 2020, April 24, 2020, April 28, 2020, April 30, 2020, 
May 5, 2020, May 8, 2020, May 13, 2020, May 14, 2020, May 18, 2020, and 
May 20, 2020, and the Department of the Treasury (Treasury) posted an 
additional interim final rule on April 27, 2020. SBA and Treasury 
posted an interim final rule on Loan Forgiveness contemporaneously with 
this interim final rule on May 22, 2020. This interim final rule 
supplements the previously posted interim final rules in order to 
inform borrowers and lenders of SBA's process for reviewing PPP loan 
applications and loan forgiveness applications, and requests public 
comment.

DATES: 
    Effective date: This rule is effective May 28, 2020.
    Applicability date: This interim final rule applies to loan 
applications and loan forgiveness applications submitted under the 
Paycheck Protection Program.
    Comment date: Comments must be received on or before July 1, 2020.

ADDRESSES: You may submit comments, identified by number SBA-2020-0033 
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

[[Page 33011]]

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 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) (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 CARES 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 CARES 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 CARES Act provides for forgiveness of up to the full principal 
amount of qualifying loans guaranteed under the Paycheck Protection 
Program, and requires SBA to issue guidance and regulations 
implementing section 1106 within 30 days after the date of enactment of 
the CARES Act. On April 2, 2020, SBA posted its first PPP interim final 
rule (85 FR 20811) (the First Interim Final Rule) covering in part loan 
forgiveness. On April 8, 2020 and on April 26, 2020, SBA posted 
Frequently Asked Questions on loan forgiveness.\1\ On April 14, 2020, 
SBA posted another PPP interim final rule (85 FR 21747) covering in 
part loan forgiveness. 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 
Paycheck Protection Program.
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    \1\ https://www.sba.gov/document/support-faq-lenders-borrowers.
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    As described below, this interim final rule informs borrowers and 
lenders of SBA's process for reviewing PPP loan applications and loan 
forgiveness applications. This interim final rule supplements the 
interim final rule on Loan Forgiveness posted contemporaneously with 
this interim final rule.

II. Comments and Immediate Effective Date

    The intent of the CARES Act is that SBA provide relief to America's 
small businesses expeditiously. This intent, along with the dramatic 
decrease in economic activity nationwide, provides good cause for SBA 
to dispense with the 30-day delayed effective date provided in the 
Administrative Procedure Act. Specifically, it is critical to meet 
lenders' and borrowers' need for clarity concerning loan forgiveness 
requirements as rapidly as possible because borrowers can seek loan 
forgiveness as early as eight-weeks following the date of disbursement 
of their PPP loans. Because the first PPP loans were disbursed after 
April 3, providing borrowers with certainty on SBA's process for 
reviewing PPP loan applications and loan forgiveness applications will 
enhance borrowers' ability to determine whether, and to what extent, 
they should apply for PPP loans and loan forgiveness, and thereby carry 
out the purposes of the CARES Act in keeping their workers employed and 
paid, while at the same time taking necessary steps to maximize 
eligible loan forgiveness amounts. An immediate effective date also is 
necessary for PPP lenders who generally will make the loan forgiveness 
determinations, as provided in the CARES Act. Specifically, an 
immediate effective date is necessary for lenders so that they will 
have both a degree of certainty and sufficient time to develop their 
systems and policies and procedures in order to timely process loan 
forgiveness applications.
    This interim final rule supplements previous regulations and 
guidance on the discrete issues related to SBA's process for review of 
PPP loan applications and loan forgiveness applications. This interim 
final rule is effective without advance notice and public comment 
because section 1114 of the CARES Act authorizes SBA to issue 
regulations to implement Title I of the CARES 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 has determined that advance notice and public comment would delay 
the ability of PPP borrowers to understand with certainty SBA's process 
for reviewing PPP loan applications and loan forgiveness applications. 
By providing a high degree of certainty to PPP borrowers through this 
interim final rule, PPP borrowers will be able to take immediate steps 
to maximize their loan forgiveness amounts. This rule is being issued 
to allow for immediate implementation of the forgiveness component of 
this program. Although this interim final rule is effective 
immediately, comments are solicited from interested members of the 
public on all aspects of this interim final rule, including section III 
below. These comments must be submitted on or before July 1, 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 SBA Loan Review 
Procedures and Related Borrower and Lender Responsibilities

Overview

    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 will be 100 
percent guaranteed by SBA, and the full principal amount of the loans 
may qualify for loan forgiveness. Additional information about the PPP 
is available in interim final rules published by SBA and Treasury in 
the Federal Register (85 FR 20811, 85 FR 20817, 85 FR 21747, 85 FR 
23450, 85 FR 23917, 85 FR 26321, 85 FR 26324, 85 FR 27287, 85 FR 29842, 
85 FR 29845, 85 FR 29847, 85 FR 30835), as well as an SBA interim final 
rule posted on May 20, 2020 and an SBA and Treasury interim final rule 
posted on May 22, 2020 (collectively, the PPP Interim Final Rules).
    Under the CARES Act, SBA is authorized to guarantee loans under the 
PPP, a new temporary 7(a) program, through June 30, 2020. The intent of 
the Act is that SBA provide relief to America's small businesses 
expeditiously, which is expressed in the Act by giving all lenders 
delegated authority and streamlining the requirements of the regular 
7(a) loan program.
    The Small Business Act authorizes the Administrator to conduct 
investigations to determine whether a recipient or participant in any 
assistance under a 7(a) program, including the PPP, is ineligible for a 
loan, or has violated section 7(a), or any rule, regulation or order 
issued

[[Page 33012]]

thereunder. 15 U.S.C. 634(b)(11). Additionally, under section 7(a), the 
Administrator is empowered to make loans in cooperation with lenders 
through agreements to participate on a deferred (guaranteed) basis. 15 
U.S.C. 636(a). Further, the Administrator may make such rules and 
regulations as deemed necessary and take any and all actions determined 
to be necessary or desirable with respect to 7(a) loans. 15 U.S.C. 
634(b)(6) and (b)(7). Pursuant to these provisions of the Small 
Business Act, SBA has issued regulations establishing the standards by 
which it will investigate whether a loan met program requirements and 
the circumstances under which SBA will be released from liability on a 
guarantee for such a loan. 13 CFR 120.524.
    In light of the structure of the PPP program established by the 
CARES Act and the PPP Interim Final Rules, in which loans and loan 
forgiveness are provided based on the borrower's certifications and 
documentation provided by the borrower, the Administrator, in 
consultation with the Secretary of the Treasury (Secretary), has 
determined that it is appropriate to adopt additional procedures and 
criteria through which SBA will review whether an action by the 
borrower has resulted in its receipt of a PPP loan that did not meet 
program requirements.\2\ SBA's review of borrower certifications and 
representations regarding the borrower's eligibility for a PPP loan and 
loan forgiveness, and the borrower's use of PPP loan proceeds, is 
essential to ensure that PPP loans are directed to the entities 
Congress intended, and that PPP loan proceeds are used for the purposes 
Congress required, including the CARES Act's central purpose of keeping 
workers paid and employed.
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    \2\ This interim final rule is an exercise of SBA's rulemaking 
authority under 15 U.S.C. 634(b), 15 U.S.C. 633(d), and 5 U.S.C. 
App., Reorg. Plan No. 4 of 1965, 11(b), 13(a) (abolishing Loan 
Policy Board and transferring functions to the Administrator); and 
CARES Act sections 1106(k) and 1114.
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1. SBA Reviews of Individual PPP Loans
a. Will SBA review individual PPP loans?
    Yes. SBA may review any PPP loan, as the Administrator deems 
appropriate, as described below.
b. What borrower representations and statements will SBA review?
    The Administrator is authorized to review the following:
    Borrower Eligibility: The Administrator may review whether a 
borrower is eligible for the PPP loan based on the provisions of the 
CARES Act, the rules and guidance available at the time of the 
borrower's PPP loan application, and the terms of the borrower's loan 
application. See FAQ 17 (posted April 6, 2020).\3\ These include, but 
are not limited to, SBA's regulations under 13 CFR 120.110 (as modified 
and clarified by the PPP Interim Final Rules) and 13 CFR 121.301(f) and 
the information, certifications, and representations on the Borrower 
Application Form (SBA Form 2483 or lender's equivalent form) and Loan 
Forgiveness Application Form (SBA Form 3508 or lender's equivalent 
form).
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    \3\ https://www.sba.gov/document/support--faq-lenders-borrowers.
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    Loan Amounts and Use of Proceeds: The Administrator may review 
whether a borrower calculated the loan amount correctly and used loan 
proceeds for the allowable uses specified in the CARES Act.
    Loan Forgiveness Amounts: CThe Administrator may review whether a 
borrower is entitled to loan forgiveness in the amount claimed on the 
borrower's Loan Forgiveness Application (SBA Form 3508 or lender's 
equivalent form).
c. When will SBA undertake a loan review?
    For a PPP loan of any size, SBA may undertake a review at any time 
in SBA's discretion. For example, SBA may review a loan if the loan 
documentation submitted to SBA by the lender or any other information 
indicates that the borrower may be ineligible for a PPP loan, or may be 
ineligible to receive the loan amount or loan forgiveness amount 
claimed by the borrower. 13 CFR 120.524(c). As noted on the Loan 
Forgiveness Application Form, the borrower must retain PPP 
documentation in its files for six years after the date the loan is 
forgiven or repaid in full, and permit authorized representatives of 
SBA, including representatives of its Office of Inspector General, to 
access such files upon request.
    Lenders must comply with applicable SBA requirements for records 
retention, which for Federally regulated lenders means compliance with 
the requirements of their federal financial institution regulator and 
for SBA supervised lenders (as defined in 13 CFR 120.10 and including 
PPP lenders with authority under SBA Form 3507) means compliance with 
13 CFR 120.461.
d. Will I have the opportunity to respond to SBA's questions in a 
review?
    Yes. If loan documentation submitted to SBA by the lender or any 
other information indicates that the borrower may be ineligible for a 
PPP loan or may be ineligible to receive the loan amount or loan 
forgiveness amount claimed by the borrower, SBA will require the lender 
to contact the borrower in writing to request additional information. 
SBA may also request information directly from the borrower. The lender 
will provide any additional information provided to it by the borrower 
to SBA. SBA will consider all information provided by the borrower in 
response to such an inquiry.
    Failure to respond to SBA's inquiry may result in a determination 
that the borrower was ineligible for a PPP loan or ineligible to 
receive the loan amount or loan forgiveness amount claimed by the 
borrower.
e. If SBA determines that a borrower is ineligible for a PPP loan, can 
the loan be forgiven?
    No. If SBA determines that a borrower is ineligible for the PPP 
loan, SBA will direct the lender to deny the loan forgiveness 
application. Further, if SBA determines that the borrower is ineligible 
for the loan amount or loan forgiveness amount claimed by the borrower, 
SBA will direct the lender to deny the loan forgiveness application in 
whole or in part, as appropriate. SBA may also seek repayment of the 
outstanding PPP loan balance or pursue other available remedies.
    Section 1106(b) of the CARES Act provides for forgiveness of a PPP 
loan only if the borrower is an ``eligible recipient.'' The 
Administrator has determined that to be an eligible recipient that is 
entitled to forgiveness under section 1106(b), the borrower must be an 
``eligible recipient'' under 15 U.S.C. 636(a)(36)(A)(iv) and rules and 
guidance available at the time of the borrower's loan application. This 
requirement promotes the public interest, aligns SBA's functions with 
other governmental policies, and appropriately carries out the CARES 
Act's PPP provisions, including by preventing evasion of the 
requirements for PPP loan eligibility and ensuring program integrity 
with respect to this emergency financial assistance program. It is also 
consistent with the CARES Act's nonrecourse provision, 15 U.S.C. 
636(a)(36)(F)(v), which limits SBA's recourse against individual 
shareholders, members, or partners of a PPP borrower for nonpayment of 
a PPP loan only if the borrower is an eligible

[[Page 33013]]

recipient of the loan. Accordingly, the PPP Loan Forgiveness 
Application (SBA Form 3508 or lender's equivalent form) notes that SBA 
may direct a lender to disapprove a borrower's loan forgiveness 
application if SBA determines that the borrower does not qualify as an 
eligible recipient for the PPP loan.
f. May a borrower appeal SBA's determination that the borrower is 
ineligible for a PPP loan or ineligible for the loan amount or the loan 
forgiveness amount claimed by the borrower?
    Yes. SBA intends to issue a separate interim final rule addressing 
this process.
2. The Loan Forgiveness Process for Lenders
a. What should a lender review?
    For all PPP Loan Forgiveness Applications, each lender shall:
    i. Confirm receipt of the borrower certifications contained in the 
Loan Forgiveness Application Form.
    ii. Confirm receipt of the documentation borrowers must submit to 
aid in verifying payroll and nonpayroll costs, as specified in the 
instructions to the Loan Forgiveness Application Form.
    iii. Confirm the borrower's calculations on the borrower's Loan 
Forgiveness Application, including the dollar amount of the (A) Cash 
Compensation, Non-Cash Compensation, and Compensation to Owners claimed 
on Lines 1, 4, 6, 7, 8, and 9 on PPP Schedule A and (B) Business 
Mortgage Interest Payments, Business Rent or Lease Payments, and 
Business Utility Payments claimed on Lines 2, 3, and 4 on the PPP Loan 
Forgiveness Calculation Form, by reviewing the documentation submitted 
with the Loan Forgiveness Application.
    iv. Confirm that the borrower made the calculation on Line 10 of 
the Loan Forgiveness Calculation Form correctly, by dividing the 
borrower's Eligible Payroll Costs claimed on Line 1 by 0.75.
    Providing an accurate calculation of the loan forgiveness amount is 
the responsibility of the borrower, and the borrower attests to the 
accuracy of its reported information and calculations on the Loan 
Forgiveness Application. Lenders are expected to perform a good-faith 
review, in a reasonable time, of the borrower's calculations and 
supporting documents concerning amounts eligible for loan forgiveness. 
For example, minimal review of calculations based on a payroll report 
by a recognized third-party payroll processor would be reasonable. By 
contrast, if payroll costs are not documented with such recognized 
sources, more extensive review of calculations and data would be 
appropriate. The borrower shall not receive forgiveness without 
submitting all required documentation to the lender.
    As the First Interim Final Rule \4\ indicates, lenders may rely on 
borrower representations. If the lender identifies errors in the 
borrower's calculation or material lack of substantiation in the 
borrower's supporting documents, the lender should work with the 
borrower to remedy the issue. As stated in paragraph III.3.c of the 
First Interim Final Rule, the lender does not need to independently 
verify the borrower's reported information if the borrower submits 
documentation supporting its request for loan forgiveness and attests 
that it accurately verified the payments for eligible costs.
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    \4\ 85 FR 20811, 20815-20816 (April 15, 2020).
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b. What is the timeline for the lender's decision on a loan forgiveness 
application?
    The lender must issue a decision to SBA on a loan forgiveness 
application not later than 60 days after receipt of a complete loan 
forgiveness application from the borrower. That decision may take the 
form of an approval (in whole or in part); denial; or (if directed by 
SBA) a denial without prejudice due to a pending SBA review of the loan 
for which forgiveness is sought. In the case of a denial without 
prejudice, the borrower may subsequently request that the lender 
reconsider its application for loan forgiveness, unless SBA has 
determined that the borrower is ineligible for a PPP loan. The 
Administrator has determined that this process appropriately balances 
the need for efficient processing of loan forgiveness applications with 
considerations of program integrity, including affording SBA the 
opportunity to ensure that borrower representations and certifications 
(including concerning eligibility for a PPP loan) were accurate.
    When the lender issues its decision to SBA approving the 
application (in whole or in part), it must include (1) the PPP Loan 
Forgiveness Calculation Form; (2) PPP Schedule A; and (3) the 
(optional) PPP Borrower Demographic Information Form (if submitted to 
the lender). The lender must confirm that the information provided by 
the lender to SBA accurately reflects lender's records for the loan, 
and that the lender has made its decision in accordance with the 
requirements set forth in 2.a. If the lender determines that the 
borrower is entitled to forgiveness of some or all of the amount 
applied for under the statute and applicable regulations, the lender 
must request payment from SBA at the time the lender issues its 
decision to SBA. SBA will, subject to any SBA review of the loan or 
loan application, remit the appropriate forgiveness amount to the 
lender, plus any interest accrued through the date of payment, not 
later than 90 days after the lender issues its decision to SBA. If 
applicable, SBA will deduct EIDL Advance Amounts from the forgiveness 
amount remitted to the Lender as required by section 1110(e)(6) of the 
CARES Act.
    When the lender issues its decision to SBA determining that the 
borrower is not entitled to forgiveness in any amount, the lender must 
provide SBA with the reason for its denial, together with (1) the PPP 
Loan Forgiveness Calculation Form; (2) PPP Schedule A; and (3) the 
(optional) PPP Borrower Demographic Information Form (if submitted to 
the lender). The lender must confirm that the information provided by 
the lender to SBA accurately reflects lender's records for the loan, 
and that the lender has made its decision in accordance with the 
requirements set forth in 2.a. The lender must also notify the borrower 
in writing that the lender has issued a decision to SBA denying the 
loan forgiveness application. SBA reserves the right to review the 
lender's decision in its sole discretion. Within 30 days of notice from 
the lender, a borrower may request that SBA review the lender's 
decision by reviewing the loan in accordance with 2.c. below.
    Enabling SBA to use the statutory 90-day period to review the PPP 
loan and forgiveness documentation is an appropriate procedural 
protection to prevent fraud or misuse of PPP funds, ensure that 
recipients of PPP loans are within the scope of entities that the CARES 
Act is intended to assist, and confirm compliance with the PPP 
requirements set forth in the statute, rules, and guidance. This 
protection is also important in light of the large number and diverse 
types of PPP lenders, many of which were not previously SBA 
participating lenders and which were approved rapidly in order to 
enable financial assistance to be provided as rapidly as feasible to 
millions of small businesses. SBA will use the 90-day period to help 
ensure that applicable legal requirements have been satisfied.
    SBA will issue additional procedures on the process for advance 
purchase of PPP loans.

[[Page 33014]]

c. What should a lender do if it receives notice that SBA is reviewing 
a loan?
    SBA may begin a review of any PPP loan of any size at any time in 
SBA's discretion. If SBA undertakes such a review, SBA will notify the 
lender in writing and the lender must notify the borrower in writing 
within five business days of receipt.
    Within five business days of receipt of such notice, the lender 
shall transmit to SBA electronic copies of the following:
    i. The Borrower Application Form (SBA Form 2483 or lender's 
equivalent form) and all supporting documentation provided by the 
borrower.
    ii. The Loan Forgiveness Application (SBA Form 3508 or lender's 
equivalent form), and all supporting documentation provided by the 
borrower (if the lender has received such application). If the lender 
receives such application after it receives notice that SBA has 
commenced a loan review, the lender shall transmit electronic copies of 
the application and all supporting documentation provided by the 
borrower to SBA within five business days of receipt. The lender must 
also request that the borrower provide the lender with a copy of the 
Schedule A Worksheet to the Loan Forgiveness Application, and the 
lender must submit the worksheet to SBA within 5 business days of 
receipt from the borrower.
    iii. A signed and certified transcript of account.
    iv. A copy of the executed note evidencing the PPP loan.
    v. Any other documents related to the loan requested by SBA.
    If SBA has notified the lender that SBA has commenced a loan 
review, the lender shall not approve any application for loan 
forgiveness for such loan until SBA notifies the lender in writing that 
SBA has completed its review.
3. Lender Fees
a. Is the lender eligible for a processing fee if SBA determines that a 
borrower is ineligible?
    No. If SBA conducts a loan review and determines that the borrower 
was ineligible for a PPP loan, the lender is not eligible for a 
processing fee.
b. Are lender processing fees subject to clawback if SBA determines 
that a borrower is ineligible?
    Yes. For any SBA-reviewed PPP loan, if within one year after the 
loan was disbursed SBA determines that a borrower was ineligible for a 
PPP loan based on the provisions of the CARES Act or applicable rules 
or guidance available at the time of the borrower's loan application, 
or the terms of the loan application, SBA will seek repayment of the 
lender processing fee from the lender. However, SBA's determination of 
borrower eligibility will have no effect on SBA's guaranty of the loan 
if the lender has complied with its obligations under section III.3.b 
of the First Interim Final Rule and the document collection and 
retention requirements described in the lender application form (SBA 
Form 2484).
c. Are lender processing fees subject to clawback if a lender has not 
fulfilled its obligations under PPP regulations?
    Yes. If a lender fails to satisfy the requirements applicable to 
lenders that are set forth in section III.3.b of the First Interim 
Final Rule or the document collection and retention requirements 
described in the lender application form (SBA Form 2484), SBA will seek 
repayment of the lender processing fee from the lender and may 
determine that the loan is not eligible for a guaranty.
4. 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 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 impose a new reporting 
requirement on the lenders that are participating in the PPP. As 
discussed above, when a lender approves or denies a request for loan 
forgiveness, the lender must submit to SBA limited information from the 
borrower's Loan Forgiveness Application (SBA Form 3508 or lender's 
equivalent form), including the portion of the form used to calculate 
the total amount to be forgiven, as well as the schedule used to 
determine the borrower's payroll expenses. In addition, for those loans 
that SBA selects for review, the applicable lenders will be required to 
submit information to allow SBA to review the loans for borrower 
eligibility, loan amount eligibility, and loan forgiveness eligibility. 
SBA will submit the new reporting requirements to OMB for approval as a 
modification to the existing PPP information collection. This 
information collection is currently approved as an emergency request 
under OMB Control Number 3245-0407 until October 31, 2020.

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

[[Page 33015]]

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. 2020-11533 Filed 5-28-20; 8:45 am]
BILLING CODE 8026-03-P