[Federal Register Volume 86, Number 53 (Monday, March 22, 2021)]
[Rules and Regulations]
[Pages 15083-15089]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05930]
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SMALL BUSINESS ADMINISTRATION
13 CFR Parts 120 and 121
[Docket Number SBA-2021-0013]
RIN 3245-AH77
Business Loan Program Temporary Changes; Paycheck Protection
Program as Amended by American Rescue Plan Act
AGENCY: U.S. Small Business Administration.
ACTION: Interim final rule.
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SUMMARY: This interim final rule implements changes related to loans
made under the Paycheck Protection Program (PPP), which was originally
established under the Coronavirus Aid, Relief, and Economic Security
Act (CARES Act) to provide economic relief to small businesses
nationwide adversely impacted by the Coronavirus Disease 2019 (COVID-
19). On December 27, 2020, the Economic Aid to Hard-Hit Small
Businesses, Nonprofits, and Venues Act (Economic Aid Act) was enacted,
extending the authority to make PPP loans through March 31, 2021,
revising certain PPP requirements, and permitting second draw PPP
loans. On January 14, 2021, SBA published an interim final rule that
incorporated the Economic Aid Act amendments to the PPP and
consolidated the interim final rules (and important guidance) that had
been issued governing borrower eligibility, lender eligibility, and PPP
application and origination requirements for PPP loans. On March 11,
2021, the American Rescue Plan Act of 2021 (American Rescue Plan Act)
was enacted expanding eligibility for first and second draw PPP loans,
revising the exclusions from payroll costs for purposes of loan
forgiveness, and providing that a PPP borrower that receives a PPP loan
after December 27, 2020 can be approved for a Shuttered Venue Operator
Grant under certain conditions. This interim final rule revises the PPP
rules to incorporate the American Rescue Plan Act's amendments to the
PPP. Additionally, this interim final rule clarifies the eligibility
for first draw PPP loans for applicants that are assigned a North
American Industry Classification System (NAICS) code beginning with 72
and have more than one physical location and clarifies certain payroll
cost exclusions included in the Economic Aid Act.
DATES:
Effective date: The provisions of this interim final rule are
effective March 18, 2021.
[[Page 15084]]
Applicability date: The provisions of this interim final rule
incorporating the American Rescue Plan Act changes to the PPP apply to
PPP loans approved, and loan forgiveness applications submitted, on or
after March 11, 2021.
Comment date: Comments must be received on or before April 21,
2021.
ADDRESSES: You may submit comments, identified by number SBA-2021-0013
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].
All other comments must be submitted through the Federal eRulemaking
Portal described above. 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 27, 2020, the Coronavirus Aid, Relief, and Economic
Security Act (the CARES Act) (Pub. L. 116-136) was enacted to provide
emergency assistance and health care response for individuals,
families, and businesses affected by the coronavirus disease 2019
(COVID-19) pandemic. Section 1102 of the CARES Act temporarily
permitted the Small Business Administration (SBA) to guarantee 100
percent of 7(a) loans under a new program titled the ``Paycheck
Protection Program,'' pursuant to section 7(a)(36) of the Small
Business Act (15 U.S.C. 636(a)(36)) (First Draw PPP Loans). Section
1106 of the CARES Act provided for forgiveness of up to the full
principal amount of qualifying loans guaranteed under the Paycheck
Protection Program (PPP).
On December 27, 2020, the Economic Aid to Hard-Hit Small
Businesses, Nonprofits and Venues Act (Economic Aid Act) (Pub. L. 116-
260) was enacted. The Economic Aid Act reauthorized lending under the
PPP through March 31, 2021. The Economic Aid Act added a new temporary
section 7(a)(37) to the Small Business Act, which authorizes SBA to
guarantee additional PPP loans (Second Draw PPP Loans) to eligible
borrowers under generally the same terms and conditions available under
section 7(a)(36) of the Small Business Act through March 31, 2021. The
Economic Aid Act also redesignated section 1106 of the CARES Act as
section 7A of the Small Business Act, to appear after section 7 of the
Small Business Act.
SBA initially published an interim final rule implementing the PPP
on April 15, 2020 and subsequently issued additional interim final
rules. On January 14, 2021, SBA published interim final rules
implementing the Economic Aid Act amendments to the PPP.\1\ On February
5, 2021, SBA published an additional interim final rule implementing
Economic Aid Act changes related to the forgiveness and review of PPP
loans.\2\ Following the publication of the interim final rules
implementing the Economic Aid Act, SBA published another interim final
rule revising certain loan amount calculation and eligibility
provisions of those rules.\3\ As described below, this interim final
rule further revises the consolidated interim final rule implementing
updates to the PPP, the interim final rule on second draw PPP loans,
and the consolidated interim final rule on loan forgiveness
requirements and loan review procedures, by incorporating the expanded
eligibility for First Draw and Second Draw PPP Loans and the exclusions
from payroll costs that may be forgiven enacted in the American Rescue
Plan Act (Pub. L. 117-2); confirming that First Draw PPP Loan
applicants that are assigned a NAICS code beginning with 72 and that
employ no more than 500 employees per physical location are eligible;
and clarifying certain forgiveness payroll cost exclusions in the
Economic Aid Act.
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\1\ 86 FR 3692 (Jan. 14, 2021) (which we refer to as the
``consolidated interim final rule implementing updates to the
PPP''); 86 FR 3712 (Jan. 14, 2021) (which we refer to as the
``interim final rule on second draw PPP loans'').
\2\ 86 FR 8283 (Feb. 5, 2021) (which we refer to as the
``consolidated interim final rule on loan forgiveness requirements
and loan review procedures'').
\3\ 86 FR 13149 (March 8, 2021).
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II. Comments and Immediate Effective Date
This interim final rule is being issued without advance notice and
public comment because section 1114 of the CARES Act and section 303 of
the Economic Aid Act authorize SBA to issue regulations to implement
the Paycheck Protection Program without regard to notice requirements.
In addition, this rule is being issued to allow for immediate
implementation of these changes. The intent of the CARES Act, the
Economic Aid Act, and the American Rescue Plan Act is that SBA provide
relief to America's small businesses and nonprofit organizations
expeditiously. Given the urgent need to provide borrowers with timely
relief and the short period of time before the program ends on March
31, 2021, SBA has determined that it is impractical and not in the
public interest to provide a 30-day delayed effective date. An
immediate effective date will allow SBA to give small businesses and
nonprofit organizations affected by this interim final rule the maximum
amount of time to apply for loans and lenders the maximum amount of
time to process applications before the program ends. This good cause
justification also supports waiver of the 60-day delayed effective date
for major rules under the Congressional Review Act at 5 U.S.C. 808(2).
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.
These comments must be submitted on or before April 21, 2021. SBA
will consider these comments and the need for making any revisions as a
result of these comments.
III. Paycheck Protection Program as Amended by the American Rescue Plan
Act
1. Eligibility, Size, Affiliation Waivers, and Certifications
Part III.B.1. of the consolidated interim final rule implementing
updates to the PPP identifies the businesses, organizations, and
individuals that are eligible for First Draw PPP Loans, including the
applicable size standards. Part III.B.3. of that rule sets forth the
affiliation rules generally applicable to PPP loans, including the
affiliation waivers available to certain businesses and organizations.
The American Rescue Plan Act expands eligibility to additional
businesses and organizations and revises size standards and adds
affiliation waivers for certain eligible businesses and organizations.
The American Rescue Plan Act also revises section 324 of the
Economic Aid Act to provide that businesses that receive a PPP loan
after December 27, 2020 are no longer ineligible for a Shuttered Venue
Operator (SVO) Grant under certain conditions. Specifically, if a PPP
borrower receives a First Draw or Second Draw PPP Loan after December
27, 2020, the amount of any subsequently-approved SVO grant will
[[Page 15085]]
be reduced by the amount of the First Draw or Second Draw PPP Loan. (If
a PPP borrower receives both a First Draw and a Second Draw PPP Loan
after December 27, 2020, the amount of any subsequently-approved SVO
grant will be reduced by the combined amount of both PPP loans.)
However, because sections 7(a)(36)(U) and 7(a)(37)(A)(iv)(III)(ee) of
the Small Business Act were not amended by the American Rescue Plan
Act, if a PPP applicant is approved for an SVO grant before SBA issues
a loan number for the PPP loan, the applicant is ineligible for the PPP
loan and acceptance of any PPP loan proceeds will be considered an
unauthorized use.
In addition, SBA is making a clarifying change to the list of
eligible entities for First Draw PPP Loans by adding businesses with a
NAICS code beginning with 72 that employ no more than 500 employees per
physical location. These entities are included in section
7(a)(36)(D)(iii) of the Small Business Act (15 U.S.C.
636(a)(36)(D)(iii)), as amended by the CARES Act, and are addressed in
section B.3. of the consolidated interim final rule implementing
updates to the PPP. Because the omission of these entities from the
list of eligible entities could cause borrower confusion, SBA is
revising subsection B.1.a. to add these entities.
Therefore, Part III.B.1.a. (86 FR 3692, 3695) of the consolidated
interim final rule implementing updates to the PPP is revised to read
as follows:
1. What businesses, organizations, and individuals are eligible?
a. Am I eligible? 2 3
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\2\ See interim final rule on Second Draw PPP Loans for
eligibility criteria for Second Draw PPP Loans, which was published
separately. 86 FR 3712 (January 14, 2021).
\3\ This subsection was originally published at 85 FR 20811,
subsection III.2.a. (April 15, 2020), as amended by 85 FR 36308
(June 16, 2020), 85 FR 36717 (June 18, 2020), and 85 FR 38301 (June
26, 2020), and has been modified to reflect subsequent rules or
guidance, the Economic Aid Act, and the American Rescue Plan Act.
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You are eligible for a PPP loan if:
i. You, together with any affiliates (if applicable),\4\ are:
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\4\ See subsection B.3 of the consolidated interim final rule
implementing updates to the PPP regarding the applicability of
affiliation rules at 13 CFR 121.103 and 121.301 to PPP loans.
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A small business concern under the applicable revenue-
based size standard established by SBA in 13 CFR 121.201 for your
industry or under the SBA alternative size standard; \5\
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\5\ Under SBA's alternative size standard, a business concern
may qualify as a small business concern if it, together with any
affiliates: (1) Has a maximum tangible net worth of not more than
$15 million; and (2) the average net income after Federal income
taxes (excluding any carry-over losses) for the two full fiscal
years before the date of application is not more than $5 million.
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an independent contractor, eligible self-employed
individual, or sole proprietor;
a business concern, a tax-exempt nonprofit organization
described in section 501(c)(3) of the Internal Revenue Code (IRC), a
tax-exempt veterans organization described in section 501(c)(19) of
the IRC, a Tribal business concern described in section 31(b)(2)(C)
of the Small Business Act, and you employ no more than the greater
of 500 employees or, if applicable, the size standard in number of
employees established by SBA in 13 CFR 121.201;
a housing cooperative that employs no more than 300
employees and meets the criteria described in subsection B.1.g.v. of
the consolidated interim final rule implementing updates to the PPP,
as amended by this interim final rule;
a business concern that is assigned a North American
Industry Classification System (NAICS) code beginning with 72 that
employs no more than 500 employees per physical location;
an eligible section 501(c)(6) organization or an
eligible destination marketing organization,\6\ that employs no more
than 300 employees per physical location;
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\6\ See subsections B.1.g.vii. and B.1.g.viii for additional
information on the eligibility of section 501(c)(6) organizations,
and destination marketing organizations. As amended by the American
Rescue Plan Act, the applicable size standard for section 501(c)(6)
organizations and destination marketing organizations is not more
than 300 employees per physical location.
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a news organization that is majority owned or
controlled by a NAICS code 511110 or 5151 business or a nonprofit
public broadcasting entity with a trade or business under NAICS
511110 or 5151, that employs no more than 500 employees (or, if
applicable, the size standard in number of employees established by
SBA in 13 CFR 121.201 for your industry) per location;
a tax-exempt non-profit organization described in
section 501(c)(3) of the Internal Revenue Code that employs not more
than 500 employees per physical location of the organization;
a tax-exempt nonprofit organization described in any
paragraph of section 501(c) of the Internal Revenue Code of 1986,
other than paragraph (3), (4), (6), or (19) that employs not more
than 300 employees per physical location and meets the criteria
described in subsection B.1.g.iii. of the consolidated interim final
rule implementing updates to the PPP, as amended by this interim
final rule;
a business concern or other organization that is
assigned a NAICS code of 519130, certifies in good faith as an
internet-only news publisher or internet-only periodical publisher,
and is engaged in the collection and distribution of local or
regional and national news and information, that employs not more
than 500 employees (or the size standard in number of employees
established by SBA in 13 CFR 121.201 for NAICS code 519130) per
physical location, and meets the criteria described in subsection
B.1.g.iv. of the consolidated interim final rule implementing
updates to the PPP, as amended by this interim final rule; or
another type of entity specifically provided for by PPP
rules (as described below); and
ii. you were in operation on February 15, 2020, and either had
employees for whom you paid salaries and payroll taxes or paid
independent contractors, as reported on a Form 1099-MISC or you were
an eligible self-employed individual, independent contractor, or
sole proprietorship with no employees.
You must submit documentation sufficient to establish
eligibility and to demonstrate the qualifying payroll amount, which
may include, as applicable, payroll records, payroll tax filings,
Form 1099-MISC, Schedule C or F, income and expenses from a sole
proprietorship, or bank records.
* * * * *
The American Rescue Plan Act expands eligibility for PPP loans to
tax-exempt organizations described in any paragraph of section 501(c)
of the Internal Revenue Code of 1986, except for section 501(c)(4).
Thus, subsections III.B.1.g.iii. and iv. of the consolidated interim
final rule implementing updates to the PPP, which describe the
eligibility of electric cooperatives and telephone cooperatives that
are exempt from Federal income taxation under section 501(c)(12) of the
Internal Revenue Code, are no longer necessary. For PPP loans made
after the effective date of this interim final rule, such organizations
will be eligible as set forth in a new subsection for tax-exempt
organizations under any paragraph of section 501(c) of the Internal
Revenue Code (other than paragraph (3), (4), (6), or (19)) discussed
immediately below. With the new statutory change, the size eligibility
requirements for electric and telephone cooperatives have changed as
well. Previously, these entities were eligible if they had no more than
500 employees, met the employee-based SBA size standard for their
industry (if higher), or met SBA's alternative size standard. For PPP
loans made after the effective date of this interim final rule, these
entities are eligible if they have no more than 300 employees per
physical location, and these entities are no longer permitted to use
the employee-based SBA size standard for their industry or SBA's
alternative size standard to determine size.
Therefore, Part III.B.1.g. of the consolidated interim final rule
implementing updates to the PPP (86 FR 3692, 3696-3697) is revised by
replacing subsections B.1.g.iii. and iv. of the industry-specific
eligibility issues with two new subsections to read as follows:
g. Industry-Specific Eligibility Issues
* * * * *
iii. Are tax-exempt nonprofit organizations described in any
paragraph of section 501(c)
[[Page 15086]]
of the Internal Revenue Code of 1986, other than paragraph (3), (4),
(6), or (19), eligible for PPP loans? \17\
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\17\ This subsection was originally published at 85 FR 29847,
subsection III.1. (May 19, 2020) and has been revised to conform to
the American Rescue Plan Act. Section 7(a)(36)(D)(ix) of the Small
Business Act (15 U.S.C. 636(a)(36)(D)(ix)) as amended by the
American Rescue Plan Act adds ``additional covered nonprofit
entities'' to the eligible entities for First Draw PPP Loans. The
term ``additional covered nonprofit entities'' is defined in section
7(a)(36)(A)(xvii) as ``an organization described in any paragraph of
section 501(c) of the Internal Revenue Code of 1986, other than
paragraph (3), (4), (6), or (19), and exempt from tax under section
501(a) of such Code; and does not include any entity that, if the
entity were a business concern, would be described in section
120.110 of title 13, Code of Federal Regulations (or in any
successor regulation or other related guidance that may be issued by
the Administrator) other than a business concern described in
paragraph (a) or (k) of such section.''
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Yes. An organization described in any paragraph of section
501(c) of the Internal Revenue Code of 1986, other than paragraph
(3), (4), (6), or (19) and exempt from tax under section 501(a) of
such Code, is eligible for a PPP loan if: (1) The organization does
not receive more than 15 percent of its receipts from lobbying
activities; (2) the lobbying activities of the organization do not
comprise more than 15 percent of the total activities of the
organization; (3) the cost of the lobbying activities of the
organization did not exceed $1,000,000 during the most recent tax
year of the organization that ended prior to February 15, 2020; and
(4) the organization employs not more than 300 employees.\18\
However, this does not include any organization that, if the
organization were a business concern, would be described in 13 CFR
120.110 (or any successor regulation or other related guidance or
rule that may be issued by SBA) other than a business concern
described in paragraph (a) or (k) of such section. Tax-exempt
organizations described in section 501(c)(3), 501(c)(6) and
501(c)(19) of the Internal Revenue Code of 1986 have separate
eligibility requirements described elsewhere in this rule. Tax-
exempt organizations described in section 501(c)(4) of the Internal
Revenue Code of 1986 are ineligible for a PPP loan.
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\18\ For such entities with more than one physical location,
section 7(a)(36)(D)(iii)(III) of the Small Business Act (15 U.S.C.
636(a)(36)(D)(iii)(III)), as amended by section 5001 of the American
Rescue Plan Act, provides that such entities with more than one
physical location are eligible if they employ not more than 300
employees per physical location.
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iv. Are internet publishing organizations eligible for PPP
loans? \19\
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\19\ This subsection was originally published at 85 FR 35550,
subsection III.1. (June 11, 2020) and has been revised to conform
with the American Rescue Plan Act.
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Yes. A business concern or other organization that was not
eligible to receive a PPP loan before March 11, 2021, is eligible
for a PPP loan if it: (1) Is assigned a NAICS code of 519130; (2)
certifies in good faith that it is an internet-only news publisher
or internet-only periodical publisher; (3) is engaged in the
collection and distribution of local or regional and national news
and information; (4) employs not more than 500 employees (or the
size standard in number of employees established by SBA in 13 CFR
121.201 for NAICS code 519130) per physical location; and (5)
certifies in good faith that proceeds of the loan will be used to
support expenses at the component of the business concern or
organization that supports local or regional news.\20\
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\20\ See section 7(a)(36)(D)(iii)(IV) of the Small Business Act
as amended by the American Rescue Plan Act.
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* * * * *
To implement the American Rescue Plan Act provision that allows
businesses to receive both a Shuttered Venue Operator (SVO) Grant and a
PPP loan under certain conditions, Part III.B.2.a.vi. of the
consolidated interim final rule implementing updates to the PPP (86 FR
3692, 3698) is revised to read as follows:
2. What businesses, organizations, and individuals are
ineligible?
a. Could I be ineligible even if I meet the eligibility
requirements in section 1? \28\
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\28\ This subsection was originally published at 85 FR 20811,
subsection III.2.a. (April 15, 2020), and amended by 85 FR 36308
(June 16, 2020), 85 FR 36717 (June 18, 2020), 85 FR 38301 (June 26,
2020), and 86 FR 13149 (March 8, 2021), and has been modified to
conform to subsequent interim final rules or guidance, the Economic
Aid Act, the American Rescue Plan Act and for readability.
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You are ineligible for a PPP loan if, for example:
* * * * *
vi. You or your business have been approved for a grant under
the Shuttered Venue Operator (SVO) Grant Program under section 324
of the Economic Aid Act. (If you receive a PPP loan after December
27, 2020 and you are subsequently approved for an SVO grant, the
amount of the SVO grant received will be reduced by the amount of a
First Draw or Second Draw PPP Loan. If you receive both a First Draw
and Second Draw PPP Loan after December 27, 2020 and you are
subsequently approved for an SVO grant, the SVO grant will be
reduced by the combined amounts of both PPP loans. A PPP loan
received before December 27, 2020 will not reduce the amount of the
SVO grant.) \30\
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\30\ This subsection has been revised to conform to section 5005
of the American Rescue Plan Act.
As noted above, the American Rescue Plan Act added affiliation
waivers for certain eligible organizations with respect to PPP loans.
To implement the additional affiliation waiver applicable to eligible
internet publishing organizations, the parenthetical at the end of Part
III.B.2.a.viii. of the consolidated interim final rule implementing
updates to the PPP (86 FR 3692, 3698) is revised to include a reference
to B.1.g.iv, which describes the conditions under which such internet
publishing companies are eligible. Therefore, Part III.B.2.a.viii of
the consolidated interim final rule implementing updates to the PPP, as
amended by this interim final rule, is revised to read as follows:
* * * * *
viii. Your business is an issuer, the securities of which are
listed on an exchange registered as a national securities exchange
under section 6 of the Securities Exchange Act of 1934 (15 U.S.C.
78f) \32\ (SBA will not consider whether a news organization that is
eligible under the conditions described in subsection 1.f. and
1.g.vi. or an internet publishing organization that is eligible
under the conditions described in subsection 1.g.iv. is affiliated
with an entity, which includes any entity that owns or controls such
news organization or internet publishing organization, that is an
issuer \33\);
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\32\ Added to conform to section 342 of the Economic Aid Act,
which also added the following definitions to paragraph 7(a)(36)(A)
of the Small Business Act (15 U.S.C. 636(a)(36)(A)): ``(xvi) the
terms `exchange', `issuer', and `security' have the meanings given
those terms in section 3(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)).'' This provision applies to loans made on or
after December 27, 2020.
\33\ See section 317 of the Economic Aid Act, as amended by
section 5001 of the American Rescue Plan Act.
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* * * * *
Also, Part III.B.12.vi. of the consolidated interim final rule
implementing updates to the PPP (86 FR 3692, 3706) is revised to read
as follows:
12. What certifications need to be made?
On the PPP borrower application, an authorized representative of
the applicant must certify in good faith to all of the below:
* * * * *
vi. The Applicant has not been approved for a Shuttered Venue
Operator (SVO) grant from SBA as of the date of this loan
application, and the Applicant acknowledges that if the Applicant is
approved for an SVO grant before SBA issues a loan number for this
loan, the Applicant is ineligible for the loan and acceptance of any
loan proceeds will be considered an unauthorized use.
Part III.B.3. of the consolidated interim final rule implementing
updates to the PPP describes the affiliation rules generally applicable
to PPP loans (86 FR 3692, 3698-3699). The American Rescue Plan Act adds
affiliation waivers for certain businesses and organizations.
Therefore, footnote 40 in part III.B.3.a. is revised to read as
follows:
Paragraph 7(a)(36)(D)(iv) of the Small Business Act (15 U.S.C.
636(a)(36)(D)(iv)), as added by the CARES Act and amended by the
Economic Aid Act and the American Rescue Plan Act, waives the
affiliation rules contained in Sec. 121.103 for (1) any business
concern with not more than 500 employees that, as of the date on
which the loan is disbursed, is assigned a North American Industry
Classification System code beginning with 72; (2) any business
concern operating as a franchise that is assigned a franchise
identifier code by the Administration; (3) any business concern that
receives financial assistance from a company
[[Page 15087]]
licensed under section 301 of the Small Business Investment Act of
1958 (15 U.S.C. 681); (4)(a) any business concern (including any
station which broadcasts pursuant to a license granted by the
Federal Communications Commission under title III of the
Communications Act of 1934 (47 U.S.C. 301 et seq.) without regard
for whether such a station is a concern as defined in Sec. 121.105
of title 13, Code of Federal Regulations, or any successor thereto)
that employs not more than 500 employees, or the size standard
established by the Administrator for the North American Industry
Classification System code applicable to the business concern, per
physical location of such business concern and is majority owned or
controlled by a business concern that is assigned a North American
Industry Classification System code beginning with 511110 or 5151;
or (b) any nonprofit organization that is assigned a North American
Industry Classification System code beginning with 5151; and (5) any
business concern or organization that is assigned a NAICS code of
519130, certifies in good faith as an internet-only news publisher
or internet-only periodical publisher, and is engaged in the
collection and distribution of local or regional and national news
and information, if the business concern or organization employs not
more than 500 employees (or the size standard in number of employees
established by SBA in 13 CFR 121.201 for NAICS code 519130) per
physical location, and is majority owned or controlled by a business
concern or organization that is assigned NAICS 519130. This interim
final rule has no effect on these statutory waivers, which remain in
full force and effect. As a result, the affiliation rules contained
in Sec. 121.301 also do not apply to these types of entities. In
addition, paragraph 7(a)(36)(D) of the Small Business Act (15 U.S.C.
636(a)(36)(D)), as amended by section 342 of the Economic Aid Act
and section 5001 of the American Rescue Plan Act states that, with
respect to a business concern made eligible under paragraph
7(a)(36)(D)(iii)(II) or (IV) or 7(a)(36)(D)(iv)(IV) or (V) (certain
news organizations and internet publishing organizations), the
Administrator shall not consider whether any affiliated entity,
which for purposes of this subclause shall include any entity that
owns or controls such business concern or organization, is an issuer
as defined in subsection III.B.2.a.viii.
Part IV.(c) of the interim final rule on second draw PPP loans sets
forth who is eligible for a Second Draw PPP Loan. The American Rescue
Plan Act amended the eligibility criteria for a Second Draw PPP Loan
similarly to the amendments discussed above for First Draw PPP Loans.
Therefore, part IV.(c)(1) of the interim final rule on second draw PPP
loans (86 FR 3712, 3717) is revised to read as follows:
(c) Who is eligible for a Second Draw PPP Loan?
Subject to subsection (e) of this section, below, the following
applicants are eligible for Second Draw PPP Loans:
(1) An applicant is eligible for a Second Draw PPP Loan if it is
a business concern, independent contractor, eligible self-employed
individual, sole proprietor, nonprofit organization eligible for a
First Draw PPP Loan, veterans organization, Tribal business concern,
housing cooperative, small agricultural cooperative, eligible
501(c)(6) organization or destination marketing organization, an
eligible nonprofit news organization, additional covered nonprofit
entity, or eligible internet publishing company \33\ that:
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\33\ All terms in this subsection have the same definitions as
in sections 7(a)(36) and (37) of the Small Business Act and the
Consolidated First Draw PPP IFR, as applicable.
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(i) Previously received a First Draw PPP loan in accordance with
the eligibility criteria in the Consolidated First Draw PPP IFR (as
amended);
(ii) has used, or will use, the full amount of its First Draw
PPP Loan (including the amount of any increase on such First Draw
PPP Loan) on authorized uses under subsection B.11. of the
Consolidated First Draw PPP IFR on or before the expected date on
which the Second Draw PPP Loan will be disbursed;
(iii) employs not more than 300 employees, unless it satisfies
the alternative criteria for businesses with a North American
Industry Classification System (``NAICS'') code beginning with 72,
eligible news organizations, (501)(c)(3) nonprofit organizations,
additional covered nonprofit entities, 501(c)(6) organizations,
eligible destination marketing organizations, and eligible internet
publishing organizations with more than one physical location
described in subsection (c)(3), (c)(4), (c)(5), or (c)(6) of this
section; and
(iv) (A) experienced a reduction in revenue in calendar year
2020, measured as follows:
* * * * *
Part IV.(c) of the interim final rule on second draw PPP loans (86
FR 3712, 3718) also is revised by adding two new subsections at the end
to read as follows:
(5) An entity is eligible for a Second Draw PPP Loan if it is a
501(c)(3) nonprofit organization, an additional covered nonprofit
entity, an eligible 501(c)(6) organization, or an eligible
destination marketing organization and it employs not more than 300
employees per physical location of the entity or organization.
(6) A business concern or other organization that was not
eligible to receive a covered loan before March 11, 2021, is
eligible to receive a Second Draw PPP Loan for the continued
provision of news, information, content, or emergency information if
it is assigned a NAICS code of 519130, certifies in good faith as an
internet-only news publisher or internet-only periodical publisher,
and is engaged in the collection and distribution of local or
regional and national news and information, and:
(i) The business concern or organization employs not more than
300 employees per physical location of the business concern or
organization; and
(ii) the business concern or organization makes a good faith
certification that proceeds of the loan will be used to support
expenses at the component of the business concern or organization
that supports local or regional news.
Part IV.(d) of the interim final rule on second draw PPP loans
states that eligibility for Second Draw PPP Loans is governed by the
same affiliation rules (and waivers) as First Draw PPP Loans, except as
described in subsection (d)(2). The American Rescue Plan Act revised
the affiliation waivers for First Draw and Second Draw PPP Loans.
Although the American Rescue Plan Act did not amend section
7(a)(37)(E)(ii) of the Small Business Act (15 U.S.C. 636(a)(37)(E)(ii))
to substitute ``not more than 300 employees'' for ``not more than 500
employees'' in subclause (V) of section 7(a)(36)(D)(iv) of the Small
Business Act (15 U.S.C. 636(a)(36)(D)(iv)), as section 7(a)(37)(E)(ii)
does for eligible news organizations, SBA is doing so here to harmonize
the affiliation waiver for internet publishing organizations with the
300 employees per location size standard for Second Draw PPP Loans to
internet publishing organizations.
Therefore, Part IV.(d)(2) of the interim final rule on second draw
PPP loans (86 FR 3712, 3718) is revised by adding a new subsection
(iii) to read as follows:
(d) How do SBA's affiliation rules affect an applicant's
eligibility for a Second Draw PPP Loan?
* * * * *
(iii) Any business concern or other organization that was not
eligible to receive a covered loan before March 11, 2021, is
assigned a NAICS code of 519130, certifies in good faith as an
internet-only news publisher or internet-only periodical publisher,
and is engaged in the collection and distribution of local or
regional and national news and information, if the business concern
or organization:
(A) Employs not more than 300 employees, per physical location
of the business concern or organization; and
(B) is majority owned or controlled by a busines concern or
organization that is assigned a NAICS code of 519130.
In order to implement the American Rescue Plan Act provision that
allows businesses to receive both a Shuttered Venue Operator (SVO)
Grant and a PPP loan, part IV.(e)(5) of the interim final rule on
second draw PPP loans (86 FR 3712, 3719) is revised to read as follows:
(e) Who is not eligible for a Second Draw PPP Loan?
An applicant is not eligible for a Second Draw PPP Loan, even if
it meets the eligibility requirements of subsection (c) of this
section, if the applicant is:
* * * * *
(5) any person or entity that has been approved for a grant
under the Shuttered Venue Operator (SVO) Grant Program under
[[Page 15088]]
section 324 of the Economic Aid Act. (If you receive a PPP loan
after December 27, 2020 and you are subsequently approved for an SVO
grant, the amount of the SVO grant received will be reduced by the
amount of a First Draw or Second Draw PPP Loan. If you receive both
a First Draw and Second Draw PPP Loan after December 27, 2020 and
you are subsequently approved for an SVO grant, the SVO grant will
be reduced by the combined amounts of both PPP loans. A PPP loan
received prior to December 27, 2020 will not reduce the amount of
the SVO grant.)
As noted above, the American Rescue Plan Act added affiliation
waivers for certain eligible organizations with respect to PPP loans.
To implement the additional affiliation waiver applicable to eligible
internet publishing organizations, the parenthetical at the end of Part
IV.(e)(7) of the interim final rule on second draw loans (86 FR 3712,
3719) is revised to include a reference to Part IV.(c)(6), which
describes the conditions under which such internet publishing companies
are eligible. Therefore, Part IV.(e)(7) of the interim final rule on
second draw loans, as amended by this interim final rule, is revised to
read as follows:
* * * * *
(7) Any issuer, the securities of which are listed on an
exchange registered as a national securities exchange under section
6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f), where the
terms ``exchange,'' ``issuer,'' and ``security'' have the meanings
given those terms in section 3(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)) (except that SBA will not consider whether a
news organization that is eligible under subsection (c)(4) or an
internet publishing organization that is eligible under subsection
(c)(6) is affiliated with an entity, which includes any entity that
owns or controls such news organization or internet publishing
organization, that is an issuer);
* * * * *
2. Forgiveness of First Draw and Second Draw PPP Loans
Part III.B.14 of the consolidated interim final rule implementing
updates to the PPP provides general information to borrowers on loan
forgiveness. The consolidated interim final rule implementing updates
to the PPP requires a revision to clarify certain forgiveness payroll
cost exclusions included in the Economic Aid Act and to incorporate
section 3134 of the Internal Revenue Code of 1986 (Internal Revenue
Code) as added by section 9651 of the American Rescue Plan Act.
Additionally, section 5001(c) of the American Rescue Plan Act revised
the forgiveness payroll cost exclusions to include premiums taken into
account in determining the credit allowed under section 6432 of the
Internal Revenue Code. Therefore, the fourth full sentence in part
III.B.14 of the consolidated interim final rule implementing updates to
the PPP (86 FR 3692, 3706) reading ``[p]ayroll costs that are qualified
wages taken into account in determining the Employer Retention Credit
are not eligible for loan forgiveness,'' is revised to read ``The
following payroll costs are not eligible for loan forgiveness: (a)
Qualified wages taken into account in determining (i) the Employee
Retention Credit under section 2301 of the CARES Act, as amended by
section 206 of the Taxpayer Certainty and Disaster Tax Relief Act of
2020 (Relief Act), (ii) the Employee Retention Credit under section
3134 of the Internal Revenue Code, or (iii) the disaster credit under
section 303 of the Relief Act, and (b) premiums for COBRA continuation
coverage taken into account in determining the credit under section
6432 of the Internal Revenue Code.''
Part IV.1 of the consolidated interim final rule on loan
forgiveness requirements and loan review procedures sets forth general
information about loan forgiveness for First Draw and Second Draw PPP
Loans. The consolidated interim final rule on loan forgiveness
requirements and loan review procedures requires revisions to clarify
certain forgiveness payroll cost exclusions under the Economic Aid Act
and revisions to incorporate the forgiveness payroll cost exclusions
required by the American Rescue Plan Act. Part IV.1.a.(1) describes the
payroll costs that are eligible for loan forgiveness and identifies
those costs that are to be excluded. The second full sentence of part
IV.1.a.(1), Payroll Costs (86 FR 8283, 8286), reading ``[p]ayroll costs
that are qualified wages taken into account in determining the Employer
Retention Credit are not eligible for loan forgiveness,'' is revised to
read ``The following payroll costs are not eligible for loan
forgiveness: (a) Qualified wages taken into account in determining (i)
the Employee Retention Credit under section 2301 of the CARES Act, as
amended by section 206 of the Taxpayer Certainty and Disaster Tax
Relief Act of 2020 (Relief Act) (CARES Act Employee Retention Credit),
(ii) the Employee Retention Credit under section 3134 of the Internal
Revenue Code of 1986 (ARP Employee Retention Credit), or (iii) the
disaster credit under section 303 of the Relief Act (Disaster Credit),
and (b) premiums for COBRA continuation coverage taken into account in
determining the credit under section 6432 of the Internal Revenue Code
of 1986 (COBRA Continuation Coverage).''
Part IV.1.b. of the consolidated interim final rule on loan
forgiveness requirements and loan review procedures describes the
amount eligible for loan forgiveness for individuals with self-
employment income who file an IRS Form 1040, Schedule C or F. The last
clause of part IV.1.b.i (86 FR 8283, 8287) is revised to read ``but
excluding any qualified wages taken into account in determining the
CARES Act Employee Retention Credit, ARP Employee Retention Credit, or
the Disaster Credit or premiums for COBRA Continuation Coverage.''
3. 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 and 13563 the
Congressional Review Act, the Administrative Procedure Act, the
Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Regulatory
Flexibility Act (5 U.S.C. 601-612).
Executive Orders 12866 and 13563
This interim final rule is economically significant for the
purposes of Executive Orders 12866 and 13563. 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 is necessary to provide economic relief to small
businesses and nonprofit organizations nationwide adversely impacted
under the COVID-19 Emergency Declaration. We anticipate that this rule
will result in substantial benefits to small businesses, nonprofit
organizations, their employees, and the communities they serve.
However, we lack data to estimate the effects of this rule.
The Administrator of the Office of Management and Budget's Office
of Information and Regulatory Affairs (OIRA) has determined that this
is a major rule for purposes of Subtitle E of the Small Business
Regulatory Enforcement and Fairness Act of 1996 (also known as the
Congressional Review Act or CRA) (5 U.S.C. 804(2) et seq.). Under the
CRA, a major rule takes effect 60 days after the rule is published in
the Federal Register. 5 U.S.C. 801(a)(3).
Notwithstanding this requirement, the CRA allows agencies to
dispense with
[[Page 15089]]
the requirements of section 801 when the agency for good cause finds
that such procedure would be impracticable, unnecessary, or contrary to
the public interest and the rule shall take effect at such time as the
agency promulgating the rule determines. 5 U.S.C. 808(2). Pursuant to
section 808(2), SBA for good cause finds that a 60-day delay to provide
public notice is impracticable and contrary to the public interest.
Likewise, for the same reasons, SBA for good cause finds that there are
grounds to waive the 30-day effective date delay under the
Administrative Procedure Act. 5 U.S.C. 553(d)(3).
The last day to apply for and receive a PPP loan is March 31, 2021.
Given the short duration of this program, and the urgent need to issue
loans quickly, SBA has determined that it is impractical and not in the
public interest to provide a delayed effective date. An immediate
effective date will give small businesses and nonprofit organizations
affected by this interim final rule the maximum amount of time to apply
for loans and lenders the maximum amount of time to process
applications before the program ends.
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 require revisions to
existing recordkeeping or reporting requirements of the Paycheck
Protection Program (PPP) information collections (OMB Control Numbers
3245-0407 and 3245-0417. The revisions will affect SBA Form 2483,
Borrower Application Form Revised March 3, 2021, SBA Form 2483-C,
Borrower Application Form for Schedule C Filers Using Gross Income
March 3, 2021, SBA Form 2483-SD, Second Draw Borrower Application Form
Revised March 3, 2021, SBA Form 2483-SD-C, Second Draw Borrower
Application Form for Schedule C Filers Using Gross Income March 3,
2021, SBA Form 2484, Lender's Application--Paycheck Protection Program
Loan Guaranty Revised March 3, 2021, SBA Form 2484-SD, Lender's
Application--Second Draw Loan Guaranty Revised March 3, 2021,. SBA
Forms 2483, 2483-C, 2483-SD, and 2483-SD-C were amended to include the
additional eligible entities (where applicable) and revise the
Shuttered Venue Operator Grant Program certification due to the changes
made by the American Rescue Plan Act. Other clarifying changes were
also made to the forms. Additionally, conforming changes were made to
SBA Forms 2484 and 2484-SD.
SBA has requested Office of Management and Budget (OMB) emergency
approval of the revisions to the information collections to give small
businesses and nonprofits affected by this interim final rule the
maximum amount of time to apply for loans and lenders the maximum
amount of time to process applications before the program ends.
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 Administrative Procedure Act 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.
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. Since this rule is
exempt from notice and comment, SBA is not required to conduct a
regulatory flexibility analysis.
Authority: 15 U.S.C. 636(a)(36); 15 U.S.C. 636(a)(37); 15 U.S.C.
636m; Coronavirus Aid, Relief, and Economic Security Act, Pub. L.
116-136, section 1114, Economic Aid to Hard-Hit Small Businesses,
Nonprofits, and Venues Act (Pub. L. 116-260), section 303, and
American Rescue Plan Act of 2021, sections 5001 and 5005.
James Rivera,
Acting Administrator, Small Business Administration.
[FR Doc. 2021-05930 Filed 3-18-21; 4:15 pm]
BILLING CODE P