Rules and Regulations

This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents.

Rules and Regulations

Federal Register

8283

Vol. 86, No. 23

Friday, February 5, 2021

BUREAU OF CONSUMER FINANCIAL

PROTECTION

12 CFR Part 1026

[Docket No. CFPB–2020–0028]

RIN 3170–AA98

Qualified Mortgage Definition Under

the Truth in Lending Act (Regulation

Z): Seasoned QM Loan Definition;

Correction

AGENCY

: Bureau of Consumer Financial

Protection.

ACTION

: Final rule; correction.

SUMMARY

: The Bureau of Consumer

Financial Protection (Bureau) recently

published ‘‘Qualified Mortgage

Definition Under the Truth in Lending

Act (Regulation Z): Seasoned QM Loan

Definition,’’ which appeared in the

Federal Register on December 29, 2020.

This document corrects a scrivener’s

error in an amendatory instruction in

that document.

DATES

: Effective March 1, 2021.

FOR FURTHER INFORMATION CONTACT

Amanda Quester, Senior Counsel, Office

of Regulations, at (202) 435–7700. If you

require this document in an alternative

electronic format, please contact CFPB_

[email protected].

SUPPLEMENTARY INFORMATION

: In FR Doc.

2020–27571 appearing on page 86402 in

the Federal Register of Tuesday,

December 29, 2020, the following

correction is made:

§ 1026.43 [Corrected]

■ On page 86452, in the second column,

in amendment 2, the instruction

‘‘Amend § 1026.43 by revising

paragraphs (e)(1) and (e)(2) introductory

text and adding paragraph (e)(7) to read

as follows: ’’ is corrected to read:

‘‘Amend § 1026.43 by revising the

headings for paragraphs (e) and (e)(1)

and paragraphs (e)(1)(i) and (e)(2)

introductory text and adding paragraph

(e)(7) to read as follows:’’.

Dated: January 15, 2021.

Grace Feola,

Federal Register Liaison, Bureau of Consumer

Financial Protection.

[FR Doc. 2021–01387 Filed 2–4–21; 8:45 am]

BILLING CODE 4810–AM–P

SMALL BUSINESS ADMINISTRATION

13 CFR Part 120

[Docket Number SBA–2021–0006]

RIN 3245–AH65

DEPARTMENT OF THE TREASURY

RIN 1505–AC75

Business Loan Program Temporary

Changes; Paycheck Protection

Program—Loan Forgiveness

Requirements and Loan Review

Procedures as Amended by Economic

Aid Act

AGENCY

: U.S. Small Business

Administration; Department of the

Treasury.

ACTION

: Interim final rule.

SUMMARY

: This interim final rule

implements changes related to the

forgiveness and review of 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.

This interim final rule consolidates

prior rules related to forgiveness and

reviews of PPP loans and incorporates

changes made by the Economic Aid Act,

including with respect to forgiveness of

second draw PPP loans.

DATES

Effective date: Unless otherwise

specified in the Economic Aid Act, the

provisions of this interim final rule are

effective February 3, 2021.

Applicability date: This interim final

rule applies to Paycheck Protection

Programs loans for which a loan

forgiveness payment had not been

remitted by SBA as of December 27,

2020. Parts IV.6.c., IV.7 and V of this

interim final rule, Paycheck Protection

Program SBA Loan Review Procedures

and Related Borrower and Lender

Responsibilities, apply to all Paycheck

Protection Program loans.

Comment date: Comments must be

received on or before March 8, 2021.

ADDRESSES

: You may submit comments,

identified by number SBA–2021–0006

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 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 continue to experience

economic hardship as a direct result of

the Federal, State, and local public

health measures that continue to be

taken to minimize the public’s exposure

to the virus. In addition, based on the

advice of public health officials, other

voluntary measures continue to be

observed, resulting in a 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

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Because section 1106 of the CARES Act is now

codified as section 7A of the Small Business Act,

any reference to section 1106 of the CARES Act in

the rules that are being restated herein will refer to

section 7A.

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 permitted 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)). 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 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.

On June 5, 2020, the President signed

the Paycheck Protection Program

Flexibility Act of 2020 (Flexibility Act)

(Pub. L. 116–142), which changed

provisions of the PPP relating to the

maturity of PPP loans, the deferral of

PPP loan payments, and the forgiveness

of PPP loans. On July 4, 2020, Public

Law 116–147 extended the authority for

SBA to guarantee PPP loans to August

8, 2020.

On December 27, 2020, the President

signed the Economic Aid to Hard-Hit

Small Businesses, Nonprofits and

Venues Act (Economic Aid Act) (Pub. L.

116–260), which reauthorizes lending

under the PPP through March 31, 2021,

and among other things, modifies the

PPP, including provisions relating to

forgiveness of PPP loans. 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 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 redesignates

section 1106 of the CARES Act as

section 7A and transfers that section to

the Small Business Act, to appear after

section 7 of the Small Business Act.

As described below, this interim final

rule (1) provides borrowers and lenders

with guidance on requirements

governing forgiveness of PPP loans, and

(2) informs borrowers and lenders of

SBA’s process for reviewing loan

applications and loan forgiveness

applications. SBA is incorporating and

restating the prior interim final rules

relating to loan forgiveness and loan

reviews and making revisions to

conform these prior interim final rules

to the amendments made by the

Economic Aid Act, including for PPP

loans made under section 7(a)(37) of the

Small Business Act. The prior interim

final rules relating to loan forgiveness

and loan reviews that are incorporated

in this interim final rule are: The first

interim final rule on loan forgiveness

(85 FR 33004) (June 1, 2020); the first

interim final rule on SBA loan review

procedures and related borrower and

lender responsibilities (85 FR 33010)

(June 1, 2020); the interim final rule

incorporating Flexibility Act

Amendments (85 FR 38304) (June 26,

2020); the interim final rule on

Treatment of Owners and Forgiveness of

Certain Nonpayroll Costs (85 FR 52881)

(August 27, 2020); and the interim final

rule on Additional Revisions to Loan

Forgiveness and Loan Review

Procedures Interim Final Rules (85 FR

66214) (October 19, 2020). The rule also

incorporates the forgiveness portions of

the interim final rules regarding

individuals with self-employment

income (85 FR 21747 (April 20, 2020)

and 85 FR 36997 (June 19, 2020)) and

fishing boat owners (85 FR 39066) (June

30, 2020).

This rule should be interpreted

consistently with the sets of Frequently

Asked Questions (FAQs) regarding the

PPP that are posted on SBA’s and the

Department of the Treasury’s (Treasury)

websites, the consolidated interim final

rule implementing updates to the

Paycheck Protection Program (86 FR

3692 (January 14, 2021)) and the interim

final rule on second draw PPP loans (86

FR 3712 (January 14, 2021)); however,

the Economic Aid Act overrides any

conflicting guidance in the FAQs, and

SBA will be revising the FAQs to fully

conform to the Economic Aid Act as

quickly as feasible.

Most of this document restates

existing regulatory provisions to provide

PPP lenders and new and existing PPP

borrowers a single regulation to consult

on loan forgiveness and loan review

requirements and processes. To enhance

the readability of this document, SBA

has not reproduced the policy and legal

justifications for existing regulatory

provisions restated here, except to the

extent that those justifications may be

helpful to the borrower or lender.

However, those justifications from the

original interim final rules are adopted

here.

Six provisions of this interim final

rule are an exercise of rulemaking

authority by Treasury either jointly with

SBA or by Treasury alone: (1) The

additional reference period option

provided for seasonal employers, (2) the

de minimis exemption provided with

respect to certain offers of rehire, (3) the

de minimis exemption from the full-

time equivalent employee reduction

penalty when an employee is, for

example, fired for cause, (4) the de

minimis exemption from the full-time

equivalent employee reduction penalty

when the borrower eliminates

reductions by December 31, 2020 or, for

a PPP loan made after December 27,

2020, the last day of the loan’s covered

period, (5) the de minimis exemption

from the full-time equivalent (FTE)

employee reduction penalty for certain

PPP loans of $50,000 or less, and (6) the

de minimis exemption from the

employee salary and wages reduction

penalty for certain PPP loans of $50,000

or less. Otherwise, all provisions in this

rule are an exercise of rulemaking

authority by SBA alone.

II. Comments and Immediate Effective

Date

This interim final rule is being issued

without advance notice and public

comment because section 303 of the

Economic Aid Act authorizes SBA to

issue regulations to implement the

Economic Aid Act without regard to

notice requirements. In addition, this

rule is being issued to allow for

immediate implementation of this

program. The intent of both the CARES

Act and the Economic Aid Act is that

SBA provides relief to America’s small

businesses expeditiously. The Economic

Aid Act provided that several of the

changes relating to loan forgiveness are

effective as if included in the CARES

Act and apply to any loan made

pursuant to section 7(a)(36) of the Small

Business Act before, on, or after

December 27, 2020, including

forgiveness of such a loan. Accordingly,

loans that were made in 2020 but for

which SBA has not yet remitted

forgiveness to the lender will be

forgiven based on changes made in the

Economic Aid Act, as implemented in

this interim final rule. Given the urgent

need to provide borrowers that are

eligible for loan forgiveness with timely

relief, the Administrator in consultation

with the Secretary 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 continue

remitting forgiveness payments to

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See, e.g., section 303 of the Economic Aid Act;

section 7(a)(37)(M) of the Small Business Act.

15 U.S.C. 634(b)(11).

15 U.S.C. 636(a).

15 U.S.C. 634(b)(6) and (b)(7).

13 CFR 120.524.

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); sections 1106(k) (now section 7A(k)

of the Small Business Act) and 1114 of the CARES

Act, and section 307 of the Economic Aid Act.

lenders without disruption and in

accordance with the amendments made

by the Economic Aid Act. 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 March 8, 2021. SBA will

consider these comments and the need

for making any revisions as a result of

these comments.

III. Paycheck Protection Program—

Loan Forgiveness and Loan Review

Procedures as Amended by Economic

Aid Act

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.

Under the CARES Act, as amended by

the Economic Aid Act, SBA is

authorized to guarantee loans under the

PPP, a new temporary 7(a) program,

through March 31, 2021. PPP loans

made under section 7(a)(36) of the Small

Business Act may be referred to as

‘‘First Draw PPP Loans,’’ and PPP loans

made under section 7(a)(37) of the Small

Business Act may be referred to as

‘‘Second Draw PPP Loans.’’ (Any

reference to ‘‘PPP loans’’ or ‘‘PPP loan’’

herein refers to both First Draw PPP

Loans and Second Draw PPP Loans.)

The intent of the CARES Act and the

Economic Aid Act is that SBA provide

relief to America’s small businesses

expeditiously, which is expressed in the

CARES Act by giving all lenders

delegated authority and streamlining the

requirements of the regular 7(a) loan

program. This intent is also expressed in

the Economic Aid Act through the

statutory deadlines requiring that the

Administrator issue certain guidance

and regulations within 10 days of

enactment.

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

thereunder.

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.

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.

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.

Additionally, section 7A(l)(1)(E) of the

Small Business Act expressly provides

that SBA may review and audit PPP

loans of $150,000 or less and access any

records the borrower is required to

retain.

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),

previously determined that it was

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.

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 and the Economic Aid Act’s

central purposes of keeping workers

paid and employed.

Table of Contents

IV. Paycheck Protection Program Loan

Forgiveness Requirements

1. General

a. What amounts are eligible for

forgiveness?

b. For borrowers that are individuals with

self-employment income who file a Form

1040, Schedule C or F, what amounts are

eligible for forgiveness?

2. Loan Forgiveness Process

a. What is the general process to obtain

loan forgiveness?

b. When must a borrower apply for loan

forgiveness or start making payments on

a loan?

3. Payroll Costs Eligible for Loan

Forgiveness

a. When must payroll costs be incurred

and/or paid to be eligible for forgiveness?

b. Are salary, wages, or commission

payments to furloughed employees;

bonuses; or hazard pay during the

covered period eligible for loan

forgiveness?

c. Are there caps on the amount of loan

forgiveness available for owner-

employees and self-employed

individuals’ own payroll compensation?

d. Are any individuals with an ownership

stake in a PPP borrower exempt from

application of the PPP owner-employee

compensation rule when determining the

amount of their compensation that is

eligible for loan forgiveness?

e. May a fishing boat owner include as

payroll costs in its application for loan

forgiveness any compensation paid to a

crewmember who received his or her

own PPP loan and is seeking forgiveness

for amounts of compensation the

crewmember received for performing

services described in Section 3121(b)(20)

of the Internal Revenue Code with

respect to that owner’s fishing boat?

4. Nonpayroll Costs Eligible for Loan

Forgiveness

a. When must nonpayroll costs be incurred

and/or paid to be eligible for forgiveness?

b. Are advance payments of interest on

mortgage obligations eligible for loan

forgiveness?

c. Are amounts attributable to the business

operation of a tenant or sub-tenant of the

PPP borrower or, in the context of home-

based businesses, household expenses,

eligible for forgiveness?

d. Are rent payments to a related party

eligible for loan forgiveness?

5. Reductions to Loan Forgiveness Amount

a. Will a borrower’s loan forgiveness

amount be reduced if the borrower

reduced the hours of an employee, then

offered to restore the reduction in hours,

but the employee declined the offer?

b. What effect does a reduction in a

borrower’s number of full-time

equivalent (FTE) employees have on the

loan forgiveness amount?

c. What does ‘‘full-time equivalent

employee’’ mean?

d. How should a borrower calculate its

number of FTE employees?

e. What effect does a borrower’s reduction

in employees’ salary or wages have on

the loan forgiveness amount?

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This subsection was originally published at 85

FR 33004, section III.1. (June 1, 2020) and has been

modified to conform to section 304 of the Economic

Aid Act.

‘‘Payroll costs’’ has the same meaning as in

subsections III.B.4.g. and h. of the consolidated

interim final rule implementing updates to the

Paycheck Protection Program. 86 FR 3692, 3702

(Jan. 14, 2021).

Section 7(a)(37)(J)(iii) of the Small Business Act

provides these amounts are not eligible for

forgiveness for Second Draw PPP Loans. This

provision similarly provides that these amounts are

not eligible for forgiveness for First Draw PPP Loans

in order to provide consistent treatment and to

prevent a borrower from receiving forgiveness for

amounts for which the borrower will also receive

a tax credit.

This eligible nonpayroll cost was added by

section 304 of the Economic Aid Act.

This eligible nonpayroll cost was added by

section 304 of the Economic Aid Act.

This eligible nonpayroll cost was added by

section 304 of the Economic Aid Act.

f. How should borrowers seeking loan

forgiveness account for the reduction

based on a reduction in the number of

employees (section 7A(d)(2)) relative to

the reduction relating to salary and

wages (section 7A(d)(3))?

g. If a borrower restores reductions made

to employee salaries and wages or FTE

employees, can the borrower avoid a

reduction in its loan forgiveness amount?

h. Will a borrower’s loan forgiveness

amount be reduced if an employee is

fired for cause, voluntarily resigns, or

voluntarily requests a schedule

reduction?

i. Is a borrower with a loan of $50,000 or

less exempt from any reductions to the

loan forgiveness amount?

6. Documentation Requirements

a. What must borrowers submit for

forgiveness of their PPP loans?

b. What documentation must borrowers

who are individuals with self-

employment income who file a Form

1040, Schedule C or F, submit to their

lender with their request for loan

forgiveness?

c. What additional documentation must a

borrower submit when the President of

the United States, Vice President of the

United States, the head of an Executive

department, or a Member of Congress, or

the spouse of any of the preceding,

directly or indirectly holds a controlling

interest in the borrower?

7. Lender Hold Harmless

V. Paycheck Protection Program SBA Loan

Review Procedures and Related

Borrower and Lender Responsibilities

1. SBA Reviews of Individual PPP Loans

a. Will SBA review individual PPP loans?

b. What borrower representations and

statements will SBA review?

c. When will SBA undertake a loan review?

d. Will I have the opportunity to respond

to SBA’s questions in a review?

e. If SBA determines that a borrower is

ineligible for a PPP loan, can the loan be

forgiven?

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?

2. The Loan Forgiveness Process for

Lenders

a. What should a lender review?

b. What is the timeline for the lender’s

decision on a loan forgiveness

application?

c. What should a lender do if it receives

notice that SBA is reviewing a loan?

d. What should a lender do if a borrower

submits documentation of eligible costs

that exceed a borrower’s PPP Loan

Amount?

3. Lender Fees

IV. Paycheck Protection Program Loan

Forgiveness Requirements

1. General

a. What amounts are eligible for

forgiveness?

Section 7A(b) of the Small Business

Act provides that, subject to several

important limitations, borrowers shall

be eligible for forgiveness of their PPP

loan in an amount equal to the sum of

the following costs incurred and

payments made during the covered

period (as described in section IV.3.

below).

(1) Payroll costs.

Payroll costs consist

of compensation to employees (whose

principal place of residence is the

United States) in the form of salary,

wages, commissions, or similar

compensation; cash tips or the

equivalent (based on employer records

of past tips or, in the absence of such

records, a reasonable, good-faith

employer estimate of such tips);

payment for vacation, parental, family,

medical, or sick leave; allowance for

separation or dismissal; payment for the

provision of employee benefits

consisting of group health care or group

life, disability, vision, or dental

insurance, including insurance

premiums, and retirement; payment of

state and local taxes assessed on

compensation of employees; and for an

independent contractor or sole

proprietor, wages, commissions,

income, or net earnings from self-

employment, or similar compensation.

Payroll costs that are qualified wages

taken into account in determining the

Employer Retention Credit are not

eligible for loan forgiveness.

(2) Interest payments on any business

mortgage obligation on real or personal

property that was incurred before

February 15, 2020 (but not any

prepayment or payment of principal).

(3) Payments on business rent

obligations on real or personal property

under a lease agreement in force before

February 15, 2020.

(4) Business utility payments for the

distribution of electricity, gas, water,

transportation, telephone, or internet

access for which service began before

February 15, 2020.

(5) Covered operations expenditures.

A covered operations expenditure is a

payment for any business software or

cloud computing service that facilitates

business operations, product or service

delivery, the processing, payment, or

tracking of payroll expenses, human

resources, sales and billing functions, or

accounting or tracking of supplies,

inventory, records and expenses.

(6) Covered property damage costs. A

covered property damage cost is a cost

related to property damage and

vandalism or looting due to public

disturbances that occurred during 2020

that was not covered by insurance or

other compensation.

(7) Covered supplier costs. A covered

supplier cost means an expenditure

made by a borrower to a supplier of

goods for the supply of goods that—(A)

are essential to the operations of the

borrower at the time at which the

expenditure is made; and (B) is made

pursuant to a contract, order, or

purchase order—(i) in effect at any time

before the covered period with respect

to the applicable covered loan; or (ii)

with respect to perishable goods, in

effect before or at any time during the

covered period with respect to the

applicable covered loan.

(8) Covered worker protection

expenditures. A covered worker

protection expenditure:

(A) Means an operating or a capital

expenditure to facilitate the adaptation

of the business activities of an entity to

comply with requirements established

or guidance issued by the Department of

Health and Human Services, the Centers

for Disease Control, or the Occupational

Safety and Health Administration, or

any equivalent requirements established

or guidance issued by a State or local

government related to the maintenance

of standards for sanitation, social

distancing, or any other worker or

customer safety requirement related to

COVID–19, during the period beginning

on March 1, 2020 and ending the date

on which the national emergency

declared by the President under the

National Emergencies Act (50 U.S.C.

1601 et seq.) with respect to the

Coronavirus Disease 2019 (COVID–19)

expires;

(B) may include—

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This eligible nonpayroll cost was added by

section 304 of the Economic Aid Act.

See section 7A(d)(8) of the Small Business Act.

This subsection was originally published at 85

FR 21747, subsection III.1.f. (Apr. 20, 2020) and has

been modified to conform to subsequent rules or

guidance and sections 306, 313, and 344 of the

Economic Aid Act.

The Economic Aid Act amended the definition

of the forgiveness covered period.

Due to the amended definition of forgiveness

covered period in the Economic Aid Act, this

calculated amount has changed.

For First Draw PPP loans made in 2020,

borrowers use 2019. For First Draw PPP loans made

in 2021 and Second Draw PPP Loans, borrowers use

the year (2019 or 2020) that was used to calculate

the borrower’s loan amount.

For self-employed borrowers that file Form

1040, Schedule F and have no employees, gross

income may be used instead of net profit

throughout this calculation. For self-employed

borrowers that file Schedule F and have employees,

the difference between gross income and employee

payroll costs may be used instead of net profit

throughout this calculation. See section 313 of the

Economic Aid Act.

Section 306 of the Economic Aid Act allows the

borrower to select a covered period between 8

weeks and 24 weeks.

This eligible nonpayroll cost was added by

section 304 of the Economic Aid Act.

This eligible nonpayroll cost was added by

section 304 of the Economic Aid Act.

This eligible nonpayroll cost was added by

section 304 of the Economic Aid Act.

This eligible nonpayroll cost was added by

section 304 of the Economic Aid Act.

This subsection was originally published at 85

FR 33004, section III.2. (June 1, 2020) and was

amended by 85 FR 38304, subsection III.2.a. (June

26, 2020) and 85 FR 66214, subsections III.2.a. and

b. (Oct. 19, 2020) and has been modified to conform

to section 307 of the Economic Aid Act.

SBA Form 3508, 3508EZ, 3508S, as applicable,

or lender equivalent. Loan Forgiveness Application

forms were amended to conform to the Economic

Aid Act, including section 307, which requires a

simplified forgiveness application for loans of not

more than $150,000. The Simplified Forgiveness

Application is SBA Form 3508S (as amended).

This requirement is necessary to provide

information relevant to the borrower’s eligibility for

the Second Draw PPP Loan and loan forgiveness.

A borrower is eligible for a Second Draw PPP Loan

Continued

(i) the purchase, maintenance, or

renovation of assets that create or

expand—

(I) a drive-through window facility;

(II) an indoor, outdoor, or combined

air or air pressure ventilation or

filtration system;

(III) a physical barrier such as a

sneeze guard;

(IV) an expansion of additional

indoor, outdoor, or combined business

space;

(V) an onsite or offsite health

screening capability; or

(VI) other assets relating to the

compliance with the requirements or

guidance described in subsection (A), as

determined by the Administrator in

consultation with the Secretary of

Health and Human Services and the

Secretary of Labor; and

(ii) the purchase of—

(I) covered materials described in

§ 328.103(a) of title 44, Code of Federal

Regulations, or any successor

regulation;

(II) particulate filtering facepiece

respirators approved by the National

Institute for Occupational Safety and

Health, including those approved only

for emergency use authorization; or

(III) other kinds of personal protective

equipment, as determined by the

Administrator in consultation with the

Secretary of Health and Human Services

and the Secretary of Labor; and

property or intangible property.

This interim final rule uses the term

‘‘nonpayroll costs’’ to refer to the

payments described in (2)–(8) above.

Eligible nonpayroll costs cannot exceed

40 percent of the loan forgiveness

amount.

A borrower may receive

forgiveness for the nonpayroll costs

described in (5), (6), (7) and (8) only if

SBA had not yet remitted a forgiveness

payment on the borrower’s loan to the

borrower’s PPP lender as of December

27, 2020 (the date of the Economic Aid

Act’s enactment).

b. For borrowers that are individuals

with self-employment income who file

a Form 1040, Schedule C or F, what

amounts are eligible for forgiveness?

The amount of loan forgiveness can be

up to the full principal amount of the

loan plus accrued interest. The actual

amount of loan forgiveness will depend,

in part, on the total amount spent

during the covered period (as described

in section IV.3 below)

on:

i. Payroll costs including salary,

wages, and tips, up to $100,000 of

annualized pay per employee, as

prorated for the period during which the

payments are made or the obligation to

make the payments is incurred

(maximum per individual is $100,000

prorated for the covered period, e.g., for

an 8-week covered period a maximum

of $15,385 and for a 24-week covered

period a maximum of $46,154),

well as covered benefits for employees

(but not owners), including health care

expenses, retirement contributions, and

state taxes imposed on employee payroll

paid by the employer (such as

unemployment insurance premiums),

but excluding any qualified wages taken

into account in determining the

Employer Retention Credit;

ii. owner compensation replacement,

calculated based on 2019 or 2020

net

profit

as described in subsection 3.c.

below; forgiveness of such amounts is

limited to either (a) the prorated portion

of 2019 or 2020 net profit for a covered

period up to 2.5 months, or (b) 2.5

months’ worth (2.5/12) of 2019 or 2020

net profit (up to $20,833) for a covered

period greater than 2.5 months,

excluding any qualified sick leave

equivalent amount for which a credit is

claimed under section 7002 of the

Families First Coronavirus Response

Act (FFCRA) (Pub. L. 116–127) or

qualified family leave equivalent

amount for which a credit is claimed

under section 7004 of FFCRA;

iii. payments of interest on mortgage

obligations on real or personal property

incurred before February 15, 2020, to

the extent they are deductible on Form

1040 Schedule C or F (business

mortgage payments);

iv. rent payments on lease agreements

in force before February 15, 2020, to the

extent they are deductible on Form 1040

Schedule C or F (business rent

payments);

v. utility payments under service

agreements dated before February 15,

2020 to the extent they are deductible

on Form 1040 Schedule C or F (business

utility payments);

vi. any covered operations

expenditures to the extent they are

deductible on Form 1040 Schedule C or

vii. any covered property damage

costs to the extent they are deductible

on Form 1040 Schedule C or F;

viii. Any covered supplier costs to the

extent they are deductible on Form 1040

Schedule C or F;

and

ix. any covered worker protection

expenditures to the extent they are

deductible on Form 1040 Schedule C or

A borrower may receive forgiveness

for the new nonpayroll costs described

in vi., vii., viii., and ix. only if SBA had

not yet remitted a forgiveness payment

on the borrower’s loan to the borrower’s

PPP lender as of December 27, 2020.

2. Loan Forgiveness Process

a. What is the general process to obtain

loan forgiveness?

To receive loan forgiveness on either

a First Draw PPP Loan or a Second Draw

PPP Loan, a borrower must complete

and submit the Loan Forgiveness

Application

to its lender (or to the

lender servicing its loan). For Second

Draw PPP Loans in excess of $150,000,

the borrower must submit its loan

forgiveness application for the First

Draw PPP Loan before or

simultaneously with the loan

forgiveness application for the Second

Draw PPP Loan, even if the calculated

amount of forgiveness on the First Draw

PPP Loan is zero.

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if they have 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 on or before the expected date on

which the Second Draw PPP Loan will be

disbursed. See interim final rule on Second Draw

PPP Loans. 86 FR 3712, 3717 (Jan. 14, 2021). This

requirement does not apply to Second Draw PPP

Loans of $150,000 or less that use the simplified

forgiveness application (SBA Form 3508S).

Section 333 of the Economic Aid Act repealed

the CARES Act provision requiring SBA to deduct

EIDL Advance Amounts received by borrowers from

the forgiveness payment amounts remitted by SBA

to the lender. Any EIDL Advance Amounts

previously deducted from a borrower’s forgiveness

amount will be remitted to the lender, together with

interest through the remittance date.

Although the note is marked ‘‘Paid in Full,’’ the

forgiven amount is considered canceled

indebtedness under section 7A(c)(1) of the Small

Business Act.

This subsection was originally published at 85

FR 38304, section III.1.c. (June 26, 2020) and has

been modified to conform to sections 306 and 307

of the Economic Aid Act.

Because section 306 of the Economic Aid Act

allows the borrower to select a covered period

between 8 weeks and 24 weeks, there is no longer

a need to allow a borrower to apply for forgiveness

‘‘before the end of the covered period’’ and that text

has been deleted.

The Economic Aid Act is silent on what

covered period applies for a borrower who does not

apply for forgiveness, so SBA will apply the longest

available covered period to such borrowers.

This subsection was originally published at 85

FR 33004, subsection III.3.a. (June 1, 2020) and

amended by 85 FR 38304, subsection III.1.d. (June

26, 2020) and has been modified to conform to

section 306 of the Economic Aid Act and for

readability.

Amended to conform to the section 306 of

Economic Aid Act change to definition of covered

period. The option to elect an alternative covered

period has been removed because the Economic Aid

Act provided borrowers flexibility to choose the

end of their covered period.

This subsection was originally published at 85

FR 33004, subsection III.3.b. (June 1, 2020) and has

been modified to conform to section 344 of the

Economic Aid Act.

As a general matter, the lender will

review the application and make a

decision regarding loan forgiveness. The

lender has 60 days from receipt of a

complete application to issue a decision

to SBA. 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

borrower’s loan(s) or loan application(s),

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. The EIDL

Advance Amount received by the

borrower will not reduce the amount of

forgiveness to which the borrower is

entitled and will not be deducted from

the forgiveness payment amount that

SBA remits to the Lender.

If SBA

determines in the course of its review

that the borrower was ineligible for the

PPP loan under the statute, the SBA

rules or guidance available at the time

of the borrower’s loan application, or

the terms of the borrower’s PPP loan

application (for example, because the

borrower lacked an adequate basis for

the certifications that it made in its PPP

loan application), the loan will not be

eligible for loan forgiveness. The lender

must notify the borrower of the

forgiveness amount. If only a portion of

the loan is forgiven, or if the forgiveness

request is denied, any remaining

balance due on the loan must be repaid

by the borrower on or before the

maturity date of the loan. The lender

must notify the borrower of remittance

by SBA of (i) the loan forgiveness

amount (or that SBA determined that no

amount of the loan is eligible for

forgiveness), and (ii) the date on which

the borrower’s first payment is due, if

applicable. If SBA determines that the

full amount of the loan is eligible for

forgiveness and remits the full amount

of the loan to the lender, the lender

must mark the PPP loan note as ‘‘paid

in full’’ and report the status of the loan

as ‘‘paid in full’’ on the next monthly

1502 report filed by the lender.

The general loan forgiveness process

described above applies only to loan

forgiveness applications that are not

reviewed by SBA prior to the lender’s

decision on the forgiveness application.

Part V of this interim final rule

describes SBA’s procedures for

reviewing PPP loan applications and

loan forgiveness applications.

b. When must a borrower apply for loan

forgiveness or start making payments on

a loan?

A borrower may submit a loan

forgiveness application any time on or

before the maturity date of the loan if

the borrower has used all of the loan

proceeds for which the borrower is

requesting forgiveness, except that a

borrower applying for forgiveness of a

Second Draw PPP Loan that is more

than $150,000 must submit the loan

forgiveness application for its First

Draw PPP Loan before or

simultaneously with the loan

forgiveness application for its Second

Draw PPP Loan.

If the borrower does

not apply for loan forgiveness within 10

months after the last day of the

maximum covered period of 24 weeks,

or if SBA determines that the loan is not

eligible for forgiveness (in whole or in

part), the PPP loan is no longer deferred

and the borrower must begin paying

principal and interest. If this occurs, the

lender must notify the borrower of the

date the first payment is due. The lender

must report that the loan is no longer

deferred to SBA on the next monthly

SBA Form 1502 report filed by the

lender.

3. Payroll Costs Eligible for Loan

Forgiveness

a. When must payroll costs be incurred

and/or paid to be eligible for

forgiveness?

In general, payroll costs paid or

incurred during the covered period are

eligible for forgiveness. For purposes of

loan forgiveness, the covered period is

the period beginning on the date the

lender disburses the PPP loan and

ending on a date selected by the

borrower that occurs during the period

(i) beginning on the date that is 8 weeks

after the date of disbursement, and (ii)

ending on the date that is 24 weeks after

the date of disbursement.

The covered

periods for a First Draw PPP Loan and

a Second Draw PPP Loan cannot

overlap; the borrower must use all

proceeds of the First Draw PPP Loan for

eligible expenses before disbursement of

the Second Draw PPP Loan.

Payroll costs are considered paid on

the day that paychecks are distributed

or the borrower originates an ACH

credit transaction. Payroll costs incurred

during the borrower’s last pay period of

the covered period are eligible for

forgiveness if paid on or before the next

regular payroll date; otherwise, payroll

costs must be paid during the covered

period to be eligible for forgiveness.

Payroll costs generally are incurred on

the day the employee’s pay is earned

(i.e., on the day the employee worked).

For employees who are not performing

work but are still on the borrower’s

payroll, payroll costs are incurred based

on the schedule established by the

borrower (typically, each day that the

employee would have performed work).

b. Are salary, wages, or commission

payments to furloughed employees;

bonuses; or hazard pay during the

covered period eligible for loan

forgiveness?

Yes. The CARES Act defines the term

‘‘payroll costs’’ broadly to include

compensation in the form of salary,

wages, commissions, or similar

compensation. If a borrower pays

furloughed employees their salary,

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This subsection was originally published at 85

FR 33004, subsection III.3.c. (June 1, 2020) and

amended by 85 FR 38304, subsection III.1.d (June

26, 2020) and has been modified to conform to

sections 308 and 344 of the Economic Aid Act and

for readability.

For First Draw PPP loans made in 2020,

borrowers use 2019. For First Draw PPP loans made

in 2021 and Second Draw PPP loans, borrowers use

the year (2019 or 2020) that was used to calculate

the borrower’s loan amount.

Use whichever year was used to calculate the

borrower’s loan amount.

Use whichever year was used to calculate the

borrower’s loan amount.

For self-employed borrowers that file Form

1040, Schedule F and have no employees, gross

income may be used instead of net profit. For self-

employed borrowers that file Schedule F and have

employees, the difference between gross income

and employee payroll costs may be used instead of

net profit. See section 313 of the Economic Aid Act.

This subsection was originally published at 85

FR 52881, section III.1. (Aug. 27, 2020) and has

been modified for readability.

This subsection was originally published at 85

FR 39066, subsection III.2. (June 30, 2020) and has

been modified for consistency with the Economic

Aid Act.

This subsection was originally published at 85

FR 33004, subsection III.4.a. (June 1, 2020) and

amended by 85 FR 38304, subsection III.1.e (June

26, 2020) and has been modified for readability.

wages, or commissions during the

covered period, those payments are

eligible for forgiveness as long as they

do not exceed an annual salary of

$100,000, as prorated for the period

during which the payments are made or

the obligation to make the payments is

incurred. The Administrator, in

consultation with the Secretary, has also

determined that, if an employee’s total

compensation does not exceed $100,000

on an annualized basis, as prorated for

the period during which the payments

are made or the obligation to make the

payments is incurred, the employee’s

hazard pay and bonuses are eligible for

loan forgiveness because they constitute

a supplement to salary or wages, and are

thus a similar form of compensation.

c. Are there caps on the amount of loan

forgiveness available for owner-

employees and self-employed

individuals’ own payroll

compensation?

Yes. Forgiveness is capped at 2.5

months’ worth (2.5/12) of an owner-

employee or self-employed individual’s

2019 or 2020

compensation (up to a

maximum $20,833 per individual in

total across all businesses). The

individual’s total compensation may not

exceed $100,000 on an annualized basis,

as prorated for the period during which

the payments are made or the obligation

to make the payments is incurred. For

example, for borrowers that elect to use

an eight-week covered period, the

amount of loan forgiveness requested for

owner-employees and self-employed

individuals’ payroll compensation is

capped at eight weeks’ worth (8/52) of

2019 or 2020 compensation (i.e.,

approximately 15.38 percent of 2019 or

2020 compensation) or $15,385 per

individual, whichever is less, in total

across all businesses. For borrowers that

elect to use a ten-week covered period,

the cap is ten weeks’ worth (10/52) of

2019 or 2020 compensation

(approximately 19.23 percent) or

$19,231 per individual, whichever is

less, in total across all businesses. For

a covered period longer than 2.5

months, the amount of loan forgiveness

requested for owner-employees and self-

employed individuals’ payroll

compensation is capped at 2.5 months’

worth (2.5/12) of 2019 or 2020

compensation (up to $20,833) in total

across all businesses.

In particular, C-corporation owner-

employees are capped by the prorated

amount of their 2019 or 2020

employee cash compensation and

employer retirement and health, life,

disability, vision and dental insurance

contributions made on their behalf. S-

corporation owner-employees are

capped by the prorated amount of their

2019 or 2020

employee cash

compensation and employer retirement

contributions made on their behalf.

However, employer health, life,

disability, vision and dental insurance

contributions made on their behalf

cannot be separately added; those

payments are already included in their

employee cash compensation. Schedule

C or F filers are capped by the prorated

amount of their owner compensation

replacement, calculated based on 2019

or 2020 net profit.

General partners are

capped by the prorated amount of their

2019 or 2020 net earnings from self-

employment (reduced by claimed

section 179 expense deduction,

unreimbursed partnership expenses,

and depletion from oil and gas

properties) multiplied by 0.9235. For

self-employed individuals, including

Schedule C or F filers and general

partners, retirement and health, life,

disability, vision or dental insurance

contributions are included in their net

self-employment income and therefore

cannot be separately added to their

payroll calculation. LLC members are

subject to the rules based on their LLC’s

tax filing status in the reference year

used to determine their loan amount.

d. Are any individuals with an

ownership stake in a PPP borrower

exempt from application of the PPP

owner-employee compensation rule

when determining the amount of their

compensation that is eligible for loan

forgiveness?

Yes, owner-employees with less than

a 5 percent ownership stake in a C- or

S-corporation are not subject to the

owner-employee compensation rule in

subsection IV.3.c. above.

e. May a fishing boat owner include as

payroll costs in its application for loan

forgiveness any compensation paid to a

crewmember who received his or her

own PPP loan and is seeking forgiveness

for amounts of compensation the

crewmember received for performing

services described in Section

3121(b)(20) of the Internal Revenue

Code with respect to that owner’s

fishing boat?

No. If a fishing boat crewmember

obtains his or her own PPP loan during

the fishing boat owner’s covered period

and seeks forgiveness of that loan based

in part on compensation from a

particular fishing boat owner, the

fishing boat owner cannot also obtain

PPP loan forgiveness based on

compensation paid to that same

crewmember. This restriction applies

only if the crewmember is performing

services described in section 3121(b)(20)

of the Internal Revenue Code for the

particular fishing boat owner. The

fishing boat owner is responsible for

determining whether any of its

crewmembers received their own PPP

loans during the fishing boat owner’s

loan forgiveness covered period.

4. Nonpayroll Costs Eligible for Loan

Forgiveness

a. When must nonpayroll costs be

incurred and/or paid to be eligible for

forgiveness?

A nonpayroll cost is eligible for

forgiveness if it was:

i. Paid during the covered period; or

ii. incurred during the covered period

and paid on or before the next regular

billing date, even if the billing date is

after the covered period.

Example: A borrower that received a

loan before June 5, 2020 uses a 24-week

covered period that begins on June 1

and ends on November 15. The

borrower pays its electricity bills for

June through October during the

covered period and pays its November

electricity bill on December 10, which is

the next regular billing date. The

borrower may seek loan forgiveness for

its June through October electricity bills,

because they were paid during the

covered period. In addition, the

borrower may seek loan forgiveness for

the portion of its November electricity

bill through November 15 (the end of

the covered period), because it was

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This subsection was originally published at 85

FR 33004, subsection III.4.b. (June 1, 2020).

This subsection was originally published at 85

FR 52881, subsection III.2.a. (Aug. 27, 2020).

This subsection was originally published at 85

FR 52881, subsection III.2.b. (Aug. 27, 2020) and

has been modified for readability.

In this context, the related party itself would

not also be eligible to request forgiveness for this

amount.

This subsection was originally published at 85

FR 33004, subsection III.5. (June 1, 2020) and

amended by 85 FR 38304, subsection III.1.f. (June

26, 2020), and has been modified to conform to

subsequent rules or guidance and section 311 of the

Economic Aid Act.

This subsection was originally published at 85

FR 33004, subsection III.5.a. (June 1, 2020) and

amended by 85 FR 38304, section III.5. (June 26,

2020) and has been modified for readability.

This subsection was originally published at 85

FR 33004, subsection III.5.b. (June 1, 2020) and

amended by 85 FR 38304, section III.1.f. (June 26,

2020) and has been modified to conform to sections

306, 311 and 336 of the Economic Aid Act and for

readability.

The term ‘‘seasonal employer’’ is defined in

section 7(a)(36)(A)(xiii) of the Small Business Act.

This decision to permit seasonal employers to

use, as a reference period, any consecutive 12-week

period between February 15, 2019 and February 15,

2020 is an exercise of the Secretary’s rulemaking

authority under section 1109 of the CARES Act.

This reference period is consistent with section 336

of the Economic Aid Act, which amends the

calculation of the maximum loan amount for

seasonal employers.

incurred during the covered period and

paid on the next regular billing date.

b. Are advance payments of interest on

mortgage obligations eligible for loan

forgiveness?

No. Advance payments of interest on

a covered mortgage obligation are not

eligible for loan forgiveness because the

CARES Act’s loan forgiveness

provisions regarding mortgage

obligations specifically exclude

‘‘prepayments.’’ Principal on mortgage

obligations is not eligible for forgiveness

under any circumstances.

c. Are amounts attributable to the

business operation of a tenant or sub-

tenant of the PPP borrower or, in the

context of home-based businesses,

household expenses, eligible for

forgiveness?

No, the amount of loan forgiveness

requested for nonpayroll costs may not

include any amount attributable to the

business operation of a tenant or sub-

tenant of the PPP borrower or, for home-

based businesses, household expenses.

The examples below illustrate this rule.

Example 1: A borrower rents an office

building for $10,000 per month and sub-

leases out a portion of the space to other

businesses for $2,500 per month. Only

$7,500 per month is eligible for loan

forgiveness.

Example 2: A borrower has a

mortgage on an office building it

operates out of, and it leases out a

portion of the space to other businesses.

The portion of mortgage interest that is

eligible for loan forgiveness is limited to

the percent share of the fair market

value of the space that is not leased out

to other businesses. As an illustration, if

the leased space represents 25% of the

fair market value of the office building,

then the borrower may only claim

forgiveness on 75% of the mortgage

interest.

Example 3: A borrower shares a

rented space with another business.

When determining the amount that is

eligible for loan forgiveness, the

borrower must prorate rent and utility

payments in the same manner as on the

borrower’s 2019 tax filings, or if a new

business, the borrower’s expected 2020

tax filings.

Example 4: A borrower works out of

his or her home. When determining the

amount of nonpayroll costs that are

eligible for loan forgiveness, the

borrower may include only the share of

covered expenses that were deductible

on the borrower’s 2019 tax filings, or if

a new business, the borrower’s expected

2020 tax filings.

d. Are rent payments to a related party

eligible for loan forgiveness?

Yes, as long as (1) the amount of loan

forgiveness requested for rent or lease

payments to a related party is no more

than the amount of mortgage interest

owed on the property during the

covered period that is attributable to the

space being rented by the business, and

(2) the lease and the mortgage were

entered into prior to February 15,

2020.

Any ownership in common

between the business and the property

owner is a related party for these

purposes. The borrower must provide

its lender with mortgage interest

documentation to substantiate these

payments. While rent or lease payments

to a related party may be eligible for

forgiveness, mortgage interest payments

to a related party are not eligible for

forgiveness.

5. Reductions to Loan Forgiveness

Amount

Section 7A of the Small Business Act

specifically requires certain reductions

in a borrower’s loan forgiveness amount

based on reductions in full-time

equivalent employees or in employee

salary and wages. It includes an

important statutory exemption for

borrowers that have eliminated the

reduction on or before December 31,

2020 (or, for a PPP loan made on or after

December 27, 2020, not later than the

last day of the loan’s covered period).

Section 7A(d)(7) of the Small Business

Act also allows exemptions from

reductions in loan forgiveness amounts

based on employee availability and

business activity. In addition, SBA and

Treasury have adopted regulatory

exemptions to the reduction rules for

borrowers that (1) have offered to restore

employee hours at the same salary or

wages, even if the employees have not

accepted, (2) fired an employee for

cause or have an employee that

voluntarily resigns or voluntarily

requests a schedule reduction, (3)

eliminate reductions by December 31,

2020 or, for a PPP loan made after

December 27, 2020, the last day of the

loan’s covered period, or (4) have a PPP

loan of $50,000 or less. The instructions

to the loan forgiveness applications and

the guidance below explain how the

statutory forgiveness reduction formulas

work.

a. Will a borrower’s loan forgiveness

amount be reduced if the borrower

reduced the hours of an employee, then

offered to restore the reduction in hours,

but the employee declined the offer?

No. In calculating the loan forgiveness

amount, a borrower may exclude any

reduction in full-time equivalent

employee headcount that is attributable

to an individual employee if:

i. The borrower made a good faith,

written offer to restore the reduced

hours of such employee;

ii. the offer was for the same salary or

wages and same number of hours as

earned by such employee in the last pay

period prior to the reduction in hours;

iii. the offer was rejected by such

employee; and

iv. the borrower has maintained

records documenting the offer and its

rejection.

b. What effect does a reduction in a

borrower’s number of full-time

equivalent (FTE) employees have on the

loan forgiveness amount?

In general, a reduction in FTE

employees during the covered period

reduces the loan forgiveness amount by

the same percentage as the percentage

reduction in FTE employees. For both

First Draw PPP Loans and Second Draw

PPP Loans, the borrower must first

select a reference period: (i) February

15, 2019 through June 30, 2019; (ii)

January 1, 2020 through February 29,

2020; or (iii) in the case of a seasonal

employer,

either of the two preceding

methods or a consecutive 12-week

period between February 15, 2019 and

February 15, 2020.

If the average

number of FTE employees during the

covered period is less than during the

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This text was originally published at 85 FR

38304, subsection III.1.f. (June 26, 2020) and has

been modified to conform to section 311 of the

Economic Aid Act.

This text was originally published at 85 FR

38304, subsection III.1.f. (June 26, 2020) and has

been modified to conform to section 311 the

Economic Aid Act.

This subsection was originally published at 85

FR 33004, subsection III.5.c. (June 1, 2020) and has

been modified for readability.

This subsection was originally published at 85

FR 33004, subsection III.5.d. (June 1, 2020) and has

been modified to conform to section 311 of the

Economic Aid Act and for readability.

This subsection was originally published at 85

FR 33004, subsection III.5.e. (June 1, 2020) and has

been modified to conform to section 306 of the

Economic Aid Act and for readability.

reference period, the total eligible

expenses available for forgiveness is

reduced proportionally by the

percentage reduction in FTE employees.

For example, if a borrower had 10.0 FTE

employees during the reference period

and this declined to 8.0 FTE employees

during the covered period, the

percentage of FTE employees declined

by 20 percent and thus only 80 percent

of otherwise eligible expenses are

available for forgiveness.

Borrowers are exempted from the loan

forgiveness reduction arising from a

proportional reduction in FTE

employees during the covered period if

the borrower is able to document in

good faith the following: (1) An inability

to rehire individuals who were

employees of the borrower on February

15, 2020; and (2) an inability to hire

similarly qualified individuals for

unfilled positions on or before

December 31, 2020 (or, for a PPP loan

made on or after December 27, 2020, not

later than the last day of the loan’s

covered period).

Borrowers are

required to inform the applicable state

unemployment insurance office of any

employee’s rejected rehire offer within

30 days of the employee’s rejection of

the offer. The documents that borrowers

should maintain to show compliance

with this exemption include, but are not

limited to, the written offer to rehire an

individual, a written record of the

offer’s rejection, and a written record of

efforts to hire a similarly qualified

individual.

Borrowers are also exempted from the

loan forgiveness reduction arising from

a reduction in the number of FTE

employees during the covered period if

the borrower is able to document in

good faith an inability to return to the

same level of business activity as the

borrower was operating at before

February 15, 2020, due to compliance

with requirements established or

guidance issued between March 1, 2020

and December 31, 2020 (or, for a PPP

loan made on or after December 27,

2020, not later than the last day of the

loan’s covered period)

by the

Secretary of Health and Human

Services, the Director of the Centers for

Disease Control and Prevention (CDC),

or the Occupational Safety and Health

Administration related to the

maintenance of standards for sanitation,

social distancing, or any other worker or

customer safety requirement related to

COVID–19 (COVID Requirements or

Guidance). Specifically, borrowers that

can certify that they have documented

in good faith that their reduction in

business activity during the covered

period stems directly or indirectly from

compliance with such COVID

Requirements or Guidance are exempt

from any reduction in their forgiveness

amount stemming from a reduction in

FTE employees during the covered

period. Such documentation must

include copies of applicable COVID

Requirements or Guidance for each

business location and relevant borrower

financial records.

Example: A PPP borrower is in the

business of selling beauty products both

online and at its physical store. During

the covered period, the local

government where the borrower’s store

is located orders all non-essential

businesses, including the borrower’s

business, to shut down their stores,

based in part on COVID–19 guidance

issued by the CDC in March 2020.

Because the borrower’s business activity

during the covered period was reduced

compared to its activity before February

15, 2020 due to compliance with COVID

Requirements or Guidance, the borrower

satisfies the exemption and will not

have its forgiveness amount reduced

because of a reduction in FTEs during

the covered period, if the borrower in

good faith maintains records regarding

the reduction in business activity and

the local government’s shutdown orders

that reference a COVID Requirement or

Guidance as described above.

c. What does ‘‘full-time equivalent

employee’’ mean?

Full-time equivalent employee means

an employee who works 40 hours or

more, on average, each week. The hours

of employees who work less than 40

hours are calculated as proportions of a

single full-time equivalent employee

and aggregated, as explained further

below in subsection IV.5.d.

d. How should a borrower calculate its

number of FTE employees?

Borrowers seeking forgiveness must

document their average number of FTE

employees during the covered period

and their selected reference period. If

applicable, a borrower must perform

this calculation for both its First Draw

PPP Loan and Second Draw PPP Loan.

For purposes of this calculation,

borrowers must divide the average

number of hours paid for each employee

per week by 40, capping this quotient at

1.0. For example, an employee who was

paid 48 hours per week during the

covered period would be considered to

be an FTE employee of 1.0.

For employees who were paid for less

than 40 hours per week, borrowers may

choose to calculate the full-time

equivalency in one of two ways. First,

the borrower may calculate the average

number of hours a part-time employee

was paid per week during the covered

period. For example, if an employee was

paid for 30 hours per week on average

during the covered period, the employee

could be considered to be an FTE

employee of 0.75. Similarly, if an

employee was paid for ten hours per

week on average during the covered

period, the employee could be

considered to be an FTE employee of

0.25. Second, for administrative

convenience, borrowers may elect to use

a full-time equivalency of 0.5 for each

part-time employee. The Administrator

recognizes that not all borrowers

maintain hours-worked data, and has

decided to afford such borrowers this

flexibility in calculating the full-time

equivalency of their part-time

employees.

Borrowers may select only one of

these two methods, and must apply that

method consistently to all of their part-

time employees for the covered period

and the selected reference period. In

either case, the borrower shall provide

the aggregate total of FTE employees for

both the selected reference period and

the covered period by adding together

all of the employee-level FTE employee

calculations. The borrower must then

divide the average FTE employees

during the covered period by the

average FTE employees during the

selected reference period, resulting in

the reduction quotient.

e. What effect does a borrower’s

reduction in employees’ salary or wages

have on the loan forgiveness amount?

Under section 7A(d)(3) of the Small

Business Act, a reduction in an

employee’s salary or wages in excess of

25 percent will generally result in a

reduction in the loan forgiveness

amount, unless an exception applies.

Specifically, for each new employee in

2020 and 2021, as well as each existing

employee who was not paid more than

the annualized equivalent of $100,000

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This subsection previously provided that a

borrower must account for the salary reduction for

the full 24-week covered period if the borrower

applies for forgiveness before the end of the covered

period. 85 FR 38304, 38308 (June 26, 2020). This

text has been removed because section 306 of the

Economic Aid Act allows the borrower to select a

covered period between 8 and 24 weeks and there

is no need to apply for forgiveness before the end

of the covered period.

This subsection was originally published at 85

FR 33004, subsection III.5.e. (June 1, 2020) and has

been modified for readability.

This subsection was originally published at 85

FR 33004, subsection III.5.g. (June 1, 2020) and has

been modified to conform to section 311 of the

Economic Aid Act.

In light of the flexibility the Small Business Act

provides to borrowers with respect to their selection

of the reference time period for any potential

reduction in loan forgiveness, and the statutory

authority for SBA and the Treasury to grant de

minimis exemptions from this requirement, if the

borrower meets the requirements for the FTE

reduction safe harbor, it will not be subject to any

loan forgiveness reduction based on a reduction in

FTE employees.

This subsection was originally published at 85

FR 33004, subsection III.5.h. (June 1, 2020) and has

been modified to conform to section 304 of the

Economic Aid Act and for readability.

This subsection was originally published at 85

FR 66214, subsection III.1.b. (Oct. 19, 2020) and has

been modified to conform to sections 304 and 307

the Economic Aid Act and for readability. As

described further below in subsection 6.a and 6.b,

borrowers with loans up to $150,000 may use SBA

Form 3508S. However, only borrowers with loans

of $50,000 or less, other than any borrower that

together with its affiliates received First Draw Loans

totaling $2 million or more or Second Draw Loans

totaling $2 million or more, are exempt from any

reductions to the loan forgiveness amount.

Accordingly, the exemptions in this subsection are

in any pay period in 2019, the borrower

must reduce the total forgiveness

amount by the total dollar amount of the

salary or wage reductions that are in

excess of 25 percent of base salary or

wages of the employee during the most

recent full quarter during which the

employee was employed before the

covered period (the reference period),

subject to exceptions for borrowers who

restore reduced wages or salaries (see g.

below). This reduction calculation is

performed on a per employee basis, not

in the aggregate. Additionally, this

reduction is performed based on the

covered period and reference period

applicable to the First Draw Loan or

Second Draw Loan.

Example: A borrower is using a 24-

week covered period. This borrower

reduced a full-time employee’s weekly

salary from $1,000 per week during the

reference period to $700 per week

during the covered period. The

employee continued to work on a full-

time basis during the covered period,

with an FTE of 1.0. In this case, the first

$250 (25 percent of $1,000) is exempted

from the loan forgiveness reduction. The

borrower seeking forgiveness would list

$1,200 as the salary/hourly wage

reduction for that employee (the extra

$50 weekly reduction multiplied by 24

weeks).

Example: A borrower has elected to

use an eight-week covered period. This

borrower reduced a full-time employee’s

weekly salary from $1,000 per week

during the reference period to $700 per

week during the covered period. The

employee continued to work on a full-

time basis during the covered period,

with an FTE of 1.0. In this case, the first

$250 (25 percent of $1,000) is exempted

from the loan forgiveness reduction. The

borrower seeking forgiveness would list

$400 as the salary/hourly wage

reduction for that employee (the extra

$50 weekly reduction multiplied by

eight weeks).

f. How should borrowers seeking loan

forgiveness account for the reduction

based on a reduction in the number of

employees (section 7A(d)(2)) relative to

the reduction relating to salary and

wages (section 7A(d)(3))?

To ensure that borrowers are not

doubly penalized, the salary/wage

reduction applies only to the portion of

the decline in employee salary and

wages that is not attributable to the FTE

reduction.

Example: An hourly wage employee

had been working 40 hours per week

during the borrower selected reference

period (FTE employee of 1.0) and the

borrower reduced the employee’s hours

to 20 hours per week during the covered

period (FTE employee of 0.5). There was

no change to the employee’s hourly

wage during the covered period.

Because the hourly wage did not

change, the reduction in the employee’s

total wages is entirely attributable to the

FTE employee reduction and the

borrower is not required to conduct a

salary/wage reduction calculation for

that employee.

g. If a borrower restores reductions

made to employee salaries and wages or

FTE employees, can the borrower avoid

a reduction in its loan forgiveness

amount?

Yes. Section 7A(d)(5) of the Small

Business Act provides that if certain

employee salaries and wages were

reduced between February 15, 2020 and

April 26, 2020 (the safe harbor period)

but the borrower eliminates those

reductions by December 31, 2020 (or, for

a PPP loan made on or after December

27, 2020, by the last day of the loan’s

covered period), the borrower is exempt

from any reduction in loan forgiveness

amount that would otherwise be

required due to reductions in salaries

and wages under section 7A(d)(3) of the

Small Business Act. Similarly, if a

borrower eliminates any reductions in

FTE employees occurring during the

safe harbor period by December 31,

2020 (or, for a PPP loan made on or after

December 27, 2020, by last day of the

loan’s covered period), the borrower is

exempt from any reduction in loan

forgiveness amount that would

otherwise be required due to reductions

in FTE employees.

This provision implements section

7A(d)(5) of the Small Business Act,

which gives borrowers an opportunity

to cure reductions in FTEs, salary/wage

reductions in excess of 25 percent, or

both, using the applicable methodology

set forth in section 7A(d)(5). The Small

Business Act provides that the

reduction in FTEs or the reduction in

salary/hourly wages must be eliminated

not later than December 31, 2020 (or, for

a PPP loan made on or after December

27, 2020, not later than the last day of

the loan’s covered period). This does

not change or affect the requirement that

at least 60 percent of the loan

forgiveness amount must be attributable

to payroll costs.

h. Will a borrower’s loan forgiveness

amount be reduced if an employee is

fired for cause, voluntarily resigns, or

voluntarily requests a schedule

reduction?

No. When an employee of the

borrower is fired for cause, voluntarily

resigns, or voluntarily requests a

reduced schedule during the covered

period (FTE reduction event), the

borrower may count such employee at

the same full-time equivalency level

before the FTE reduction event when

calculating the section 7A(d)(2) FTE

employee reduction penalty. Borrowers

that avail themselves of this de minimis

exemption shall maintain records

demonstrating that each such employee

was fired for cause, voluntarily

resigned, or voluntarily requested a

schedule reduction. The borrower shall

provide such documentation upon

request.

i. Is a borrower with a loan of $50,000

or less exempt from any reductions to

the loan forgiveness amount?

Yes. A borrower with a loan of

$50,000 or less, other than any borrower

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limited to qualifying borrowers with loans of

$50,000 or less. A borrower with a loan greater than

$50,000 and up to $150,000 must comply with the

requirements under the Paycheck Protection

Program, including calculating any reduction in

forgiveness amounts based on reductions in FTEs

or employee salary or wages.

This subsection was originally published at 85

FR 33004, section III.6. (June 1, 2020) and amended

at 85 FR 38304, subsection III.1.g. (June 26, 2020)

and has been modified to conform to sections 304

and 307 of the Economic Aid Act and for

readability.

See interim final rule on Second Draw PPP

Loans. 86 FR 3712, 3721 (Jan. 14, 2021). Subsection

(g)(2)(v) of the interim final rule on Second Draw

PPP Loans implements section 7(a)(37)(J)(v) of the

Small Business Act.

This subsection was originally published at 85

FR 21747, subsection III.1.g. (Apr. 20, 2020) and has

been modified to conform to sections 304, 307, 308,

and 313 of the Economic Aid Act and for

readability.

See subsection (g)(2)(v) of the interim final rule

on Second Draw PPP Loans. 86 FR 3712, 3721 (Jan.

14, 2021).

For self-employed borrowers that file Form

1040, Schedule F and have no employees, gross

income may be used instead of net profit. For self-

employed borrowers that file Schedule F and have

employees, the difference between gross income

and employee payroll costs may be used instead of

net profit.

This subsection has been added to conform to

section 322 of the Economic Aid Act.

that together with its affiliates received

First Draw PPP Loans totaling $2

million or more or Second Draw PPP

Loans totaling $2 million or more, is

exempt from any reductions in the

borrower’s loan forgiveness amount

based on reductions in FTE employees

(section 7A(d)(2) of the Small Business

Act) or reductions in employee salary or

wages (section 7A(d)(3) of the Small

Business Act) that would otherwise

apply. As such, subsections IV.5.a.

through IV.5.h. above do not apply to

qualifying borrowers with loans of

$50,000 or less.

6. Documentation Requirements

a. What must borrowers submit for

forgiveness of their PPP loans?

The loan forgiveness application form

details the documentation requirements;

specifically, documentation each

borrower must submit with its Loan

Forgiveness Application (SBA Form

3508, 3508EZ, 3508S as applicable, or

lender equivalent), documentation each

borrower is required to maintain and

make available upon request, and

documentation each borrower may

voluntarily submit with its loan

forgiveness application. An eligible

borrower that received a loan of

$150,000 or less should use the SBA

Form 3508S and shall not, at the time

of its application for loan forgiveness, be

required to submit any application or

documentation in addition to the

certification and information required

by section 7A(l)(1)(A) of the Small

Business Act. However, an eligible

borrower that received a Second Draw

loan of $150,000 or less and is using the

SBA Form 3508S must, before or at the

time of its application for loan

forgiveness, submit documentation

sufficient to establish that the borrower

experienced a reduction in revenue as

provided in subsection (g)(2)(v) of the

interim final rule on Second Draw PPP

Loans, unless the borrower already

provided such documentation at the

time of its application for the Second

Draw PPP Loan.

Such documentation

may include relevant tax forms,

including annual tax forms, or, if

relevant tax forms are not available, a

copy of the applicant’s quarterly income

statements or bank statements.

For Second Draw PPP Loans, all

borrowers must certify on their loan

forgiveness application that the

borrower used all First Draw PPP Loan

amounts on eligible expense prior to

disbursement of the Second Draw PPP

Loan. For Second Draw PPP Loans in

excess of $150,000, the borrower must

submit its loan forgiveness application

for the First Draw PPP Loan before or

simultaneously with the loan

forgiveness application for the Second

Draw PPP Loan, even if the calculated

forgiveness amount for the First Draw

PPP Loan is zero.

b. What documentation are borrowers

who are individuals with self-

employment income who file a Form

1040, Schedule C or F required to

submit to their lender with their request

for loan forgiveness?

For borrowers that received loans of

$150,000 or less that use the SBA Form

3508S, the borrower must submit the

certification and information required

by section 7A(l)(1)(A) of the Small

Business Act and, for a Second Draw

PPP Loan, revenue reduction

documentation if such documentation

was not provided at the time of

application.

All other borrowers must

submit the certification required by

section 7A(e)(3) of the Small Business

Act, and (if the borrower has employees)

Form 941 and state quarterly business

and individual employee wage reporting

and unemployment insurance tax forms

or equivalent payroll processor records

that best correspond to the covered

period (with evidence of any retirement

and group health, life, disability, vision,

and dental insurance contributions).

Whether or not the borrower has

employees, the borrower must submit

evidence of business rent, business

mortgage interest payments on real or

personal property, business utility

payments, or payments for a covered

operations expenditure, covered

property damage cost, covered supplier

cost, or covered worker protection

expenditure during the covered period

if the borrower used loan proceeds for

those purposes. This documentation

may include cancelled checks, payment

receipts, transcripts of accounts,

purchase orders, orders, invoices, or

other documents verifying payments on

nonpayroll costs.

For all loans, the 2019 or 2020 Form

1040 Schedule C or F that the borrower

provided at the time of the PPP loan

application must be used to determine

the amount of net profit allocated to the

owner for the covered period.

c. What additional documentation must

a borrower submit when the President

of the United States, Vice President of

the United States, the head of an

Executive department, or a Member of

Congress, or the spouse of any of the

preceding, directly or indirectly holds a

controlling interest in the borrower?

For any First Draw PPP loan made

before December 27, 2020, if the

President of the United States, Vice

President of the United States, the head

of an Executive department, or a

Member of Congress, or the spouse of

any such person as determined under

applicable common law, directly or

indirectly held a controlling interest in

the borrower on the date of the loan

application, the borrower is required to

make certain disclosures following

submission of the borrower’s

application for loan forgiveness.

For purposes of this section, the term

‘‘controlling interest’’ means owning,

controlling, or holding not less than 20

percent, by vote or value, of the

outstanding amount of any class of

equity interest in a borrower. For

purposes of making this determination,

the securities owned, controlled or held

by the individual and spouse shall be

aggregated. The term ‘‘equity interest’’

means (1) a share in a borrower, without

regard to whether the share is

transferable or classified as stock or

anything similar, (2) a capital or profit

interest in a limited liability company or

partnership, or (3) a warrant or right,

other than a right to convert, to

purchase, sell, or subscribe to a share of

interest described in (1) or (2),

respectively. The term ‘‘Executive

department’’ has the meaning given the

term in section 101 of title 5, United

States Code. The term ‘‘Member of

Congress’’ means a Member of the

Senate or House of Representatives, a

Delegate to the House of

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See subsection III.B.2.a. of the consolidated

interim final rule implementing updates to the

Paycheck Protection Program, 86 FR 3692, 3698

(Jan. 14, 2021); subsection III.e.6. of the interim

final rule for Second Draw PPP loans, 86 FR 3712,

3719 (Jan. 14, 2021).

This section has been added to conform to

section 305 of the Economic Aid Act.

This provision is effective as if included in the

CARES Act and shall apply to any loan made

pursuant to section 7(a)(36) or 7(a)(37) of the Small

Business Act before, on, or after the date of

enactment of the Economic Aid Act, including

forgiveness of such a loan.

This subsection was originally published at 85

FR 33010, subsection III.1.a. (June 1, 2020).

This subsection was originally published at 85

FR 33010, subsection III.1.b. (June 1, 2020) and

amended by 85 FR 38304, subsection III.2.a. (June

26, 2020) and 85 FR 66214, subsection III.2.a. (Oct.

19, 2020) and has been modified to conform to

section 311 of the Economic Aid Act.

https://www.sba.gov/document/support—faq-

lenders-borrowers.

This subsection was originally published at 85

FR 33010, subsection III.1.c. (June 1, 2020) and has

been modified to conform to sections 307 and 311

of the Economic Aid Act.

13 CFR 120.524(c).

Representatives, and the Resident

Commissioner from Puerto Rico.

If the borrower submitted a loan

forgiveness application to its PPP lender

before December 27, 2020, then the

principal executive officer, or

individual performing a similar

function, of the borrower shall submit to

its PPP lender an SBA Form 3508D

disclosing the controlling interest(s) not

later than January 26, 2021. If the PPP

lender has already submitted a

forgiveness decision to SBA, the lender

shall promptly transmit the SBA Form

3508D to SBA. Otherwise, the PPP

lender shall transmit the SBA Form

3508D to SBA at the time the lender

issues its forgiveness decision to SBA. If

the borrower submits a loan forgiveness

application to its PPP lender on or after

December 27, 2020, then the principal

executive officer, or individual

performing a similar function, of the

borrower shall submit to its PPP lender

an SBA Form 3508D disclosing the

controlling interest(s) not later than 30

days after submitting the application.

The PPP lender shall transmit the SBA

Form 3508D to SBA with the PPP

lender’s forgiveness decision.

Alternatively, the PPP lender may

transmit the completed Form 3508D to

SBA when received.

An entity is prohibited from receiving

a PPP loan after December 27, 2020 if

a controlling interest is held directly or

indirectly by the President of the United

States, Vice President of the United

States, the head of an Executive

department, or a Member of Congress, or

the spouse of any of the preceding.

7. Lender Hold Harmless

Under what circumstances may a lender

rely on a certification or documentation

submitted by an eligible PPP borrower

that received a PPP loan?

A lender may rely on any certification

or documentation submitted by a PPP

applicant or an eligible PPP borrower

that received a PPP loan that—(a) is

submitted pursuant to all applicable

statutory requirements, regulations, and

guidance related to a PPP loan,

including sections 7(a)(36), 7(a)(37), and

7A of the Small Business Act; and (b)

attests that the PPP applicant or eligible

PPP borrower, as applicable, has

accurately provided the certification or

documentation to the lender in

accordance with the statutory

requirements, regulations, and guidance

described in (a). With respect to a lender

that relies on a borrower certification or

documentation meeting the

requirements of this subsection, an

enforcement action may not be taken

against the lender related to the PPP

loan, and the lender shall not be subject

to any penalties relating to loan

origination or forgiveness of the PPP

loan, if:

(i) The lender acts in good faith

relating to loan origination or

forgiveness of the PPP loan based on

that reliance; and

(ii) all other relevant Federal, State,

local, and other statutory and regulatory

requirements applicable to the lender

are satisfied with respect to the PPP

loan.

V. Paycheck Protection Program SBA

Loan Review Procedures and Related

Borrower and Lender Responsibilities

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 Economic Aid 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).

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, 2483–SD, or lender’s

equivalent form) and the Loan

Forgiveness Application Form (SBA

Form 3508, 3508EZ, 3508S, or lender’s

equivalent form). With respect to a

Second Draw PPP Loan, this may

include a review of whether the

borrower experienced the 25 percent

revenue reduction required under the

Economic Aid Act.

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 and the Economic Aid Act.

Loan Forgiveness Amounts: The

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, 3508EZ,

3508S, 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.

Additionally, section 7A(l)(1)(E) of the

Small Business Act expressly provides

that SBA may review and audit PPP

loans of $150,000 or less and access any

records the borrower is required to

retain. SBA may, in its discretion,

review a borrower’s First Draw PPP

Loan and Second Draw PPP Loan at the

same time or at different times. For

loans of more than $150,000, as noted

on the loan forgiveness application

forms, the borrower must retain PPP

documentation in its files for six years

after the date the loan is forgiven or

repaid in full. For loans of $150,000 and

under, the borrower must retain records

relevant to the form that prove

compliance with the requirements of

section 7(a)(36) or 7(a)(37), as

applicable, of the Small Business Act—

for employment records, for the 4-year

period following submission of the loan

forgiveness application, and for other

records, for the 3-year period following

submission of the loan forgiveness

application. All borrowers must permit

authorized representatives of SBA,

including representatives of its Office of

Inspector General, to access such files

upon request. Additionally, all

borrowers must provide documentation

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This subsection was originally published at 85

FR 33010, subsection III.1.d. (June 1, 2020).

This subsection was originally published at 85

FR 33010, subsection III.1.e. (June 1, 2020) and has

been modified for readability.

This subsection was originally published at 85

FR 33010, subsection III.1.f. (June 1, 2020) and has

been modified to reflect the issuance of the interim

final rule on appeals of SBA loan review decisions

under the Paycheck Protection Program. 85 FR

52883 (Aug. 27, 2020).

See 85 FR 52883 (Aug. 27, 2020).

This subsection was originally published at 85

FR 33010, subsection III.2.a. (June 1, 2020) and

amended by 85 FR 38304, subsection III.2.b. (June

26, 2020) and 85 FR 66214, subsection III.2.b. (Oct.

19, 2020) and has been modified to conform to

sections 307 and 311 of the Economic Aid Act.

independently to a lender to satisfy

relevant Federal, State, local or other

statutory or regulatory requirements or

in connection with an SBA loan review.

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. An SBA

determination that a borrower is

ineligible for a First Draw PPP Loan may

also result in an SBA determination that

the borrower is ineligible for any

Second Draw PPP Loan, and SBA may

direct the lender to deny any loan

forgiveness application submitted for

the Second Draw PPP Loan. 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 7A(b) of the Small Business

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 7A(b), the borrower must

be an ‘‘eligible recipient’’ under section

7(a)(36) and section 7(a)(37) of the Small

Business Act 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 PPP

provisions of the CARES Act and the

Economic Aid Act, 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

recipient of the 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 has issued a separate

interim final rule addressing this

process.

2. The Loan Forgiveness Process for

Lenders

a. What should a lender review?

When a borrower submits SBA Form

3508 or lender’s equivalent form, the

lender shall:

i. Confirm receipt of the borrower

certifications contained in the SBA

Form 3508 or lender’s equivalent form.

ii. Confirm receipt of the

documentation the borrower must

submit to aid in verifying payroll and

nonpayroll costs, as specified in the

instructions to the SBA Form 3508 or

lender’s equivalent form.

iii. Confirm the borrower’s

calculations on the borrower’s SBA

Form 3508 or lender’s equivalent form,

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,

Business Utility Payments, Covered

Operations Expenditures, Covered

Property Damage Costs, Covered

Supplier Costs, and Covered Worker

Protection Expenditures claimed on

Lines 2 through 8 on the PPP Loan

Forgiveness Calculation Form, by

reviewing the documentation submitted

with the SBA Form 3508 or lender’s

equivalent form.

iv. Confirm that the borrower made

the calculation on Line 14 of the SBA

Form 3508 or lender’s equivalent form

correctly, by dividing the borrower’s

Eligible Payroll Costs claimed on Line 1

by 0.60.

When the borrower submits SBA

Form 3508EZ or lender’s equivalent

form, the lender shall:

i. Confirm receipt of the borrower

certifications contained in the SBA

Form 3508EZ or lender’s equivalent

form.

ii. Confirm receipt of the

documentation the borrower must

submit to aid in verifying payroll and

nonpayroll costs, as specified in the

instructions to the SBA Form 3508EZ or

lender’s equivalent form.

iii. Confirm the borrower’s

calculations on the borrower’s SBA

Form 3508EZ or lender’s equivalent

form, including the dollar amount of the

Payroll Costs, Business Mortgage

Interest Payments, Business Rent or

Lease Payments, Business Utility

Payments, Covered Operations

Expenditures, Covered Property Damage

Costs, Covered Supplier Costs, and

Covered Worker Protection

Expenditures claimed on Lines 1

through 8 of the SBA Form 3508EZ or

lender’s equivalent form, by reviewing

the documentation submitted with the

SBA Form 3508EZ or lender’s

equivalent form.

iv. Confirm that the borrower made

the calculation on Line 11 of the SBA

Form 3508EZ or lender’s equivalent

form correctly, by dividing the

borrower’s Eligible Payroll Costs

claimed on Line 1 by 0.60.

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

Form. Lenders are expected to perform

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85 FR 20811, 20815–20816 (Apr. 15, 2020).

See subsection (h)(2)(i)(D) of the interim final

rule on Second Draw PPP Loans. 86 FR 3712, 3721

(Jan. 14, 2021).

85 FR 20811, 20815–20816 (Apr. 15, 2020).

This subsection was originally published at 85

FR 33010, subsection III.2.b. (June 1, 2020) and

amended by 85 FR 38304, subsection III.2.b. (June

26, 2020) and 85 FR 66214, subsection III.2.b. (Oct.

19, 2020) and has been modified to conform to

sections 311, 322, and 333 of the Economic Aid Act

and for readability.

Section 333 of the Economic Aid Act repealed

the CARES Act provision requiring SBA to deduct

EIDL Advance Amounts received by borrowers from

the forgiveness payment amounts remitted by SBA

to the lender. Any EIDL Advance Amounts

previously deducted from a borrower’s forgiveness

amount will be remitted to the lender, together with

interest to the remittance date.

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

and

section IV.7 above indicate, 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.

When a borrower submits SBA Form

3508S or lender’s equivalent form, the

lender shall:

i. Confirm receipt of the borrower

certifications contained in the SBA

Form 3508S or lender’s equivalent form.

ii. In the case of a Second Draw PPP

Loan for which the borrower did not

provide documentation of revenue

reduction with its application and the

lender did not conduct a review of the

documentation at the time of

application, confirm the dollar amount

and percentage of the borrower’s

revenue reduction by performing a good

faith review, in a reasonable time, of the

borrower’s calculations and supporting

documents concerning the borrower’s

revenue reduction.

If the lender identifies errors in the

borrower’s calculation or material lack

of substantiation in the borrower’s

supporting documents regarding

revenue reduction, the lender should

work with the borrower to remedy the

issue. 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.

The borrower shall not receive

forgiveness without submitting all

required documentation to the lender.

As the First Interim Final Rule

and

section IV.7 above indicate, lenders may

rely on borrower representations. 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 (if required) and attests that

it accurately verified the payments for

eligible costs.

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 the

following:

i. For applications submitted using

the SBA Form 3508 or lender’s

equivalent form:

(1) The PPP Loan Forgiveness

Calculation Form;

(2) PPP Schedule A;

(3) the (optional) PPP Borrower

Demographic Information Form (if

submitted to the lender); and

(4) the SBA Form 3508D, if

applicable.

ii. For applications submitted using

the SBA Form 3508EZ, 3508S, or

lender’s equivalent form:

(1) The SBA Form 3508EZ, 3508S, or

lender’s equivalent form;

(2) the (optional) Borrower

Demographic Information Form (if

submitted to the lender); and

(3) the SBA Form 3508D, if

applicable.

The lender must confirm that the

information provided by the lender to

SBA accurately reflects lender’s records

for the loan, that the lender has made its

decision in accordance with the

requirements set forth in subsection

V.2.a., and for a Second Draw PPP Loan

of $150,000 or less, if applicable, the

lender has reviewed the revenue

reduction documentation provided by

the borrower and confirmed the dollar

amount and percentage of the

borrower’s revenue reduction. 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 borrower’s loan(s) or loan

application(s), 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. The

EIDL Advance Amount received by the

borrower will not reduce the amount of

forgiveness to which the borrower is

entitled and will not be deducted from

the forgiveness payment amount that

SBA remits to the Lender.

The lender

is responsible for notifying the borrower

of remittance by SBA of the loan

forgiveness amount (or that SBA

determined that no amount of the loan

is eligible for forgiveness) and the date

on which the borrower’s first payment

is due, if applicable.

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 the following:

i. For applications submitted using

the SBA Form 3508 or lender’s

equivalent form:

(1) The PPP Loan Forgiveness

Calculation Form;

(2) PPP Schedule A;

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This change has been made so that SBA can

determine whether the borrower requested review

within the appropriate time frame.

This text has been added to clarify the

information that will be provided to borrowers

regarding the lender’s forgiveness decision.

This subsection was originally published at 85

FR 33010, subsection III.2.c. (June 1, 2020) and

amended by 85 FR 38304, subsection III.2.b. (June

26, 2020) and 85 FR 66214, subsection III.2.b. (Oct.

19, 2020) and has been modified to conform to

section 311 of the Economic Aid Act and updates

to SBA loan review procedures.

This subsection was originally published at 85

FR 66214, subsection III.2.c. (Oct. 19, 2020) and has

been modified to conform to section 307 of the

Economic Aid Act.

This section was originally published at 85 FR

33010, subsection III.3. (June 1, 2020) and has been

modified to conform to section 340 of the Economic

Aid Act. Section 340 of the Economic Aid Act

provides that a lender may not be required to repay

a processing fee unless the lender is found guilty

of an act of fraud in connection with the PPP loan.

(3) the (optional) PPP Borrower

Demographic Information Form (if

submitted to the lender); and

(4) the SBA Form 3508D, if

applicable.

ii. For applications submitted using

the SBA Form 3508EZ, 3508S, or

lender’s equivalent form:

(1) The SBA Form 3508EZ, 3508S, or

lender’s equivalent form;

(2) the (optional) Borrower

Demographic Information Form (if

submitted to the lender); and

(3) the SBA Form 3508D, if

applicable.

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 subsection

V.2.a., and for a Second Draw PPP Loan

of $150,000 or less, if applicable, the

lender has reviewed the revenue

reduction documentation provided by

the borrower and confirmed the dollar

amount and percentage of the

borrower’s revenue reduction. The

lender must also notify the borrower in

writing that the lender has issued a

decision to SBA denying the loan

forgiveness application and provide

SBA with a copy of the notice.

The

notice to the borrower must include the

reasons that the lender concluded that

the borrower is not entitled to loan

forgiveness in any amount and inform

the borrower that the borrower has 30

calendar days from receipt of the

notification to seek, through the lender,

SBA review of the lender’s decision.

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 notify the lender

that it is requesting that SBA review the

lender’s decision in accordance with

subsection V.2.c. below. Within 5 days

of receipt, the lender must notify SBA

of the borrower’s request for review.

SBA will notify the lender if SBA

decides to review the lender’s decision

or if SBA declines a request for review.

If the borrower does not timely request

SBA review or SBA declines the request

for review, the lender is responsible for

notifying the borrower of the date on

which the borrower’s first payment is

due. If SBA accepts a borrower’s request

for review, SBA will notify the borrower

and the lender of the results of the

review. If SBA denies forgiveness in

whole or in part, the lender is

responsible for notifying the borrower of

the date on which the borrower’s first

payment is due.

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. SBA may, in its discretion,

review the borrower’s First Draw PPP

Loan and Second Draw PPP Loan at the

same time or at different times. 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, 2483–SD, or lender’s

equivalent form) and all supporting

documentation provided by the

borrower, including revenue reduction

documentation provided by the

borrower on a Second Draw PPP Loan.

ii. The Loan Forgiveness Application

(SBA Form 3508, 3508EZ, 3508S, or

lender’s equivalent form), and all

supporting documentation provided by

the borrower (if the lender has received

such application), including revenue

reduction documentation provided by

the borrower on a Second Draw PPP

Loan of $150,000 or less if not provided

at the time of loan application. If the

lender receives the borrower’s loan

forgiveness 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 the

applicable documentation that the

instructions to the Loan Forgiveness

Application Form (SBA Form 3508,

3508EZ, 3508S, or lender’s equivalent)

instruct the borrower to maintain but

not submit (documentation listed under

‘‘Documents that Each Borrower Must

Maintain but is Not Required to

Submit’’).

For Second Draw PPP Loans of

$150,000 or less where a loan

forgiveness application has not been

submitted by the borrower, the lender

must also request that the borrower

provide the lender with revenue

reduction documentation, if not

previously provided to the lender.

The lender must submit documents

received from the borrower to SBA

within five 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 memorandum or other analysis

that the lender prepared in making its

decision on the borrower’s loan

forgiveness application, if applicable.

vi. 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 should issue a forgiveness

decision to SBA not later than 60 days

after receipt of the complete loan

forgiveness application from the

borrower, unless otherwise directed by

SBA.

d. What should a lender do if a borrower

submits documentation of eligible costs

that exceed a borrower’s PPP Loan

Amount?

The amount of loan forgiveness that a

borrower may receive cannot exceed the

principal amount of the PPP loan.

Whether a borrower submits SBA Form

3508, 3508EZ, 3508S, or lender’s

equivalent form, a lender should

confirm receipt of the documentation

the borrower is required to submit to aid

in verifying payroll and nonpayroll

costs, and, if applicable (for SBA Form

3508, 3508EZ, or lender’s equivalent

form), confirm the borrower’s

calculations on the borrower’s Loan

Forgiveness Application, up to the

amount required to reach the requested

Forgiveness Amount. Supporting

documentation regarding a borrower’s

payroll and nonpayroll costs is not

required to be submitted to the lender

with the SBA Form 3508S.

3. Lender Fees

Are lender processing fees subject to

clawback if a lender has not fulfilled its

obligations under PPP regulations?

A lender is required to repay the

processing fee to SBA if a lender is

found guilty of an act of fraud in

connection with the PPP loan. In such

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See 13 CFR 120.524.

case, the loan is not eligible for a

guaranty.

VI. 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 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, 13563, and

13771

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’s

designation under Executive Order

13771 will be informed by public

comment.

This rule is necessary to implement

the Economic Aid Act in order to

provide economic relief to small

businesses nationwide adversely

impacted under the COVID–19

Emergency Declaration. We anticipate

that this rule will result in substantial

benefits to small businesses, 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

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 § 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).

As discussed elsewhere in this

interim final rule, the Economic Aid Act

provided that several of the changes

relating to loan forgiveness are effective

as if included in the CARES Act and

apply to any loan made pursuant to

section 7(a)(36) of the Small Business

Act before, on, or after December 27,

2020, including forgiveness of such a

loan. Accordingly, loans that were made

in 2020 but that have not yet received

forgiveness will be forgiven based on

changes made in the Economic Aid Act,

as implemented in this interim final

rule. Given the urgent need to provide

borrowers that are eligible for loan

forgiveness with timely relief, the

Administrator in consultation with the

Secretary has determined that it is

impractical and not in the public

interest to provide a delayed effective

date. An immediate effective date will

allow SBA to continue remitting

forgiveness payments to lenders without

disruption and in accordance with the

amendments made by the Economic Aid

Act.

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 effect but does have

some retroactive effect consistent with

specific applicability provisions of the

Economic Aid Act.

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 collection (OMB

Control Number 3245–0407) as a result

of amendments made to the PPP by the

Economic Aid Act and implemented in

this interim final rule. The revisions

will affect the PPP Loan Forgiveness

Application Form 3508, PPP Loan

Forgiveness Application Form 3508EZ,

and PPP Loan Forgiveness Application

Form 3508S.

Further, to address the conflict of

interest provisions in section 322 of the

Economic Aid Act, SBA has developed

a new form, Paycheck Protection

Program—Borrower’s Disclosure of

Certain Controlling Interests Form

3508D, which is required for certain

borrowers who have disclosure

requirements under the Economic Aid

Act.

SBA Form 3508S was amended to

conform to section 307 of the Economic

Aid Act, which requires a simplified

forgiveness application for loans of not

more than $150,000. SBA Forms 3508,

3508EZ and 3508S were also amended

to address the new Second Draw PPP

Loan program under section 311 of the

Economic Aid Act, include the

additional expenses that are eligible for

forgiveness under section 304 of the

Economic Aid Act, address the changes

to the covered period definition in

section 306 of the Economic Aid Act,

and implement the EIDL advance

deduction repeal in section 333 of the

Economic Aid Act. SBA Form 3508D

will be used by borrowers where a

covered individual, as defined in

section 322 of the Economic Aid Act,

holds a controlling interest in the

borrower.

SBA has requested Office of

Management and Budget (OMB)

emergency approval of the revisions to

the information collection to enable

borrowers to begin submitting loan

forgiveness applications with the

Economic Aid Act changes as quickly as

possible and to enable borrowers with

disclosure requirements to meet the

statutory deadline for disclosure.

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

Rules that are exempt from notice and

comment are also exempt from the RFA

requirements, including conducting a

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8299

Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Rules and Regulations

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);

Coronavirus Aid, Relief, and Economic

Security Act, Pub. L. 116–136, section 1114

and Economic Aid to Hard-Hit Small

Businesses, Nonprofits, and Venues Act (Pub.

L. 116–260), section 303.

Tami Perriello,

Acting Administrator, Small Business

Administration.

Andy P. Baukol,

Principal Deputy Assistant Secretary for

International Monetary Policy (performing the

delegable duties of the Deputy Secretary),

Department of the Treasury.

[FR Doc. 2021–02314 Filed 2–3–21; 11:15 am]

BILLING CODE P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA–2020–1177; Project

Identifier MCAI–2020–01336–R; Amendment

39–21403; AD 2021–02–20]

RIN 2120–AA64

Airworthiness Directives; He

licopte

res

Guimbal Helicopters

AGENCY

: Federal Aviation

Administration (FAA), DOT.

ACTION

: Final rule; request for

comments.

SUMMARY

: The FAA is adopting a new

airworthiness directive (AD) for all

licopte

res Guimbal Model Cabri G2

helicopters. This AD was prompted by

a report of a crack in a rotating scissor

fitting. This AD requires an initial and

repetitive inspections of certain rotating

and non-rotating scissor fittings, and

depending on the results, replacing the

affected assembly. This AD also

prohibits installing certain main rotor

hubs (MRHs) and swashplate guides

unless the initial inspection has been

accomplished. The FAA is issuing this

AD to address the unsafe condition on

these products.

DATES

: This AD becomes effective

February 22, 2021.

The Director of the Federal Register

approved the incorporation by reference

of certain documents listed in this AD

as of February 22, 2021.

The FAA must receive comments on

this AD by March 22, 2021.

ADDRESSES

: You may send comments,

using the procedures found in 14 CFR

11.43 and 11.45, by any of the following

methods:

• Federal eRulemaking Portal: Go to

https://www.regulations.gov. Follow the

instructions for submitting comments.

• Fax: (202) 493–2251.

• Mail: U.S. Department of

Transportation, Docket Operations,

M–30, West Building Ground Floor,

Room W12–140, 1200 New Jersey

Avenue SE, Washington, DC 20590.

• Hand Delivery: Deliver to Mail

address above between 9 a.m. and 5

p.m., Monday through Friday, except

Federal holidays.

For service information identified in

this final rule, contact He

licopte

res

Guimbal, Basile Ginel, 1070, rue du

Lieutenant Parayre, Ae

rodrome d’Aix-

en-Provence, 13290 Les Milles, France;

telephone 33–04–42–39–10–88; email

[email protected]; web https://

www.guimbal.com. You may view this

service information at the FAA, Office

of the Regional Counsel, Southwest

Region, 10101 Hillwood Pkwy., Room

6N–321, Fort Worth, TX 76177. For

information on the availability of this

material at the FAA, call (817) 222–

5110. It is also available at https://

www.regulations.gov by searching for

and locating Docket No. FAA–2020–

1177.

Examining the AD Docket

You may examine the AD docket at

https://www.regulations.gov by

searching for and locating Docket No.

FAA–2020–1177; or in person at Docket

Operations between 9 a.m. and 5 p.m.,

Monday through Friday, except Federal

holidays. The AD docket contains this

final rule, the European Union Aviation

Safety Agency (EASA) AD, any

comments received, and other

information. The street address for

Docket Operations is listed above.

FOR FURTHER INFORMATION CONTACT

: Fred

Guerin, Aerospace Engineer, General

Aviation & Rotorcraft Section,

International Validation Branch, FAA,

2200 South 216th St. Des Moines, WA

98198; telephone (206) 231–3500; email

[email protected].

SUPPLEMENTARY INFORMATION

Background

The EASA, which is the Technical

Agent for the Member States of the

European Union, has issued EASA AD

No. 2020–0199, dated September 21,

2020, and corrected September 24, 2020

(EASA AD 2020–0199), to correct an

unsafe condition for He

licopte

res

Guimbal (HG) Model Cabri G2

helicopters. EASA advises of a report of

a crack in a rotating scissor fitting

discovered during maintenance.

According to EASA, the suspected root

cause of the crack was corrosion under

residual stress. This condition, if not

addressed, could result in failure of the

rotating or non-rotating scissor fitting on

either the MRH or the swashplate guide,

and subsequent loss of control of the

helicopter.

Accordingly, EASA AD 2020–0199

requires an initial and repetitive

inspections of the rotating and non-

rotating scissor fittings part number (P/

N) G12–00–200 installed on the MRH or

swashplate guide, respectively. If a

crack is detected, the EASA AD requires

replacing the affected MRH or

swashplate guide with a serviceable

part. The EASA AD prohibits installing

certain MRHs and swashplate guides

unless the initial inspection has been

accomplished. The EASA AD also

requires reporting certain information to

HG.

FAA’s Determination

These helicopters have been approved

by EASA and are approved for operation

in the United States. Pursuant to the

FAA’s bilateral agreement with the

European Union, EASA has notified the

FAA about the unsafe condition

described in its AD. The FAA is

proposing this AD after evaluating all

known relevant information and

determining that the unsafe condition

described previously is likely to exist or

develop on other helicopters of the same

type design.

Related Service Information Under 1

CFR Part 51

The FAA reviewed Guimbal Service

Bulletin SB 20–011, Revision C, and SB

20–012, Revision B, each dated October

5, 2020 (SB 20–011 Rev C and SB 20–

012 Rev B). SB 20–012 Rev B specifies

removing the bolts connecting the two

scissor fittings P/N G12–00–200 and

accomplishing a one-time detailed

inspection for a crack in certain areas.

SB 20–012 Rev B also specifies

reassembling the two scissor fittings

using correct bolt torque limits,

installing new cotter pins, and reporting

any findings to HG customer service. SB

20–011 Rev C specifies procedures for a

recurring inspection after

accomplishment of SB 20–012 Rev B of

the same areas of the scissor fittings for

a crack as SB 20–012 Rev B, except

without removing the bolts which

connect the two scissor fittings. SB 20–

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