Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by American Rescue Plan Act, 15083-15089 [2021-05930]

Agencies

• SMALL BUSINESS ADMINISTRATION

[Federal Register Volume 86, Number 53 (Monday, March 22, 2021)]
[Rules and Regulations]
[Pages 15083-15089]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05930]


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SMALL BUSINESS ADMINISTRATION

13 CFR Parts 120 and 121

[Docket Number SBA-2021-0013]
RIN 3245-AH77


Business Loan Program Temporary Changes; Paycheck Protection 
Program as Amended by American Rescue Plan Act

AGENCY: U.S. Small Business Administration.

ACTION: Interim final rule.

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SUMMARY: This interim final rule implements changes related to loans 
made under the Paycheck Protection Program (PPP), which was originally 
established under the Coronavirus Aid, Relief, and Economic Security 
Act (CARES Act) to provide economic relief to small businesses 
nationwide adversely impacted by the Coronavirus Disease 2019 (COVID-
19). On December 27, 2020, the Economic Aid to Hard-Hit Small 
Businesses, Nonprofits, and Venues Act (Economic Aid Act) was enacted, 
extending the authority to make PPP loans through March 31, 2021, 
revising certain PPP requirements, and permitting second draw PPP 
loans. On January 14, 2021, SBA published an interim final rule that 
incorporated the Economic Aid Act amendments to the PPP and 
consolidated the interim final rules (and important guidance) that had 
been issued governing borrower eligibility, lender eligibility, and PPP 
application and origination requirements for PPP loans. On March 11, 
2021, the American Rescue Plan Act of 2021 (American Rescue Plan Act) 
was enacted expanding eligibility for first and second draw PPP loans, 
revising the exclusions from payroll costs for purposes of loan 
forgiveness, and providing that a PPP borrower that receives a PPP loan 
after December 27, 2020 can be approved for a Shuttered Venue Operator 
Grant under certain conditions. This interim final rule revises the PPP 
rules to incorporate the American Rescue Plan Act's amendments to the 
PPP. Additionally, this interim final rule clarifies the eligibility 
for first draw PPP loans for applicants that are assigned a North 
American Industry Classification System (NAICS) code beginning with 72 
and have more than one physical location and clarifies certain payroll 
cost exclusions included in the Economic Aid Act.

DATES: 
    Effective date: The provisions of this interim final rule are 
effective March 18, 2021.

[[Page 15084]]

    Applicability date: The provisions of this interim final rule 
incorporating the American Rescue Plan Act changes to the PPP apply to 
PPP loans approved, and loan forgiveness applications submitted, on or 
after March 11, 2021.
    Comment date: Comments must be received on or before April 21, 
2021.

ADDRESSES: You may submit comments, identified by number SBA-2021-0013 
through the Federal eRulemaking Portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
    SBA will post all comments on www.regulations.gov. If you wish to 
submit confidential business information (CBI) as defined in the User 
Notice at www.regulations.gov, please send an email to [email protected]. 
All other comments must be submitted through the Federal eRulemaking 
Portal described above. Highlight the information that you consider to 
be CBI and explain why you believe SBA should hold this information as 
confidential. SBA will review the information and make the final 
determination whether it will publish the information.

FOR FURTHER INFORMATION CONTACT: A Call Center Representative at 833-
572-0502, or the local SBA Field Office; the list of offices can be 
found at https://www.sba.gov/tools/local-assistance/districtoffices.

SUPPLEMENTARY INFORMATION:

I. Background Information

    On March 27, 2020, the Coronavirus Aid, Relief, and Economic 
Security Act (the CARES Act) (Pub. L. 116-136) was enacted to provide 
emergency assistance and health care response for individuals, 
families, and businesses affected by the coronavirus disease 2019 
(COVID-19) pandemic. Section 1102 of the CARES Act temporarily 
permitted the Small Business Administration (SBA) to guarantee 100 
percent of 7(a) loans under a new program titled the ``Paycheck 
Protection Program,'' pursuant to section 7(a)(36) of the Small 
Business Act (15 U.S.C. 636(a)(36)) (First Draw PPP Loans). Section 
1106 of the CARES Act provided for forgiveness of up to the full 
principal amount of qualifying loans guaranteed under the Paycheck 
Protection Program (PPP).
    On December 27, 2020, the Economic Aid to Hard-Hit Small 
Businesses, Nonprofits and Venues Act (Economic Aid Act) (Pub. L. 116-
260) was enacted. The Economic Aid Act reauthorized lending under the 
PPP through March 31, 2021. The Economic Aid Act added a new temporary 
section 7(a)(37) to the Small Business Act, which authorizes SBA to 
guarantee additional PPP loans (Second Draw PPP Loans) to eligible 
borrowers under generally the same terms and conditions available under 
section 7(a)(36) of the Small Business Act through March 31, 2021. The 
Economic Aid Act also redesignated section 1106 of the CARES Act as 
section 7A of the Small Business Act, to appear after section 7 of the 
Small Business Act.
    SBA initially published an interim final rule implementing the PPP 
on April 15, 2020 and subsequently issued additional interim final 
rules. On January 14, 2021, SBA published interim final rules 
implementing the Economic Aid Act amendments to the PPP.\1\ On February 
5, 2021, SBA published an additional interim final rule implementing 
Economic Aid Act changes related to the forgiveness and review of PPP 
loans.\2\ Following the publication of the interim final rules 
implementing the Economic Aid Act, SBA published another interim final 
rule revising certain loan amount calculation and eligibility 
provisions of those rules.\3\ As described below, this interim final 
rule further revises the consolidated interim final rule implementing 
updates to the PPP, the interim final rule on second draw PPP loans, 
and the consolidated interim final rule on loan forgiveness 
requirements and loan review procedures, by incorporating the expanded 
eligibility for First Draw and Second Draw PPP Loans and the exclusions 
from payroll costs that may be forgiven enacted in the American Rescue 
Plan Act (Pub. L. 117-2); confirming that First Draw PPP Loan 
applicants that are assigned a NAICS code beginning with 72 and that 
employ no more than 500 employees per physical location are eligible; 
and clarifying certain forgiveness payroll cost exclusions in the 
Economic Aid Act.
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    \1\ 86 FR 3692 (Jan. 14, 2021) (which we refer to as the 
``consolidated interim final rule implementing updates to the 
PPP''); 86 FR 3712 (Jan. 14, 2021) (which we refer to as the 
``interim final rule on second draw PPP loans'').
    \2\ 86 FR 8283 (Feb. 5, 2021) (which we refer to as the 
``consolidated interim final rule on loan forgiveness requirements 
and loan review procedures'').
    \3\ 86 FR 13149 (March 8, 2021).
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II. Comments and Immediate Effective Date

    This interim final rule is being issued without advance notice and 
public comment because section 1114 of the CARES Act and section 303 of 
the Economic Aid Act authorize SBA to issue regulations to implement 
the Paycheck Protection Program without regard to notice requirements. 
In addition, this rule is being issued to allow for immediate 
implementation of these changes. The intent of the CARES Act, the 
Economic Aid Act, and the American Rescue Plan Act is that SBA provide 
relief to America's small businesses and nonprofit organizations 
expeditiously. Given the urgent need to provide borrowers with timely 
relief and the short period of time before the program ends on March 
31, 2021, SBA has determined that it is impractical and not in the 
public interest to provide a 30-day delayed effective date. An 
immediate effective date will allow SBA to give small businesses and 
nonprofit organizations affected by this interim final rule the maximum 
amount of time to apply for loans and lenders the maximum amount of 
time to process applications before the program ends. This good cause 
justification also supports waiver of the 60-day delayed effective date 
for major rules under the Congressional Review Act at 5 U.S.C. 808(2). 
Although this interim final rule is effective immediately, comments are 
solicited from interested members of the public on all aspects of the 
interim final rule.
    These comments must be submitted on or before April 21, 2021. SBA 
will consider these comments and the need for making any revisions as a 
result of these comments.

III. Paycheck Protection Program as Amended by the American Rescue Plan 
Act

1. Eligibility, Size, Affiliation Waivers, and Certifications

    Part III.B.1. of the consolidated interim final rule implementing 
updates to the PPP identifies the businesses, organizations, and 
individuals that are eligible for First Draw PPP Loans, including the 
applicable size standards. Part III.B.3. of that rule sets forth the 
affiliation rules generally applicable to PPP loans, including the 
affiliation waivers available to certain businesses and organizations. 
The American Rescue Plan Act expands eligibility to additional 
businesses and organizations and revises size standards and adds 
affiliation waivers for certain eligible businesses and organizations.
    The American Rescue Plan Act also revises section 324 of the 
Economic Aid Act to provide that businesses that receive a PPP loan 
after December 27, 2020 are no longer ineligible for a Shuttered Venue 
Operator (SVO) Grant under certain conditions. Specifically, if a PPP 
borrower receives a First Draw or Second Draw PPP Loan after December 
27, 2020, the amount of any subsequently-approved SVO grant will

[[Page 15085]]

be reduced by the amount of the First Draw or Second Draw PPP Loan. (If 
a PPP borrower receives both a First Draw and a Second Draw PPP Loan 
after December 27, 2020, the amount of any subsequently-approved SVO 
grant will be reduced by the combined amount of both PPP loans.) 
However, because sections 7(a)(36)(U) and 7(a)(37)(A)(iv)(III)(ee) of 
the Small Business Act were not amended by the American Rescue Plan 
Act, if a PPP applicant is approved for an SVO grant before SBA issues 
a loan number for the PPP loan, the applicant is ineligible for the PPP 
loan and acceptance of any PPP loan proceeds will be considered an 
unauthorized use.
    In addition, SBA is making a clarifying change to the list of 
eligible entities for First Draw PPP Loans by adding businesses with a 
NAICS code beginning with 72 that employ no more than 500 employees per 
physical location. These entities are included in section 
7(a)(36)(D)(iii) of the Small Business Act (15 U.S.C. 
636(a)(36)(D)(iii)), as amended by the CARES Act, and are addressed in 
section B.3. of the consolidated interim final rule implementing 
updates to the PPP. Because the omission of these entities from the 
list of eligible entities could cause borrower confusion, SBA is 
revising subsection B.1.a. to add these entities.
    Therefore, Part III.B.1.a. (86 FR 3692, 3695) of the consolidated 
interim final rule implementing updates to the PPP is revised to read 
as follows:

    1. What businesses, organizations, and individuals are eligible?
    a. Am I eligible? 2 3
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    \2\ See interim final rule on Second Draw PPP Loans for 
eligibility criteria for Second Draw PPP Loans, which was published 
separately. 86 FR 3712 (January 14, 2021).
    \3\ This subsection was originally published at 85 FR 20811, 
subsection III.2.a. (April 15, 2020), as amended by 85 FR 36308 
(June 16, 2020), 85 FR 36717 (June 18, 2020), and 85 FR 38301 (June 
26, 2020), and has been modified to reflect subsequent rules or 
guidance, the Economic Aid Act, and the American Rescue Plan Act.
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    You are eligible for a PPP loan if:
    i. You, together with any affiliates (if applicable),\4\ are:
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    \4\ See subsection B.3 of the consolidated interim final rule 
implementing updates to the PPP regarding the applicability of 
affiliation rules at 13 CFR 121.103 and 121.301 to PPP loans.
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     A small business concern under the applicable revenue-
based size standard established by SBA in 13 CFR 121.201 for your 
industry or under the SBA alternative size standard; \5\
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    \5\ Under SBA's alternative size standard, a business concern 
may qualify as a small business concern if it, together with any 
affiliates: (1) Has a maximum tangible net worth of not more than 
$15 million; and (2) the average net income after Federal income 
taxes (excluding any carry-over losses) for the two full fiscal 
years before the date of application is not more than $5 million.
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     an independent contractor, eligible self-employed 
individual, or sole proprietor;
     a business concern, a tax-exempt nonprofit organization 
described in section 501(c)(3) of the Internal Revenue Code (IRC), a 
tax-exempt veterans organization described in section 501(c)(19) of 
the IRC, a Tribal business concern described in section 31(b)(2)(C) 
of the Small Business Act, and you employ no more than the greater 
of 500 employees or, if applicable, the size standard in number of 
employees established by SBA in 13 CFR 121.201;
     a housing cooperative that employs no more than 300 
employees and meets the criteria described in subsection B.1.g.v. of 
the consolidated interim final rule implementing updates to the PPP, 
as amended by this interim final rule;
     a business concern that is assigned a North American 
Industry Classification System (NAICS) code beginning with 72 that 
employs no more than 500 employees per physical location;
     an eligible section 501(c)(6) organization or an 
eligible destination marketing organization,\6\ that employs no more 
than 300 employees per physical location;
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    \6\ See subsections B.1.g.vii. and B.1.g.viii for additional 
information on the eligibility of section 501(c)(6) organizations, 
and destination marketing organizations. As amended by the American 
Rescue Plan Act, the applicable size standard for section 501(c)(6) 
organizations and destination marketing organizations is not more 
than 300 employees per physical location.
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     a news organization that is majority owned or 
controlled by a NAICS code 511110 or 5151 business or a nonprofit 
public broadcasting entity with a trade or business under NAICS 
511110 or 5151, that employs no more than 500 employees (or, if 
applicable, the size standard in number of employees established by 
SBA in 13 CFR 121.201 for your industry) per location;
     a tax-exempt non-profit organization described in 
section 501(c)(3) of the Internal Revenue Code that employs not more 
than 500 employees per physical location of the organization;
     a tax-exempt nonprofit organization described in any 
paragraph of section 501(c) of the Internal Revenue Code of 1986, 
other than paragraph (3), (4), (6), or (19) that employs not more 
than 300 employees per physical location and meets the criteria 
described in subsection B.1.g.iii. of the consolidated interim final 
rule implementing updates to the PPP, as amended by this interim 
final rule;
     a business concern or other organization that is 
assigned a NAICS code of 519130, certifies in good faith as an 
internet-only news publisher or internet-only periodical publisher, 
and is engaged in the collection and distribution of local or 
regional and national news and information, that employs not more 
than 500 employees (or the size standard in number of employees 
established by SBA in 13 CFR 121.201 for NAICS code 519130) per 
physical location, and meets the criteria described in subsection 
B.1.g.iv. of the consolidated interim final rule implementing 
updates to the PPP, as amended by this interim final rule; or
     another type of entity specifically provided for by PPP 
rules (as described below); and
    ii. you were in operation on February 15, 2020, and either had 
employees for whom you paid salaries and payroll taxes or paid 
independent contractors, as reported on a Form 1099-MISC or you were 
an eligible self-employed individual, independent contractor, or 
sole proprietorship with no employees.
    You must submit documentation sufficient to establish 
eligibility and to demonstrate the qualifying payroll amount, which 
may include, as applicable, payroll records, payroll tax filings, 
Form 1099-MISC, Schedule C or F, income and expenses from a sole 
proprietorship, or bank records.
* * * * *
    The American Rescue Plan Act expands eligibility for PPP loans to 
tax-exempt organizations described in any paragraph of section 501(c) 
of the Internal Revenue Code of 1986, except for section 501(c)(4). 
Thus, subsections III.B.1.g.iii. and iv. of the consolidated interim 
final rule implementing updates to the PPP, which describe the 
eligibility of electric cooperatives and telephone cooperatives that 
are exempt from Federal income taxation under section 501(c)(12) of the 
Internal Revenue Code, are no longer necessary. For PPP loans made 
after the effective date of this interim final rule, such organizations 
will be eligible as set forth in a new subsection for tax-exempt 
organizations under any paragraph of section 501(c) of the Internal 
Revenue Code (other than paragraph (3), (4), (6), or (19)) discussed 
immediately below. With the new statutory change, the size eligibility 
requirements for electric and telephone cooperatives have changed as 
well. Previously, these entities were eligible if they had no more than 
500 employees, met the employee-based SBA size standard for their 
industry (if higher), or met SBA's alternative size standard. For PPP 
loans made after the effective date of this interim final rule, these 
entities are eligible if they have no more than 300 employees per 
physical location, and these entities are no longer permitted to use 
the employee-based SBA size standard for their industry or SBA's 
alternative size standard to determine size.
    Therefore, Part III.B.1.g. of the consolidated interim final rule 
implementing updates to the PPP (86 FR 3692, 3696-3697) is revised by 
replacing subsections B.1.g.iii. and iv. of the industry-specific 
eligibility issues with two new subsections to read as follows:

    g. Industry-Specific Eligibility Issues
* * * * *
    iii. Are tax-exempt nonprofit organizations described in any 
paragraph of section 501(c)

[[Page 15086]]

of the Internal Revenue Code of 1986, other than paragraph (3), (4), 
(6), or (19), eligible for PPP loans? \17\
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    \17\ This subsection was originally published at 85 FR 29847, 
subsection III.1. (May 19, 2020) and has been revised to conform to 
the American Rescue Plan Act. Section 7(a)(36)(D)(ix) of the Small 
Business Act (15 U.S.C. 636(a)(36)(D)(ix)) as amended by the 
American Rescue Plan Act adds ``additional covered nonprofit 
entities'' to the eligible entities for First Draw PPP Loans. The 
term ``additional covered nonprofit entities'' is defined in section 
7(a)(36)(A)(xvii) as ``an organization described in any paragraph of 
section 501(c) of the Internal Revenue Code of 1986, other than 
paragraph (3), (4), (6), or (19), and exempt from tax under section 
501(a) of such Code; and does not include any entity that, if the 
entity were a business concern, would be described in section 
120.110 of title 13, Code of Federal Regulations (or in any 
successor regulation or other related guidance that may be issued by 
the Administrator) other than a business concern described in 
paragraph (a) or (k) of such section.''
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    Yes. An organization described in any paragraph of section 
501(c) of the Internal Revenue Code of 1986, other than paragraph 
(3), (4), (6), or (19) and exempt from tax under section 501(a) of 
such Code, is eligible for a PPP loan if: (1) The organization does 
not receive more than 15 percent of its receipts from lobbying 
activities; (2) the lobbying activities of the organization do not 
comprise more than 15 percent of the total activities of the 
organization; (3) the cost of the lobbying activities of the 
organization did not exceed $1,000,000 during the most recent tax 
year of the organization that ended prior to February 15, 2020; and 
(4) the organization employs not more than 300 employees.\18\ 
However, this does not include any organization that, if the 
organization were a business concern, would be described in 13 CFR 
120.110 (or any successor regulation or other related guidance or 
rule that may be issued by SBA) other than a business concern 
described in paragraph (a) or (k) of such section. Tax-exempt 
organizations described in section 501(c)(3), 501(c)(6) and 
501(c)(19) of the Internal Revenue Code of 1986 have separate 
eligibility requirements described elsewhere in this rule. Tax-
exempt organizations described in section 501(c)(4) of the Internal 
Revenue Code of 1986 are ineligible for a PPP loan.
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    \18\ For such entities with more than one physical location, 
section 7(a)(36)(D)(iii)(III) of the Small Business Act (15 U.S.C. 
636(a)(36)(D)(iii)(III)), as amended by section 5001 of the American 
Rescue Plan Act, provides that such entities with more than one 
physical location are eligible if they employ not more than 300 
employees per physical location.
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    iv. Are internet publishing organizations eligible for PPP 
loans? \19\
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    \19\ This subsection was originally published at 85 FR 35550, 
subsection III.1. (June 11, 2020) and has been revised to conform 
with the American Rescue Plan Act.
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    Yes. A business concern or other organization that was not 
eligible to receive a PPP loan before March 11, 2021, is eligible 
for a PPP loan if it: (1) Is assigned a NAICS code of 519130; (2) 
certifies in good faith that it is an internet-only news publisher 
or internet-only periodical publisher; (3) is engaged in the 
collection and distribution of local or regional and national news 
and information; (4) employs not more than 500 employees (or the 
size standard in number of employees established by SBA in 13 CFR 
121.201 for NAICS code 519130) per physical location; and (5) 
certifies in good faith that proceeds of the loan will be used to 
support expenses at the component of the business concern or 
organization that supports local or regional news.\20\
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    \20\ See section 7(a)(36)(D)(iii)(IV) of the Small Business Act 
as amended by the American Rescue Plan Act.
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* * * * *
    To implement the American Rescue Plan Act provision that allows 
businesses to receive both a Shuttered Venue Operator (SVO) Grant and a 
PPP loan under certain conditions, Part III.B.2.a.vi. of the 
consolidated interim final rule implementing updates to the PPP (86 FR 
3692, 3698) is revised to read as follows:

    2. What businesses, organizations, and individuals are 
ineligible?
    a. Could I be ineligible even if I meet the eligibility 
requirements in section 1? \28\
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    \28\ This subsection was originally published at 85 FR 20811, 
subsection III.2.a. (April 15, 2020), and amended by 85 FR 36308 
(June 16, 2020), 85 FR 36717 (June 18, 2020), 85 FR 38301 (June 26, 
2020), and 86 FR 13149 (March 8, 2021), and has been modified to 
conform to subsequent interim final rules or guidance, the Economic 
Aid Act, the American Rescue Plan Act and for readability.
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    You are ineligible for a PPP loan if, for example:
* * * * *
    vi. You or your business have been approved for a grant under 
the Shuttered Venue Operator (SVO) Grant Program under section 324 
of the Economic Aid Act. (If you receive a PPP loan after December 
27, 2020 and you are subsequently approved for an SVO grant, the 
amount of the SVO grant received will be reduced by the amount of a 
First Draw or Second Draw PPP Loan. If you receive both a First Draw 
and Second Draw PPP Loan after December 27, 2020 and you are 
subsequently approved for an SVO grant, the SVO grant will be 
reduced by the combined amounts of both PPP loans. A PPP loan 
received before December 27, 2020 will not reduce the amount of the 
SVO grant.) \30\
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    \30\ This subsection has been revised to conform to section 5005 
of the American Rescue Plan Act.

    As noted above, the American Rescue Plan Act added affiliation 
waivers for certain eligible organizations with respect to PPP loans. 
To implement the additional affiliation waiver applicable to eligible 
internet publishing organizations, the parenthetical at the end of Part 
III.B.2.a.viii. of the consolidated interim final rule implementing 
updates to the PPP (86 FR 3692, 3698) is revised to include a reference 
to B.1.g.iv, which describes the conditions under which such internet 
publishing companies are eligible. Therefore, Part III.B.2.a.viii of 
the consolidated interim final rule implementing updates to the PPP, as 
amended by this interim final rule, is revised to read as follows:
* * * * *
    viii. Your business is an issuer, the securities of which are 
listed on an exchange registered as a national securities exchange 
under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 
78f) \32\ (SBA will not consider whether a news organization that is 
eligible under the conditions described in subsection 1.f. and 
1.g.vi. or an internet publishing organization that is eligible 
under the conditions described in subsection 1.g.iv. is affiliated 
with an entity, which includes any entity that owns or controls such 
news organization or internet publishing organization, that is an 
issuer \33\);
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    \32\ Added to conform to section 342 of the Economic Aid Act, 
which also added the following definitions to paragraph 7(a)(36)(A) 
of the Small Business Act (15 U.S.C. 636(a)(36)(A)): ``(xvi) the 
terms `exchange', `issuer', and `security' have the meanings given 
those terms in section 3(a) of the Securities Exchange Act of 1934 
(15 U.S.C. 78c(a)).'' This provision applies to loans made on or 
after December 27, 2020.
    \33\ See section 317 of the Economic Aid Act, as amended by 
section 5001 of the American Rescue Plan Act.
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* * * * *
    Also, Part III.B.12.vi. of the consolidated interim final rule 
implementing updates to the PPP (86 FR 3692, 3706) is revised to read 
as follows:

    12. What certifications need to be made?
    On the PPP borrower application, an authorized representative of 
the applicant must certify in good faith to all of the below:
* * * * *
    vi. The Applicant has not been approved for a Shuttered Venue 
Operator (SVO) grant from SBA as of the date of this loan 
application, and the Applicant acknowledges that if the Applicant is 
approved for an SVO grant before SBA issues a loan number for this 
loan, the Applicant is ineligible for the loan and acceptance of any 
loan proceeds will be considered an unauthorized use.

    Part III.B.3. of the consolidated interim final rule implementing 
updates to the PPP describes the affiliation rules generally applicable 
to PPP loans (86 FR 3692, 3698-3699). The American Rescue Plan Act adds 
affiliation waivers for certain businesses and organizations. 
Therefore, footnote 40 in part III.B.3.a. is revised to read as 
follows:

    Paragraph 7(a)(36)(D)(iv) of the Small Business Act (15 U.S.C. 
636(a)(36)(D)(iv)), as added by the CARES Act and amended by the 
Economic Aid Act and the American Rescue Plan Act, waives the 
affiliation rules contained in Sec.  121.103 for (1) any business 
concern with not more than 500 employees that, as of the date on 
which the loan is disbursed, is assigned a North American Industry 
Classification System code beginning with 72; (2) any business 
concern operating as a franchise that is assigned a franchise 
identifier code by the Administration; (3) any business concern that 
receives financial assistance from a company

[[Page 15087]]

licensed under section 301 of the Small Business Investment Act of 
1958 (15 U.S.C. 681); (4)(a) any business concern (including any 
station which broadcasts pursuant to a license granted by the 
Federal Communications Commission under title III of the 
Communications Act of 1934 (47 U.S.C. 301 et seq.) without regard 
for whether such a station is a concern as defined in Sec.  121.105 
of title 13, Code of Federal Regulations, or any successor thereto) 
that employs not more than 500 employees, or the size standard 
established by the Administrator for the North American Industry 
Classification System code applicable to the business concern, per 
physical location of such business concern and is majority owned or 
controlled by a business concern that is assigned a North American 
Industry Classification System code beginning with 511110 or 5151; 
or (b) any nonprofit organization that is assigned a North American 
Industry Classification System code beginning with 5151; and (5) any 
business concern or organization that is assigned a NAICS code of 
519130, certifies in good faith as an internet-only news publisher 
or internet-only periodical publisher, and is engaged in the 
collection and distribution of local or regional and national news 
and information, if the business concern or organization employs not 
more than 500 employees (or the size standard in number of employees 
established by SBA in 13 CFR 121.201 for NAICS code 519130) per 
physical location, and is majority owned or controlled by a business 
concern or organization that is assigned NAICS 519130. This interim 
final rule has no effect on these statutory waivers, which remain in 
full force and effect. As a result, the affiliation rules contained 
in Sec.  121.301 also do not apply to these types of entities. In 
addition, paragraph 7(a)(36)(D) of the Small Business Act (15 U.S.C. 
636(a)(36)(D)), as amended by section 342 of the Economic Aid Act 
and section 5001 of the American Rescue Plan Act states that, with 
respect to a business concern made eligible under paragraph 
7(a)(36)(D)(iii)(II) or (IV) or 7(a)(36)(D)(iv)(IV) or (V) (certain 
news organizations and internet publishing organizations), the 
Administrator shall not consider whether any affiliated entity, 
which for purposes of this subclause shall include any entity that 
owns or controls such business concern or organization, is an issuer 
as defined in subsection III.B.2.a.viii.

    Part IV.(c) of the interim final rule on second draw PPP loans sets 
forth who is eligible for a Second Draw PPP Loan. The American Rescue 
Plan Act amended the eligibility criteria for a Second Draw PPP Loan 
similarly to the amendments discussed above for First Draw PPP Loans. 
Therefore, part IV.(c)(1) of the interim final rule on second draw PPP 
loans (86 FR 3712, 3717) is revised to read as follows:

    (c) Who is eligible for a Second Draw PPP Loan?
    Subject to subsection (e) of this section, below, the following 
applicants are eligible for Second Draw PPP Loans:
    (1) An applicant is eligible for a Second Draw PPP Loan if it is 
a business concern, independent contractor, eligible self-employed 
individual, sole proprietor, nonprofit organization eligible for a 
First Draw PPP Loan, veterans organization, Tribal business concern, 
housing cooperative, small agricultural cooperative, eligible 
501(c)(6) organization or destination marketing organization, an 
eligible nonprofit news organization, additional covered nonprofit 
entity, or eligible internet publishing company \33\ that:
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    \33\ All terms in this subsection have the same definitions as 
in sections 7(a)(36) and (37) of the Small Business Act and the 
Consolidated First Draw PPP IFR, as applicable.
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    (i) Previously received a First Draw PPP loan in accordance with 
the eligibility criteria in the Consolidated First Draw PPP IFR (as 
amended);
    (ii) has used, or will use, the full amount of its First Draw 
PPP Loan (including the amount of any increase on such First Draw 
PPP Loan) on authorized uses under subsection B.11. of the 
Consolidated First Draw PPP IFR on or before the expected date on 
which the Second Draw PPP Loan will be disbursed;
    (iii) employs not more than 300 employees, unless it satisfies 
the alternative criteria for businesses with a North American 
Industry Classification System (``NAICS'') code beginning with 72, 
eligible news organizations, (501)(c)(3) nonprofit organizations, 
additional covered nonprofit entities, 501(c)(6) organizations, 
eligible destination marketing organizations, and eligible internet 
publishing organizations with more than one physical location 
described in subsection (c)(3), (c)(4), (c)(5), or (c)(6) of this 
section; and
    (iv) (A) experienced a reduction in revenue in calendar year 
2020, measured as follows:
* * * * *
    Part IV.(c) of the interim final rule on second draw PPP loans (86 
FR 3712, 3718) also is revised by adding two new subsections at the end 
to read as follows:

    (5) An entity is eligible for a Second Draw PPP Loan if it is a 
501(c)(3) nonprofit organization, an additional covered nonprofit 
entity, an eligible 501(c)(6) organization, or an eligible 
destination marketing organization and it employs not more than 300 
employees per physical location of the entity or organization.
    (6) A business concern or other organization that was not 
eligible to receive a covered loan before March 11, 2021, is 
eligible to receive a Second Draw PPP Loan for the continued 
provision of news, information, content, or emergency information if 
it is assigned a NAICS code of 519130, certifies in good faith as an 
internet-only news publisher or internet-only periodical publisher, 
and is engaged in the collection and distribution of local or 
regional and national news and information, and:
    (i) The business concern or organization employs not more than 
300 employees per physical location of the business concern or 
organization; and
    (ii) the business concern or organization makes a good faith 
certification that proceeds of the loan will be used to support 
expenses at the component of the business concern or organization 
that supports local or regional news.

    Part IV.(d) of the interim final rule on second draw PPP loans 
states that eligibility for Second Draw PPP Loans is governed by the 
same affiliation rules (and waivers) as First Draw PPP Loans, except as 
described in subsection (d)(2). The American Rescue Plan Act revised 
the affiliation waivers for First Draw and Second Draw PPP Loans. 
Although the American Rescue Plan Act did not amend section 
7(a)(37)(E)(ii) of the Small Business Act (15 U.S.C. 636(a)(37)(E)(ii)) 
to substitute ``not more than 300 employees'' for ``not more than 500 
employees'' in subclause (V) of section 7(a)(36)(D)(iv) of the Small 
Business Act (15 U.S.C. 636(a)(36)(D)(iv)), as section 7(a)(37)(E)(ii) 
does for eligible news organizations, SBA is doing so here to harmonize 
the affiliation waiver for internet publishing organizations with the 
300 employees per location size standard for Second Draw PPP Loans to 
internet publishing organizations.
    Therefore, Part IV.(d)(2) of the interim final rule on second draw 
PPP loans (86 FR 3712, 3718) is revised by adding a new subsection 
(iii) to read as follows:

    (d) How do SBA's affiliation rules affect an applicant's 
eligibility for a Second Draw PPP Loan?
* * * * *
    (iii) Any business concern or other organization that was not 
eligible to receive a covered loan before March 11, 2021, is 
assigned a NAICS code of 519130, certifies in good faith as an 
internet-only news publisher or internet-only periodical publisher, 
and is engaged in the collection and distribution of local or 
regional and national news and information, if the business concern 
or organization:
    (A) Employs not more than 300 employees, per physical location 
of the business concern or organization; and
    (B) is majority owned or controlled by a busines concern or 
organization that is assigned a NAICS code of 519130.

    In order to implement the American Rescue Plan Act provision that 
allows businesses to receive both a Shuttered Venue Operator (SVO) 
Grant and a PPP loan, part IV.(e)(5) of the interim final rule on 
second draw PPP loans (86 FR 3712, 3719) is revised to read as follows:

    (e) Who is not eligible for a Second Draw PPP Loan?
    An applicant is not eligible for a Second Draw PPP Loan, even if 
it meets the eligibility requirements of subsection (c) of this 
section, if the applicant is:
* * * * *
    (5) any person or entity that has been approved for a grant 
under the Shuttered Venue Operator (SVO) Grant Program under

[[Page 15088]]

section 324 of the Economic Aid Act. (If you receive a PPP loan 
after December 27, 2020 and you are subsequently approved for an SVO 
grant, the amount of the SVO grant received will be reduced by the 
amount of a First Draw or Second Draw PPP Loan. If you receive both 
a First Draw and Second Draw PPP Loan after December 27, 2020 and 
you are subsequently approved for an SVO grant, the SVO grant will 
be reduced by the combined amounts of both PPP loans. A PPP loan 
received prior to December 27, 2020 will not reduce the amount of 
the SVO grant.)

    As noted above, the American Rescue Plan Act added affiliation 
waivers for certain eligible organizations with respect to PPP loans. 
To implement the additional affiliation waiver applicable to eligible 
internet publishing organizations, the parenthetical at the end of Part 
IV.(e)(7) of the interim final rule on second draw loans (86 FR 3712, 
3719) is revised to include a reference to Part IV.(c)(6), which 
describes the conditions under which such internet publishing companies 
are eligible. Therefore, Part IV.(e)(7) of the interim final rule on 
second draw loans, as amended by this interim final rule, is revised to 
read as follows:
* * * * *
    (7) Any issuer, the securities of which are listed on an 
exchange registered as a national securities exchange under section 
6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f), where the 
terms ``exchange,'' ``issuer,'' and ``security'' have the meanings 
given those terms in section 3(a) of the Securities Exchange Act of 
1934 (15 U.S.C. 78c(a)) (except that SBA will not consider whether a 
news organization that is eligible under subsection (c)(4) or an 
internet publishing organization that is eligible under subsection 
(c)(6) is affiliated with an entity, which includes any entity that 
owns or controls such news organization or internet publishing 
organization, that is an issuer);
* * * * *

2. Forgiveness of First Draw and Second Draw PPP Loans

    Part III.B.14 of the consolidated interim final rule implementing 
updates to the PPP provides general information to borrowers on loan 
forgiveness. The consolidated interim final rule implementing updates 
to the PPP requires a revision to clarify certain forgiveness payroll 
cost exclusions included in the Economic Aid Act and to incorporate 
section 3134 of the Internal Revenue Code of 1986 (Internal Revenue 
Code) as added by section 9651 of the American Rescue Plan Act. 
Additionally, section 5001(c) of the American Rescue Plan Act revised 
the forgiveness payroll cost exclusions to include premiums taken into 
account in determining the credit allowed under section 6432 of the 
Internal Revenue Code. Therefore, the fourth full sentence in part 
III.B.14 of the consolidated interim final rule implementing updates to 
the PPP (86 FR 3692, 3706) reading ``[p]ayroll costs that are qualified 
wages taken into account in determining the Employer Retention Credit 
are not eligible for loan forgiveness,'' is revised to read ``The 
following payroll costs are not eligible for loan forgiveness: (a) 
Qualified wages taken into account in determining (i) the Employee 
Retention Credit under section 2301 of the CARES Act, as amended by 
section 206 of the Taxpayer Certainty and Disaster Tax Relief Act of 
2020 (Relief Act), (ii) the Employee Retention Credit under section 
3134 of the Internal Revenue Code, or (iii) the disaster credit under 
section 303 of the Relief Act, and (b) premiums for COBRA continuation 
coverage taken into account in determining the credit under section 
6432 of the Internal Revenue Code.''
    Part IV.1 of the consolidated interim final rule on loan 
forgiveness requirements and loan review procedures sets forth general 
information about loan forgiveness for First Draw and Second Draw PPP 
Loans. The consolidated interim final rule on loan forgiveness 
requirements and loan review procedures requires revisions to clarify 
certain forgiveness payroll cost exclusions under the Economic Aid Act 
and revisions to incorporate the forgiveness payroll cost exclusions 
required by the American Rescue Plan Act. Part IV.1.a.(1) describes the 
payroll costs that are eligible for loan forgiveness and identifies 
those costs that are to be excluded. The second full sentence of part 
IV.1.a.(1), Payroll Costs (86 FR 8283, 8286), reading ``[p]ayroll costs 
that are qualified wages taken into account in determining the Employer 
Retention Credit are not eligible for loan forgiveness,'' is revised to 
read ``The following payroll costs are not eligible for loan 
forgiveness: (a) Qualified wages taken into account in determining (i) 
the Employee Retention Credit under section 2301 of the CARES Act, as 
amended by section 206 of the Taxpayer Certainty and Disaster Tax 
Relief Act of 2020 (Relief Act) (CARES Act Employee Retention Credit), 
(ii) the Employee Retention Credit under section 3134 of the Internal 
Revenue Code of 1986 (ARP Employee Retention Credit), or (iii) the 
disaster credit under section 303 of the Relief Act (Disaster Credit), 
and (b) premiums for COBRA continuation coverage taken into account in 
determining the credit under section 6432 of the Internal Revenue Code 
of 1986 (COBRA Continuation Coverage).''
    Part IV.1.b. of the consolidated interim final rule on loan 
forgiveness requirements and loan review procedures describes the 
amount eligible for loan forgiveness for individuals with self-
employment income who file an IRS Form 1040, Schedule C or F. The last 
clause of part IV.1.b.i (86 FR 8283, 8287) is revised to read ``but 
excluding any qualified wages taken into account in determining the 
CARES Act Employee Retention Credit, ARP Employee Retention Credit, or 
the Disaster Credit or premiums for COBRA Continuation Coverage.''

3. Additional Information

    SBA may provide further guidance, if needed, through SBA notices 
that will be posted on SBA's website at www.sba.gov. Questions on the 
Paycheck Protection Program may be directed to the Lender Relations 
Specialist in the local SBA Field Office. The local SBA Field Office 
may be found at https://www.sba.gov/tools/local-assistance/districtoffices.
    Compliance with Executive Orders 12866, 12988, 13132 and 13563 the 
Congressional Review Act, the Administrative Procedure Act, the 
Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Regulatory 
Flexibility Act (5 U.S.C. 601-612).
Executive Orders 12866 and 13563
    This interim final rule is economically significant for the 
purposes of Executive Orders 12866 and 13563. SBA, however, is 
proceeding under the emergency provision at Executive Order 12866 
section 6(a)(3)(D) based on the need to move expeditiously to mitigate 
the current economic conditions arising from the COVID-19 emergency.
    This rule is necessary to provide economic relief to small 
businesses and nonprofit organizations nationwide adversely impacted 
under the COVID-19 Emergency Declaration. We anticipate that this rule 
will result in substantial benefits to small businesses, nonprofit 
organizations, their employees, and the communities they serve. 
However, we lack data to estimate the effects of this rule.
    The Administrator of the Office of Management and Budget's Office 
of Information and Regulatory Affairs (OIRA) has determined that this 
is a major rule for purposes of Subtitle E of the Small Business 
Regulatory Enforcement and Fairness Act of 1996 (also known as the 
Congressional Review Act or CRA) (5 U.S.C. 804(2) et seq.). Under the 
CRA, a major rule takes effect 60 days after the rule is published in 
the Federal Register. 5 U.S.C. 801(a)(3).
    Notwithstanding this requirement, the CRA allows agencies to 
dispense with

[[Page 15089]]

the requirements of section 801 when the agency for good cause finds 
that such procedure would be impracticable, unnecessary, or contrary to 
the public interest and the rule shall take effect at such time as the 
agency promulgating the rule determines. 5 U.S.C. 808(2). Pursuant to 
section 808(2), SBA for good cause finds that a 60-day delay to provide 
public notice is impracticable and contrary to the public interest. 
Likewise, for the same reasons, SBA for good cause finds that there are 
grounds to waive the 30-day effective date delay under the 
Administrative Procedure Act. 5 U.S.C. 553(d)(3).
    The last day to apply for and receive a PPP loan is March 31, 2021. 
Given the short duration of this program, and the urgent need to issue 
loans quickly, SBA has determined that it is impractical and not in the 
public interest to provide a delayed effective date. An immediate 
effective date will give small businesses and nonprofit organizations 
affected by this interim final rule the maximum amount of time to apply 
for loans and lenders the maximum amount of time to process 
applications before the program ends.
Executive Order 12988
    SBA has drafted this rule, to the extent practicable, in accordance 
with the standards set forth in section 3(a) and 3(b)(2) of Executive 
Order 12988, to minimize litigation, eliminate ambiguity, and reduce 
burden. The rule has no preemptive or retroactive effect.
Executive Order 13132
    SBA has determined that this rule will not have substantial direct 
effects on the States, on the relationship between the National 
Government and the States, or on the distribution of power and 
responsibilities among the various layers of government. Therefore, SBA 
has determined that this rule has no federalism implications warranting 
preparation of a federalism assessment.
Paperwork Reduction Act, 44 U.S.C. Chapter 35
    SBA has determined that this rule will require revisions to 
existing recordkeeping or reporting requirements of the Paycheck 
Protection Program (PPP) information collections (OMB Control Numbers 
3245-0407 and 3245-0417. The revisions will affect SBA Form 2483, 
Borrower Application Form Revised March 3, 2021, SBA Form 2483-C, 
Borrower Application Form for Schedule C Filers Using Gross Income 
March 3, 2021, SBA Form 2483-SD, Second Draw Borrower Application Form 
Revised March 3, 2021, SBA Form 2483-SD-C, Second Draw Borrower 
Application Form for Schedule C Filers Using Gross Income March 3, 
2021, SBA Form 2484, Lender's Application--Paycheck Protection Program 
Loan Guaranty Revised March 3, 2021, SBA Form 2484-SD, Lender's 
Application--Second Draw Loan Guaranty Revised March 3, 2021,. SBA 
Forms 2483, 2483-C, 2483-SD, and 2483-SD-C were amended to include the 
additional eligible entities (where applicable) and revise the 
Shuttered Venue Operator Grant Program certification due to the changes 
made by the American Rescue Plan Act. Other clarifying changes were 
also made to the forms. Additionally, conforming changes were made to 
SBA Forms 2484 and 2484-SD.
    SBA has requested Office of Management and Budget (OMB) emergency 
approval of the revisions to the information collections to give small 
businesses and nonprofits affected by this interim final rule the 
maximum amount of time to apply for loans and lenders the maximum 
amount of time to process applications before the program ends.
Regulatory Flexibility Act (RFA)
    The Regulatory Flexibility Act (RFA) generally requires that when 
an agency issues a proposed rule, or a final rule pursuant to section 
553(b) of the Administrative Procedure Act or another law, the agency 
must prepare a regulatory flexibility analysis that meets the 
requirements of the RFA and publish such analysis in the Federal 
Register. 5 U.S.C. 603, 604.
    Rules that are exempt from notice and comment are also exempt from 
the RFA requirements, including conducting a regulatory flexibility 
analysis, when among other things the agency for good cause finds that 
notice and public procedure are impracticable, unnecessary, or contrary 
to the public interest. SBA Office of Advocacy guide: How to Comply 
with the Regulatory Flexibility Act, Ch.1. p.9. Since this rule is 
exempt from notice and comment, SBA is not required to conduct a 
regulatory flexibility analysis.

    Authority: 15 U.S.C. 636(a)(36); 15 U.S.C. 636(a)(37); 15 U.S.C. 
636m; Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 
116-136, section 1114, Economic Aid to Hard-Hit Small Businesses, 
Nonprofits, and Venues Act (Pub. L. 116-260), section 303, and 
American Rescue Plan Act of 2021, sections 5001 and 5005.

James Rivera,
Acting Administrator, Small Business Administration.
[FR Doc. 2021-05930 Filed 3-18-21; 4:15 pm]
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