Business Loan Program Temporary Changes; Paycheck Protection Program — Additional Revisions to First Interim Final Rule

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Summary

An interim final rule issued by the U.S. Small Business Administration making additional revisions to its first Paycheck Protection Program interim final rule, published in the Federal Register of June 18, 2020 (Vol. 85, No. 118) under Docket No. SBA-2020-0036. The rule changes the eligibility requirement relating to felony convictions of an applicant or an owner of the applicant. As revised, an applicant is ineligible if an owner of 20 percent or more of its equity is incarcerated, on probation or parole, is subject to formal criminal charges, or has been convicted within the last five years of a felony involving fraud, bribery, embezzlement or a false statement in a loan application, or of any other felony within the last year. The rule cites the policies of the First Step Act of 2018 (Pub. L. 115-391), is effective June 16, 2020, and invites comments by July 20, 2020.

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36717 
Federal Register / Vol. 85, No. 118 / Thursday, June 18, 2020 / Rules and Regulations 
1978); E.O. 12674, 54 FR 15159, 3 CFR, 1989 
Comp., p. 215, as modified by E.O. 12731, 55 
FR 42547, 3 CFR, 1990 Comp., p. 306. 
§ 2635.204
[Amended] 
■5. In § 2635.204, in paragraph 
(g)(3)(iv) and examples 1 and 4 
following paragraph (g)(6), remove the 
dollar amount ‘‘$390’’ and add in its 
place ‘‘$415’’ wherever it occurs. 
[FR Doc. 2020–12357 Filed 6–17–20; 8:45 am] 
BILLING CODE 6345–03–P 
SMALL BUSINESS ADMINISTRATION 
13 CFR Part 120 
[Docket No. SBA–2020–0036] 
RIN 3245–AH50 
Business Loan Program Temporary 
Changes; Paycheck Protection 
Program—Additional Revisions to First 
Interim Final Rule 
AGENCY: U.S. Small Business 
Administration. 
ACTION: Interim final rule. 
SUMMARY: On April 2, 2020, the U.S. 
Small Business Administration (SBA) 
posted on its website an interim final 
rule relating to the implementation of 
sections 1102 and 1106 of the 
Coronavirus Aid, Relief, and Economic 
Security Act (CARES Act or the Act) 
(published in the Federal Register on 
April 15, 2020). Section 1102 of the Act 
temporarily adds a new product, titled 
the ‘‘Paycheck Protection Program,’’ to 
the U.S. Small Business 
Administration’s (SBA’s) 7(a) Loan 
Program. Subsequently, SBA issued a 
number of interim final rules 
implementing the Paycheck Protection 
Program. This interim final rule revises 
SBA’s interim final rule published in 
the Federal Register on April 15, 2020 
by changing the eligibility requirement 
related to felony convictions of 
applicants or owners of the applicant. 
DATES: 
Effective date: The provisions in this 
interim final rule are effective June 16, 
2020. 
Comment date: Comments must be 
received on or before July 20, 2020. 
ADDRESSES: You may submit comments, 
identified by number SBA–2020–0036, 
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 ppp-ifr@sba.gov. 
Highlight the information that you 
consider to be CBI and explain why you 
believe SBA should hold this 
information as confidential. SBA will 
review the information and make the 
final determination whether it will 
publish the information. 
FOR FURTHER INFORMATION CONTACT: A 
Call Center Representative at 833–572– 
0502, or the local SBA Field Office; the 
list of offices can be found at https://
www.sba.gov/tools/local-assistance/ 
districtoffices. 
SUPPLEMENTARY INFORMATION: 
I. Background Information 
On March 13, 2020, President Trump 
declared the ongoing Coronavirus 
Disease 2019 (COVID–19) pandemic of 
sufficient severity and magnitude to 
warrant an emergency declaration for all 
states, territories, and the District of 
Columbia. With the COVID–19 
emergency, many small businesses 
nationwide are experiencing economic 
hardship as a direct result of the 
Federal, State, and local public health 
measures that are being taken to 
minimize the public’s exposure to the 
virus. These measures, some of which 
are government-mandated, have been 
implemented nationwide and include 
the closures of restaurants, bars, and 
gyms. In addition, based on the advice 
of public health officials, other 
measures, such as keeping a safe 
distance from others or even stay-at- 
home orders, have been implemented, 
resulting in a dramatic decrease in 
economic activity as the public avoids 
malls, retail stores, and other 
businesses. 
On March 27, 2020, the President 
signed the Coronavirus Aid, Relief, and 
Economic Security Act (the CARES Act 
or the Act) (Pub. L. 116–136) to provide 
emergency assistance and health care 
response for individuals, families, and 
businesses affected by the coronavirus 
pandemic. The Small Business 
Administration (SBA) received funding 
and authority through the Act to modify 
existing loan programs and establish a 
new loan program to assist small 
businesses nationwide adversely 
impacted by the COVID–19 emergency. 
Section 1102 of the Act temporarily 
permits SBA to guarantee 100 percent of 
7(a) loans under a new program titled 
the ‘‘Paycheck Protection Program.’’ 
Section 1106 of the Act provides for 
forgiveness of up to the full principal 
amount of qualifying loans guaranteed 
under the Paycheck Protection Program. 
On April 24, 2020, the President 
signed the Paycheck Protection Program 
and Health Care Enhancement Act (Pub. 
L. 116–139), which provided additional 
funding and authority for the PPP. On 
June 5, 2020, the President signed the 
Paycheck Protection Program Flexibility 
Act of 2020 (Flexibility Act) (Pub. L. 
116–142). 
II. Comments and Immediate Effective 
Date 
This interim final rule is effective 
without advance notice and public 
comment because section 1114 of the 
CARES Act authorizes SBA to issue 
regulations to implement Title I of the 
Act without regard to notice 
requirements. In addition, SBA has 
determined that there is good cause for 
dispensing with advance public notice 
and comment on the grounds that that 
it would be contrary to the public 
interest. Specifically, advance public 
notice and comment would defeat the 
purpose of this interim final rule given 
that SBA’s authority to guarantee PPP 
loans expires on June 30, 2020. These 
same reasons provide good cause for 
SBA to dispense with the 30-day 
delayed effective date provided in the 
Administrative Procedure Act. Although 
this interim final rule is effective on or 
before date of filing, comments are 
solicited from interested members of the 
public on all aspects of the interim final 
rule, including section III below. These 
comments must be submitted on or 
before July 20. 2020. The SBA will 
consider these comments, comments 
received on the interim final rule posted 
on SBA’s website April 2, 2020 (the 
First Interim Final Rule) and published 
in the Federal Register on April 15, 
2020, and the need for making any 
revisions as a result of these comments. 
III. Paycheck Protection Program— 
Additional Revisions to First Interim 
Final Rule (85 FR 20811) 
Overview 
The CARES Act was enacted to 
provide immediate assistance to 
individuals, families, and businesses 
affected by the COVID–19 emergency. 
Among the provisions contained in the 
CARES Act are provisions authorizing 
SBA to temporarily guarantee loans 
under a new 7(a) loan program titled the 
‘‘Paycheck Protection Program.’’ Loans 
guaranteed under the Paycheck 
Protection Program (PPP) will be 100 
percent guaranteed by SBA, and the full 
principal amount of the loans may 
qualify for loan forgiveness. The 
purpose of this interim final rule is to 
make changes to the First Interim Final 
Rule, posted on SBA’s website on April 
2, 2020, and published in the Federal 
Register on April 15, 2020 (85 FR 
20811). The First Interim Final Rule, as 
amended, should be interpreted 
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36718 
Federal Register / Vol. 85, No. 118 / Thursday, June 18, 2020 / Rules and Regulations 
1 See https://www.sba.gov/document/support— 
faq-lenders-borrowers. 
2 See https://www.sba.gov/funding-programs/ 
loans/coronavirus-relief-options/paycheck- 
protection-program. 
consistent with the frequently asked 
questions (FAQs) regarding the PPP that 
are posted on SBA’s website 1 and the 
other interim final rules issued 
regarding the PPP.2 
1. Changes to the First Interim Final 
Rule 
Eligibility Requirements 
The First Interim Final Rule provided, 
among other things, that a PPP loan will 
not be approved if an owner of 20 
percent or more of the equity of the 
applicant has been convicted of a felony 
within the last five years. After further 
consideration, the Administrator, in 
consultation with the Secretary of the 
Treasury (the Secretary), has determined 
that a shorter timeframe for felonies that 
do not involve fraud, bribery, 
embezzlement, or a false statement in a 
loan application or an application for 
federal financial assistance is more 
consistent with Congressional intent to 
provide relief to small businesses and 
also promotes the important policies 
underlying the First Step Act of 2018 
(Pub. L. 115–391). Therefore, Part 
III.2.b.iii. of the First Interim Final Rule 
(85 FR 20811, 20812) is revised to read 
as follows: 
b. Could I be ineligible even if I meet 
the eligibility requirements in (a) above? 
You are ineligible for a PPP loan if, for 
example: 
* 
* 
* 
* 
* 
iii. An owner of 20 percent or more 
of the equity of the applicant is 
incarcerated, on probation, on parole; 
presently subject to an indictment, 
criminal information, arraignment, or 
other means by which formal criminal 
charges are brought in any jurisdiction; 
or has been convicted of a felony 
involving fraud, bribery, embezzlement, 
or a false statement in a loan application 
or an application for federal financial 
assistance within the last five years or 
any other felony within the last year; or 
* 
* 
* 
* 
* 
2. Additional Information 
SBA may provide further guidance, if 
needed, through SBA notices which will 
be posted on SBA’s website at 
www.sba.gov. Questions on the 
Paycheck Protection Program may be 
directed to the Lender Relations 
Specialist in the local SBA Field Office. 
The local SBA Field Office may be 
found at https://www.sba.gov/tools/ 
local-assistance/districtoffices. 
Compliance With Executive Orders 
12866, 12988, 13132, 13563, and 13771, 
the Paperwork Reduction Act (44 
U.S.C. Ch. 35), and the Regulatory 
Flexibility Act (5 U.S.C. 601–612) 
Executive Orders 12866, 13563, and 
13771 
This interim final rule is 
economically significant for the 
purposes of Executive Orders 12866 and 
13563, and is considered a major rule 
under the Congressional Review Act. 
SBA, however, is proceeding under the 
emergency provision at Executive Order 
12866 Section 6(a)(3)(D) based on the 
need to move expeditiously to mitigate 
the current economic conditions arising 
from the COVID–19 emergency. This 
rule’s designation under Executive 
Order 13771 will be informed by public 
comment. 
This rule is necessary to implement 
Sections 1102 and 1106 of the CARES 
Act and the Flexibility 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. 
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 
a limited retroactive effect consistent 
with section 3(d) of the Flexibility 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 modification to the existing 
PPP information collection that is 
approved under OMB Control Number 
3245–0407 as an emergency request 
until October 31, 2020. As discussed 
above, this rule amends the PPP 
eligibility requirements regarding 
certain felony charges. As a result of 
these amendments, conforming changes 
will be made to Question 6 of Form 
2483, Borrower Application Form, and 
Section H of Form 2484, Lender 
Application Form. SBA will submit the 
revisions to these forms to the Office of 
Management and Budget for approval. 
Regulatory Flexibility Act (RFA) 
The Regulatory Flexibility Act (RFA) 
generally requires that when an agency 
issues a proposed rule, or a final rule 
pursuant to section 553(b) of the APA or 
another law, the agency must prepare a 
regulatory flexibility analysis that meets 
the requirements of the RFA and 
publish such analysis in the Federal 
Register. 5 U.S.C. 603, 604. Specifically, 
the RFA normally requires agencies to 
describe the impact of a rulemaking on 
small entities by providing a regulatory 
impact analysis. Such analysis must 
address the consideration of regulatory 
options that would lessen the economic 
effect of the rule on small entities. The 
RFA defines a ‘‘small entity’’ as (1) a 
proprietary firm meeting the size 
standards of the Small Business 
Administration (SBA); (2) a nonprofit 
organization that is not dominant in its 
field; or (3) a small government 
jurisdiction with a population of less 
than 50,000. 5 U.S.C. 601(3)–(6). Except 
for such small government jurisdictions, 
neither State nor local governments are 
‘‘small entities.’’ Similarly, for purposes 
of the RFA, individual persons are not 
small entities. 
The requirement to conduct a 
regulatory impact analysis does not 
apply if the head of the agency ‘‘certifies 
that the rule will not, if promulgated, 
have a significant economic impact on 
a substantial number of small entities.’’ 
5 U.S.C. 605(b). The agency must, 
however, publish the certification in the 
Federal Register at the time of 
publication of the rule, ‘‘along with a 
statement providing the factual basis for 
such certification.’’ If the agency head 
has not waived the requirements for a 
regulatory flexibility analysis in 
accordance with the RFA’s waiver 
provision, and no other RFA exception 
applies, the agency must prepare the 
regulatory flexibility analysis and 
publish it in the Federal Register at the 
time of promulgation or, if the rule is 
promulgated in response to an 
emergency that makes timely 
compliance impracticable, within 180 
days of publication of the final rule. 5 
U.S.C. 604(a), 608(b). 
Rules that are exempt from notice and 
comment are also exempt from the RFA 
requirements, including conducting a 
regulatory flexibility analysis, when 
among other things the agency for good 
cause finds that notice and public 
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36719 
Federal Register / Vol. 85, No. 118 / Thursday, June 18, 2020 / Rules and Regulations 
procedure are impracticable, 
unnecessary, or contrary to the public 
interest. Small Business 
Administration’s Office of Advocacy 
guide: How to Comply with the 
Regulatory Flexibility Act, Ch.1. p.9. 
Accordingly, SBA is not required to 
conduct a regulatory flexibility analysis. 
Authority: 15 U.S.C. 636(a)(36); 
Coronavirus Aid, Relief, and Economic 
Security Act, Pub. L. 116–136, Section 1114. 
Jovita Carranza, 
Administrator. 
[FR Doc. 2020–13130 Filed 6–16–20; 2:00 pm] 
BILLING CODE 8026–03–P 
DEPARTMENT OF COMMERCE 
Bureau of Industry and Security 
15 CFR Parts 744 and 772 
[Docket No. 200611–0158] 
RIN 0694–AI06 
Release of ‘‘Technology’’ to Certain 
Entities on the Entity List in the 
Context of Standards Organizations 
AGENCY: Bureau of Industry and 
Security, Commerce. 
ACTION: Interim final rule; request for 
comments. 
SUMMARY: Huawei Technologies Co., 
Ltd. (Huawei) and 114 of its foreign 
affiliates were added to the Entity List 
by the Bureau of Industry and Security 
(BIS) in 2019, but continue to 
participate in many important 
international standards organizations in 
which U.S. companies also participate. 
As international standards serve as the 
building blocks for product 
development and help ensure 
functionality, interoperability, and 
safety of the products, it is important to 
U.S. technological leadership that U.S. 
companies be able to work in these 
bodies in order to ensure that U.S. 
standards proposals are fully 
considered. Since Huawei’s addition to 
the Entity List, organizations have 
consequently sought clarity about U.S. 
industry participation in standards 
development. BIS is amending the 
Export Administration Regulations 
(EAR) to authorize the release of certain 
technology to Huawei and its affiliates 
on the Entity List without a license if 
such release is made for the purpose of 
contributing to the revision or 
development of a ‘‘standard’’ in a 
‘‘standards organization.’’ For the 
purpose of this interim final rule, a 
‘‘standard’’ is as defined in Office of 
Management and Budget (OMB) 
Circular A–119: Federal Participation in 
the Development and Use of Voluntary 
Consensus Standards and in Conformity 
Assessment Activities, and a ‘‘standards 
organization,’’ is the equivalent of a 
‘‘voluntary consensus standards body’’ 
as defined in Office of Management and 
Budget (OMB) Circular A–119: Federal 
Participation in the Development and 
Use of Voluntary Consensus Standards 
and in Conformity Assessment 
Activities. This interim final rule does 
not change the assessment of whether 
‘‘technology’’ is subject to the EAR. BIS 
is requesting comments on the impact of 
these revisions. 
DATES: This rule is effective June 18, 
2020. Submit comments on or before 
August 17, 2020. 
ADDRESSES: You may submit comments, 
identified by docket number BIS 2020– 
0017 or RIN 0694–AI06, through the 
Federal eRulemaking Portal: http://
www.regulations.gov. Follow the 
instructions for submitting comments. 
All filers using the portal should use 
the name of the person or entity 
submitting comments as the name of 
their files, in accordance with the 
instructions below. Anyone submitting 
business confidential information 
should clearly identify the business 
confidential portion at the time of 
submission, file a statement justifying 
nondisclosure and referencing the 
specific legal authority claimed, and 
provide a non-confidential version of 
the submission. 
For comments submitted 
electronically containing business 
confidential information, the file name 
of the business confidential version 
should begin with the characters ‘‘BC.’’ 
Any page containing business 
confidential information must be clearly 
marked ‘‘BUSINESS CONFIDENTIAL’’ 
on the top of that page. The 
corresponding non-confidential version 
of those comments must be clearly 
marked ‘‘PUBLIC.’’ The file name of the 
non-confidential version should begin 
with the character ‘‘P.’’ The ‘‘BC’’ and 
‘‘P’’ should be followed by the name of 
the person or entity submitting the 
comments or rebuttal comments. All 
filers should name their files using the 
name of the person or entity submitting 
the comments. Any submissions with 
file names that do not begin with a ‘‘BC’’ 
or ‘‘P’’ will be assumed to be public and 
will be made publicly available through 
http://www.regulations.gov. 
FOR FURTHER INFORMATION CONTACT: 
Susan Kramer, Regulatory Policy 
Division, Bureau of Industry and 
Security, Department of Commerce. 
Phone: (202) 482–2440; Fax (202) 482– 
3355; Email: Susan.Kramer@bis.doc.gov. 
SUPPLEMENTARY INFORMATION: 
Background 
The Bureau of Industry and Security 
(BIS) has continued to receive questions 
regarding the applicability of the Export 
Administration Regulations (15 CFR 
730–774) (EAR) in the context of 
standards setting or development in 
light of the addition of Huawei 
Technologies Co., Ltd. (Huawei) and its 
114 non-U.S. affiliates to the Entity List 
(Supplement No. 4 to part 744 of the 
EAR) (see 84 FR 22961 (May 21, 2019) 
and 84 FR 43493 (August 21, 2019)) and 
the Temporary General License (TGL). 
The TGL was published on May 22, 
2019 (84 FR 23468), extended and 
amended through a final rule published 
on August 21, 2019 (84 FR 43487), and 
is currently extended through August 
13, 2020 in a final rule published on 
May 18, 2020 (85 FR 29610). On August 
19, 2019, BIS posted a ‘‘General 
Advisory Opinion Concerning 
Prohibited Activities in the Standards 
Setting or Development Context When a 
Listed Entity Is Involved’’ to the BIS 
website that addressed the applicability 
of § 734.7 of the EAR (Published) (15 
CFR 734.7) to certain types of releases. 
With publication of this rule, that 
advisory opinion is rescinded, and BIS 
has removed the guidance from its 
website. This rule removes certain 
license requirements imposed by the 
original listing, removing the need to 
determine the application of controls to 
those releases. 
The assessment of whether 
‘‘technology’’ is subject to the EAR is 
the same regardless of whether a person 
on the Entity List is a member of, or 
participates in, the standards setting or 
development group or body. Because of 
the importance of U.S. participation and 
leadership in standards organizations, 
and in view of the consistent concerns 
expressed with Huawei’s participation 
therein, this rule revises the Entity List 
to authorize certain releases of 
technology without a license. 
Specifically, technology subject to the 
EAR that is designated as EAR99 or 
controlled on the Commerce Control 
List only for anti-terrorism (AT) reasons 
may be released to members of a 
standards organization without a 
license, including Huawei, if released 
for the purpose of contributing to the 
revision or development of a standard. 
This interim final rule adopts in § 772.1 
(Definitions) the definitions of 
‘‘standard’’ and ‘‘standards 
organization’’ from the Office of 
Management and Budget (OMB) 
Circular A–119: Federal Participation in 
the Development and Use of Voluntary 
Consensus Standards and in Conformity 
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