Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid Act

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An interim final rule of the U.S. Small Business Administration and the Department of the Treasury, Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid Act, published in the Federal Register of January 14, 2021 under Docket No. SBA-2021-0001. It amends 13 CFR Parts 113, 120 and 121, is effective January 12, 2021, and sets a comment date of February 16, 2021. The rule implements amendments made by the Economic Aid Act, Pub. L. 116-260, enacted December 27, 2020, which extends authority to make PPP loans through March 31, 2021, and consolidates the earlier interim final rules on borrower and lender eligibility and on application and origination requirements. Background traces the program to sections 1102 and 1106 of the CARES Act, Pub. L. 116-136, and to section 7(a)(36) of the Small Business Act, 15 U.S.C. 636(a)(36).

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3692 
Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 
SMALL BUSINESS ADMINISTRATION 
13 CFR Parts 113, 120, and 121 
[Docket No. SBA–2021–0001] 
RIN 3245–AH62 
DEPARTMENT OF THE TREASURY 
RIN 1505–AC74 
Business Loan Program Temporary 
Changes; Paycheck Protection 
Program as Amended by Economic 
Aid Act 
AGENCY: U.S. Small Business 
Administration; Department of the 
Treasury. 
ACTION: Interim final rule. 
SUMMARY: On April 2, 2020, the U.S. 
Small Business Administration (SBA) 
posted an interim final rule announcing 
the implementation of sections 1102 
and 1106 of the Coronavirus Aid, Relief, 
and Economic Security Act (CARES 
Act). Section 1102 of the CARES Act 
temporarily adds a new program, titled 
the ‘‘Paycheck Protection Program,’’ to 
the SBA’s 7(a) Loan Program. Section 
1106 of the CARES Act provides for 
forgiveness of up to the full principal 
amount of qualifying loans guaranteed 
under the Paycheck Protection Program 
(PPP). The PPP is intended to provide 
economic relief to small businesses 
nationwide adversely impacted by the 
Coronavirus Disease 2019 (COVID–19). 
Subsequently, SBA published twenty- 
three interim final rules providing 
additional guidance on the PPP (some of 
which were jointly issued with the 
Department of the Treasury) and 
Treasury published one interim final 
rule. On December 27, 2020, the 
Economic Aid to Hard-Hit Small 
Businesses, Nonprofits, and Venues Act 
(Economic Aid Act) became law. The 
Economic Aid Act extends the authority 
to make PPP loans through March 31, 
2021 and revises certain PPP 
requirements. This interim final rule 
incorporates the Economic Aid Act 
amendments required to be 
implemented by regulation within 10 
days of enactment. For ease of borrower 
and lender reference, this interim final 
rule also consolidates the interim final 
rules (and important guidance) issued to 
date governing borrower eligibility, 
lender eligibility, and PPP application 
and origination requirements for new 
PPP loans, as well as provides general 
rules relating to loan increases and loan 
forgiveness. This rule is not intended to 
substantively alter or affect PPP rules 
that were not amended by the Economic 
Aid Act. Additional rules related to 
second draw PPP loans will be 
published separately, and SBA intends 
to issue a consolidated rule governing 
all aspects of loan forgiveness and the 
loan review process as well. This 
interim final rule is intended to govern 
new PPP loans made under the 
Economic Aid Act, as well as 
applications for loan forgiveness on 
existing PPP loans where the loan 
forgiveness payment has not been 
remitted, and should not be construed 
to alter or affect the requirements 
applicable to PPP loans closed prior to 
its enactment, unless the provisions 
apply retroactively consistent with 
specific applicability provisions of the 
Economic Aid Act as identified in this 
rule. In addition, in this interim final 
rule, Treasury exercises its authority 
under section 1109 of the CARES Act to 
allow borrowers of first draw PPP loans 
to use 2019 or 2020 to calculate their 
maximum loan amount. 
DATES:
Effective date: Unless otherwise 
specified in this interim final rule, the 
provisions of this interim final rule are 
effective January 12, 2021. 
Applicability date: This interim final 
rule applies to loan applications, 
including requests for increases, and 
applications for loan forgiveness 
submitted under the Paycheck 
Protection Program following enactment 
of the Economic Aid Act. This interim 
final rule also applies to loan 
forgiveness applications submitted 
under the Paycheck Protection Program 
before enactment of the Economic Aid 
Act where SBA has not remitted the 
forgiveness payment. 
Comment date: Comments must be 
received on or before February 16, 2021. 
ADDRESSES: You may submit comments, 
identified by number SBA–2021–0001 
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. 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: 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 
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 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. A more detailed 
discussion of sections 1102 and 1106 of 
the Act is found in section III. 
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), which changed key 
provisions of the Paycheck Protection 
Program, including provisions relating 
to the maturity of PPP loans, the deferral 
of PPP loan payments, and the 
forgiveness of PPP loans. Section 3(d) of 
the Flexibility Act provided that the 
amendments relating to PPP loan 
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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 
1 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. 
forgiveness and extension of the deferral 
period for PPP loans were effective as if 
included in the CARES Act, which 
meant that they were retroactive to 
March 27, 2020. Section 2 of the 
Flexibility Act provided that the 
amendment relating to the extension of 
the maturity date for PPP loans became 
effective on the date of enactment (June 
5, 2020). Under the Flexibility Act, the 
extension of the maturity date for PPP 
loans was applicable to PPP loans made 
on or after that date, and lenders and 
borrowers were able to mutually agree 
to modify PPP loans made before such 
date to reflect the longer maturity. 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 Economic 
Aid to Hard-Hit Small Businesses, 
Nonprofits, and Venues Act (Economic 
Aid Act) (Pub. L. 116–260) was enacted, 
which reauthorizes lending under the 
PPP through March 31, 2021, and 
among other things, modifies provisions 
related to making PPP loans and 
forgiveness of PPP loans, and authorizes 
second draw PPP loans under new 
section 7(a)(37) of the Small Business 
Act for PPP borrowers that previously 
received a PPP loan (rules for second 
draw loans will be published 
separately). 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.1 
In addition to incorporating the 
changes to PPP requirements made by 
the Economic Aid Act, this interim final 
rule consolidates and restates the 
following interim final rules: 85 FR 
20811 (posted on April 2, 2020 and 
published in the Federal Register on 
April 15, 2020); 85 FR 20817 (posted on 
April 3, 2020 and published on April 
15, 2020); 85 FR 21747 (posted on April 
14, 2020 and published on April 20, 
2020); 85 FR 23450 (posted on April 24, 
2020 and published on April 28, 2020); 
85 FR 23917 (posted on April 27, 2020 
and published on April 30, 2020); 85 FR 
26321 (posted on April 28, 2020 and 
published on May 4, 2020); 85 FR 26324 
(posted on April 30, 2020 and published 
on May 4, 2020); 85 FR 27827 (posted 
on May 5, 2020 and published on May 
8, 2020); 85 FR 29845 (posted on May 
8, 2020 and published on May 19, 
2020); 85 FR 29842 (posted on May 13, 
2020 and published on May 19, 2020); 
85 FR 29847 (posted on May 14, 2020 
and published on May 19, 2020); 85 FR 
30835 (posted on May 18, 2020 and 
published on May 21, 2020); 85 FR 
31357 (posted on May 20, 2020 and 
published on May 26, 2020); 85 FR 
35550 (posted on June 5, 2020 and 
published on June 11, 2020); 85 FR 
36308 (posted on June 11, 2020 and 
published on June 16, 2020); 85 FR 
36717 (posted on June 12, 2020 and 
published on June 18, 2020); 85 FR 
36997 (posted on June 17, 2020 and 
published on June 19, 2020); 85 FR 
38301 (posted on June 24, 2020 and 
published on June 26, 2020); and 85 FR 
39066 (posted on June 25, 2020 and 
published on 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 Treasury’s 
websites and the interim final rules 
posted separately providing guidance on 
second draw PPP loans and the 
consolidated guidance on loan 
forgiveness and the loan review process; 
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 
lenders and new PPP borrowers a single 
regulation to consult on borrower 
eligibility, lender eligibility, and loan 
application and origination 
requirements, as well as general rules on 
increases and loan forgiveness for PPP 
loans. 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 incorporated by reference 
here. 
In addition, section 1109(b) of the 
CARES Act authorizes Treasury to 
establish criteria for certain other 
lenders to participate in the PPP. The 
SBA is required to administer the 
program that Treasury establishes under 
section 1109 of the Act, with guidance 
from Treasury. The CARES Act 
authorizes Treasury to issue regulations 
and guidance to implement section 
1109, including regulations that 
establish ‘‘terms and conditions’’ for 
PPP loans. See section 1109(d)(2). The 
terms and conditions established by 
Treasury under section 1109 are not 
required to be identical to those 
provided elsewhere. Rather, the CARES 
Act allows Treasury to set terms and 
conditions pertaining to certain 
criteria—the maximum interest rate, 
maximum loan amount, and other 
specified terms—that are ‘‘consistent,’’ 
to ‘‘the maximum extent practicable,’’ 
with comparable terms in paragraph 36 
of section 7(a) of the Small Business Act 
(15 U.S.C. 636(a)). See section 
1109(d)(2). 
In this rulemaking, Treasury is 
addressing the needs of new PPP 
borrowers by allowing all new 
borrowers to use 2019 or 2020 for 
purposes of calculating their maximum 
loan amount. Section 1102 of the 
CARES Act states that borrowers are to 
calculate their maximum loan amount 
by using ‘‘payroll costs incurred during 
the 1-year period before the date on 
which the loan is made . . . .’’ For PPP 
loans made in 2020, most borrowers 
used 2019. The Economic Aid Act did 
not change this language for borrowers 
that are not farmers and ranchers and 
would require most new PPP borrowers 
who obtain a loan in 2021 to use 2020 
as their base period. Using authority 
granted by section 1109 of the CARES 
Act, this rulemaking allows new 
borrowers to choose 2019 or 2020 as the 
base period, thereby ensuring that they 
are able to obtain funding on terms 
commensurate with existing PPP 
borrowers. Separately, section 313 of the 
Economic Aid Act states that farmers 
and ranchers are to calculate their 
maximum loan amount using 2019 as 
their base period. This rulemaking 
allows farmers and ranchers to elect 
either 2019 or 2020 as their base period, 
in order to ensure that they can obtain 
funding on terms commensurate with 
those available to other new PPP 
borrowers. 
As required by section 1109(d)(2)(B) 
of the CARES Act, Treasury has 
determined that providing new PPP 
borrowers with flexibility in choosing a 
base period is consistent, to the 
‘‘maximum extent practicable,’’ with the 
terms applicable to existing PPP 
borrowers. This enhanced flexibility 
will help ensure that new PPP 
borrowers are treated even-handedly 
and do not see their permissible loan 
amounts reduced due to financial 
distress experienced in 2020. Other than 
these adjustments, the terms and 
requirements applicable to PPP loans 
under this rule are identical to the terms 
and requirements applicable to all other 
PPP loans. As a result, a PPP borrower 
that elects to use the flexibility in 
selecting a base period under this 
interim final rule may follow the same 
processes and procedures applicable to 
other PPP loans. 
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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 
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. Congress 
reauthorized PPP because of the current 
economic conditions affecting small 
businesses and intended for the loans to 
be made quickly. 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, 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 give small 
businesses 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, including section III. These 
comments must be submitted on or 
before February 16, 2021. The 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 Economic Aid Act 
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 
Economic Aid Act reauthorizes lending 
under the PPP through March 31, 2021, 
and revises certain PPP requirements. 
The following outlines the key 
provisions of the PPP related to 
eligibility of applicants for PPP loans, 
which lenders are authorized to make 
PPP loans, the process for making PPP 
loans, loan increases, and loan 
forgiveness, as revised by the Economic 
Aid Act. Additional rules related to 
second draw PPP loans will be 
published separately. While this interim 
final rule fully implements the 
Economic Aid Act’s changes to loan 
forgiveness, SBA also intends to issue a 
consolidated rule governing all aspects 
of loan forgiveness and loan review as 
well to provide a single reference point 
for lenders and borrowers. 
Table of Contents 
A. General 
B. What do borrowers need to know and do? 
1. What businesses, organizations, and 
individuals are eligible? 
2. What businesses, organizations, and 
individuals are ineligible? 
3. Affiliation Rules Generally 
4. I Have Determined That I Am Eligible. 
How much can I borrow? 
5. What is the interest rate on a PPP loan? 
6. What will be the maturity date on a PPP 
loan? 
7. Can I apply for more than one First Draw 
PPP Loan? 
8. Can I use e-signatures or e-consents if a 
borrower has multiple owners? 
9. When will I have to begin paying 
principal and interest on my PPP loan? 
10. What forms do I need and how do I 
submit an application for a PPP loan? 
11. How can PPP loans be used? 
12. What certifications need to be made? 
13. Limited Safe Harbor With Respect to 
Certification Concerning Need for PPP 
Loan Request 
14. Can my PPP loan be forgiven in whole 
or in part? 
15. Do independent contractors count as 
employees for purposes of PPP loan 
forgiveness? 
16. For loans made prior to December 27, 
2020, 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? 
C. What do lenders need to know and do? 
1. Who is eligible to make PPP loans? 
2. Do lenders have to register in SAM.gov 
to make PPP loans? 
3. What do lenders have to do in terms of 
loan underwriting? 
4. Can lenders rely on borrower 
documentation for loan forgiveness? 
5. What fees will lenders be paid? 
6. Can PPP loans be sold into the 
secondary market? 
7. Do the requirements for loan pledges 
under 13 CFR 120.434 apply to PPP 
loans pledged for borrowings from a 
Federal Reserve Bank (FRB) or advances 
by a Federal Home Loan Bank (FHLB)? 
8. Are lenders required to use a promissory 
note provided by SBA or may they use 
their own? 
9. Are lenders required to use a separate 
SBA Authorization document to issue 
PPP loans? 
10. By when must a lender electronically 
submit an SBA Form 1502 indicating 
that PPP loan funds have been 
disbursed? 
11. How do lenders report disbursements 
on PPP loans that are approved for loan 
increases due to the Economic Aid Act? 
D. What do both borrowers and lenders need 
to know and do? 
1. What are the loan terms and conditions? 
2. Do lenders have to apply the ‘‘credit 
elsewhere test’’? 
3. Are there any fee waivers? 
4. Who pays the fee to an agent who 
provides assistance in connection with a 
PPP loan? 
5. Can a borrower take multiple draws from 
a PPP loan and thereby delay the start of 
the covered period? 
6. If a partnership received a PPP loan that 
did not include any compensation for its 
partners, can the loan amount be 
increased to include partner 
compensation? 
7. If a seasonal employer received a PPP 
loan before December 27, 2020, can the 
loan amount be increased based on a 
revised calculation of the maximum loan 
amount? 
8. Which other PPP borrowers can reapply 
or request an increase in their PPP loan 
amount? 
9. If a borrower’s PPP loan has already 
been fully disbursed, can the lender 
make an additional disbursement for the 
increased loan proceeds? 
10. Are recipients of PPP loans entitled to 
exemptions on the grounds provided in 
Federal nondiscrimination laws for sex- 
specific admissions practices, sex- 
specific domestic violence shelters, 
coreligionist housing, or Indian tribal 
preferences in connection with adoption 
or foster care practices? 
A. General 
SBA is authorized to guarantee loans 
under the PPP through March 31, 2021. 
Congress has authorized a total program 
level of $806,450,000,000 to provide 
guaranteed loans under this temporary 
7(a) program under sections 7(a)(36) 
(PPP loans or First Draw PPP Loans) and 
7(a)(37) (Second Draw PPP Loans) of the 
Small Business Act, a portion of which 
is available for new First Draw and 
Second Draw PPP Loans. Lenders have 
delegated authority to make PPP loans. 
SBA will allow lenders to rely on 
certifications of the borrower in order to 
determine eligibility of the borrower 
and use of loan proceeds and to rely on 
specified documents provided by the 
borrower to determine qualifying loan 
amount and eligibility for loan 
forgiveness. Lenders must comply with 
the applicable lender obligations set 
forth in this interim final rule, but will 
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2 See interim final rule on Second Draw PPP 
Loans for eligibility criteria for Second Draw PPP 
Loans, which is being published separately. 
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 and the Economic Aid Act. 
4 See section 3 regarding the applicability of 
affiliation rules at 13 CFR 121.103 and 121.301 to 
PPP loans. 
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. 
6 See subsections 1.j., 1.k., and 1.m. for additional 
information on the eligibility of housing 
cooperatives, section 501(c)(6) organizations, and 
destination marketing organizations. The applicable 
size standard for these entities is not more than 300 
employees. 
7 This subsection was originally published at 85 
FR 30835, section III.1. (May 21, 2020) and has been 
modified for readability. Housing cooperatives, 
section 501(c)(6) organizations, and destination 
marketing organizations, added by the Economic 
Aid Act, must have no more than 300 employees 
to be eligible for PPP loans. 
8 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, 
waives SBA’s affiliation rules 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 licensed under section 
301 of the Small Business Investment Act of 1958 
(15 U.S.C. 681); and (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 section 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. SBA also applies affiliation 
exceptions to certain categories of entities. 13 CFR 
121.103(b). 
9 For housing cooperatives, section 501(c)(6) 
organizations, and destination marketing 
organizations, the applicable size standard is not 
more than 300 employees. See subsections 1.j. and 
1.m. For the applicable size standard for entities 
eligible to apply for Second Draw PPP Loans, see 
the interim final rule on Second Draw PPP Loans 
that is being published separately. 
10 This subsection was originally published at 85 
FR 21747, subsection III.1.a. (April 20, 2020) and 
has been modified to reflect subsequent interim 
final rules or guidance and the Economic Aid Act. 
be held harmless for borrowers’ failure 
to comply with program criteria and 
will not be subject to any enforcement 
action or penalty relating to loan 
origination or forgiveness of the PPP 
loan if the lender acts in good faith 
relating to the origination or forgiveness 
of the PPP loan and satisfies all other 
applicable Federal, State, local, and 
other statutory or regulatory 
requirements (as provided in section 
7A(h) of the Small Business Act, as 
amended). Remedies for violations of 
PPP requirements or fraud are 
separately addressed in this interim 
final rule. The program requirements of 
the PPP identified in this rule 
temporarily supersede any conflicting 
Loan Program Requirement (as defined 
in 13 CFR 120.10). 
B. What do borrowers need to know 
and do? 
1. What businesses, organizations, and 
individuals are eligible? 
a. Am I eligible? 2 3 
You are eligible for a PPP loan if: 
i. You, together with any affiliates (if 
applicable),4 are: 
• 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 
• 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, an eligible 
section 501(c)(6) organization, or an 
eligible destination marketing 
organization,6 that employs no more 
than 300 employees; 
• 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; 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. 
b. Are employees of foreign affiliates 
included for purposes of determining 
whether a PPP borrower has more than 
500 employees (or 300 employees, if 
applicable)? 7 
Yes. SBA’s affiliation regulations 
provide that to determine a concern’s 
size, employees of the concern ‘‘and all 
of its domestic and foreign affiliates’’ are 
included. 13 CFR 121.301(f). Therefore, 
to calculate the number of employees of 
an entity for purposes of determining 
eligibility for the PPP, an entity must 
include all employees of its domestic 
and foreign affiliates, except in those 
limited circumstances where the 
affiliation rules expressly do not apply 
to the entity.8 Any entity that, together 
with its domestic and foreign affiliates, 
does not meet the 500-employee, 300- 
employee,9 or other applicable PPP size 
standard is therefore ineligible for a PPP 
loan. Under no circumstances may PPP 
funds be used to support non-U.S. 
workers or operations. 
c. I have income from self- 
employment and file a Form 1040, 
Schedule C. Am I eligible for a PPP 
Loan? 10 
You are eligible for a PPP loan if: (i) 
You were in operation on February 15, 
2020; (ii) you are an individual with 
self-employment income (such as an 
independent contractor or a sole 
proprietor); (iii) your principal place of 
residence is in the United States; and 
(iv) you filed or will file a Form 1040 
Schedule C for 2019 or meet the 
requirements below. However, if you are 
a partner in a partnership, you may not 
submit a separate PPP loan application 
for yourself as a self-employed 
individual. Instead, the self- 
employment income of general active 
partners may be reported as a payroll 
cost, up to $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 on a PPP loan application filed 
by or on behalf of the partnership. 
Partnerships are eligible for PPP loans 
under the CARES Act, as amended by 
the Economic Aid Act, and the 
Administrator has determined, in 
consultation with the Secretary of the 
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11 https://www.sba.gov/sites/default/files/2020- 
12/How-to-Calculate-Loan-Amounts-508_6-26- 
20.pdf (April 20, 2020). 
12 This subsection was originally published at 85 
FR 21747, subsection III.2.a. (April 20, 2020) and 
has been modified for readability. 
13 This subsection was originally published at 85 
FR 23917, subsection III.4. (April 30, 2020) and has 
been modified to reflect the Economic Aid Act. 
14 This subsection has been added to conform to 
section 317 of the Economic Aid Act. 
15 This subsection was originally published at 85 
FR 23450, subsection III.2.c. (April 28, 2020) and 
has been modified for readability. 
16 This subsection was originally published at 85 
FR 23450, subsection III.2.d. (April 28, 2020) and 
has been modified for readability. 
17 This subsection was originally published at 85 
FR 29847, subsection III.1. (May 19, 2020) and has 
been modified for readability. 
Treasury (Secretary), that limiting a 
partnership and its partners (and an LLC 
filing taxes as a partnership) to one PPP 
loan is necessary to help ensure that as 
many eligible borrowers as possible 
obtain PPP loans before the statutory 
deadline of March 31, 2021. This 
limitation will allow lenders to more 
quickly process applications and lower 
the burdens of applying for 
partnerships/partners. The 
Administrator has further determined 
that permitting partners to apply as self- 
employed individuals would create 
unnecessary confusion regarding which 
entity, the partner or the partnership, 
applies for partner and LLC member 
income, and would generate loan 
proceeds use coordination and 
allocation issues. Rent, mortgage 
interest, utilities, other debt service, 
operations expenditures, property 
damage costs, supplier costs, and 
worker protection expenditures are 
generally incurred at the partnership 
level, not partner level, so it is most 
natural to provide the funds for these 
expenses to the partnership, not 
individual partners. In addition, you 
should be aware that participation in 
the PPP may affect your eligibility for 
state-administered unemployment 
compensation or unemployment 
assistance programs, including the 
programs authorized by Title II, Subtitle 
A of the CARES Act, or CARES Act 
Employee Retention Credits. On June 
26, 2020, SBA issued additional 
guidance for those individuals with self- 
employment income who: (i) Were not 
in operation in 2019 but who were in 
operation on February 15, 2020, and (ii) 
filed a Form 1040 Schedule C for 2020. 
See ‘‘How To Calculate Maximum Loan 
Amounts—By Business Type,’’ Question 
10 posted on SBA’s website.11 
d. Are eligible businesses owned by 
directors or shareholders of a PPP 
lender permitted to apply for a PPP loan 
through the lender with which they are 
associated? 12 
SBA regulations (including 13 CFR 
120.110 and 120.140) shall not apply to 
prohibit an otherwise eligible business 
owned (in whole or part) by an outside 
director or holder of a less than 30 
percent equity interest in a PPP lender 
from obtaining a PPP loan from the PPP 
lender on whose board the director 
serves or in which the equity owner 
holds an interest, provided that the 
eligible business owned by the director 
or equity holder follows the same 
process as any similarly situated 
customer or account holder of the 
lender. Favoritism by the lender in 
processing time or prioritization of the 
director’s or equity holder’s PPP 
application is prohibited. Lenders 
should comply with all other applicable 
state and federal regulations concerning 
loans to associates of the lender. 
Lenders should also consult their own 
internal policies concerning lending to 
individuals or entities associated with 
the lender. 
The foregoing paragraph does not 
apply to a director or owner who is also 
an officer or key employee of the PPP 
Lender. Officers and key employees of 
a PPP Lender may obtain a PPP Loan 
from a different lender, but not from the 
PPP Lender with which they are 
associated. SBA also reminds Lenders 
that the ‘‘Authorized Lender Official’’ 
for each PPP Loan is subject to the 
limitations described in the PPP Lender 
Application Form (SBA Form 2484), 
which states in relevant part: ‘‘Neither 
the undersigned Authorized Lender 
Official, nor such individual’s spouse or 
children, has a financial interest in the 
Applicant [Borrower].’’ 
e. If a seasonal business was dormant 
or not fully operating as of February 15, 
2020, is it still eligible? 13 
Yes, in evaluating eligibility, a 
seasonal business will be considered to 
have been in operation as of February 
15, 2020, if the business was in 
operation for any 12-week period 
between February 15, 2019 and 
February 15, 2020. This approach aligns 
the eligibility criteria for seasonal 
businesses being in operation with the 
time period for calculation of a seasonal 
employer’s maximum loan amount from 
section 336 of the Economic Aid Act 
and makes PPP loans available to 
seasonal businesses that operate outside 
of the original, more limited time frame. 
f. How does the 500 employee limit 
apply to news organizations with more 
than one physical location? 14 
A business concern, or 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.), with more than one 
physical location that employs not more 
than 500 employees (or the size 
standard established by the 
Administrator for the NAICS code 
applicable to the business concern) per 
physical location, is eligible for a PPP 
loan if it: (1) Is majority owned or 
controlled by a business concern that is 
assigned a NAICS code beginning with 
511110 or 5151 or, with respect to a 
public broadcasting entity (as defined in 
section 397(11) of the Communications 
Act of 1934 (47 U.S.C. 397(11))), has a 
trade or business that falls under such 
a code; and (2) makes a good faith 
certification that proceeds of the loan 
will be used to support expenses at the 
component of the organization that 
produces or distributes locally focused 
or emergency information. See section 3 
for the applicability of SBA’s affiliation 
rules to news organizations. 
g. Industry-Specific Eligibility Issues 
i. Is a hospital owned by 
governmental entities eligible for a PPP 
loan? 15 
Notwithstanding 13 CFR 120.110(j), a 
hospital that is otherwise eligible to 
receive a PPP loan as a business concern 
or nonprofit organization (described in 
section 501(c)(3) of the Internal Revenue 
Code of 1986 and exempt from taxation 
under section 501(a) of such Code) shall 
not be rendered ineligible for a PPP loan 
due to ownership by a state or local 
government if the hospital receives less 
than 50% of its funding from state or 
local government sources, exclusive of 
Medicaid. 
ii. Are businesses that receive revenue 
from legal gaming eligible for a PPP 
Loan? 16 
A business that is otherwise eligible 
for a PPP Loan is not rendered ineligible 
due to its receipt of legal gaming 
revenues, and 13 CFR 120.110(g) is 
inapplicable to PPP loans. Businesses 
that received illegal gaming revenue 
remain categorically ineligible. 
iii. Are electric cooperatives that are 
exempt from Federal income taxation 
under section 501(c)(12) of the Internal 
Revenue Code eligible for a PPP loan? 17 
Yes. An electric cooperative that is 
exempt from Federal income taxation 
under section 501(c)(12) of the Internal 
Revenue Code will be considered to be 
‘‘a business entity organized for profit’’ 
for purposes of 13 CFR 121.105(a)(1). As 
a result, such entities are eligible PPP 
borrowers, as long as other eligibility 
requirements are met. To be eligible, an 
electric cooperative must satisfy the 
employee-based size standard 
established in the CARES Act, SBA’s 
employee-based size standard 
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18 Under the alternative size standard, a business 
concern, including an electric cooperative, can 
qualify for the PPP as a small business concern if, 
as of March 27, 2020: (1) The maximum tangible net 
worth of the business was not more than $15 
million; and (2) the average net income after 
Federal income taxes (excluding any carry-over 
losses) of the business for the two full fiscal years 
before the date of the application is not more than 
$5 million. For an electric cooperative that does not 
have net income, the cooperative’s savings 
distributed to its owner-members will be 
considered its net income. 
19 This subsection was originally published at 85 
FR 35550, subsection III.1. (June 11, 2020) and has 
been modified for readability. 
20 Under the alternative size standard, a business 
concern, including a telephone cooperative, can 
qualify for the PPP as a small business concern if, 
as of March 27, 2020: (1) The maximum tangible net 
worth of the business was not more than $15 
million; and (2) the average net income after 
Federal income taxes (excluding any carry-over 
losses) of the business for the two full fiscal years 
before the date of the application is not more than 
$5 million. For a telephone cooperative that does 
not have net income, the telephone cooperative’s 
capital credits distributed to its owner-members 
will be considered its net income. 
21 This subsection has been added to conform to 
section 316 of the Economic Aid Act. 
22 This subsection has been added to conform to 
section 317 of the Economic Aid Act. 
23 This subsection provides that an eligible 
nonprofit news organization under section 317 of 
the Economic Aid Act must have no more than 500 
employees. (For those nonprofit news organizations 
with more than one physical location, they must 
have no more than 500 employees per location.) 
This will make PPP loans available to nonprofit 
news organizations, regardless of whether the 
organization would be a business concern under 
SBA regulations, if the nonprofit news organization 
satisfies the same general size standard applicable 
under the PPP rules to other borrowers that are 
nonprofit or tax-exempt organizations. The 
Administrator, in consultation with the Secretary, 
has determined this requirement appropriately 
implements section 317 of the Economic Aid Act 
by making PPP loans available to nonprofit news 
organizations on the same terms as other nonprofit 
organizations that have been made eligible for PPP 
loans. 
24 This subsection has been added to conform to 
section 318 of the Economic Aid Act. 
25 Section 318 of the Economic Aid Act added the 
following definition to paragraph 7(a)(36)(A) of the 
Small Business Act (15 U.S.C. 636(a)(36)(A)): ‘‘(xv) 
the term ’destination marketing organization’ means 
a nonprofit entity that is—(I) an organization 
described in section 501(c) of the Internal Revenue 
Code of 1986 and exempt from tax under section 
501(a) of such Code; or (II) a State, or a political 
subdivision of a State (including any 
instrumentality of such entities)—(aa) engaged in 
marketing and promoting communities and 
facilities to businesses and leisure travelers through 
a range of activities, including—(AA) assisting with 
the location of meeting and convention sites; (BB) 
providing travel information on area attractions, 
lodging accommodations, and restaurants; (CC) 
providing maps; and (DD) organizing group tours of 
local historical, recreational, and cultural 
attractions; or (bb) that is engaged in, and derives 
the majority of the operating budget of the entity 
from revenue attributable to, providing live events. 
26 A destination marketing organization that is a 
quasi-governmental entity or is a political 
subdivision of a State or local government, 
including any instrumentality of those entities, is 
eligible for a PPP loan notwithstanding the SBA 
regulation at 13 CFR 120.110(j), which states that 
government-owned entities (except for businesses 
owned or controlled by a Native American tribe) are 
not eligible for SBA financial assistance. 
27 This subsection has been added to conform to 
section 318 of the Economic Aid Act. 
28 This subsection was originally published at 85 
FR 20811, subsection III.2.a. (April 15, 2020), as 
Continued 
corresponding to its primary industry, if 
higher, or both tests in SBA’s 
‘‘alternative size standard.’’ 18 
iv. Are telephone cooperatives that 
are exempt from federal income 
taxation under section 501(c)(12) of the 
Internal Revenue Code eligible for a PPP 
loan? 19 
Yes. A telephone cooperative that is 
exempt from federal income taxation 
under section 501(c)(12) of the Internal 
Revenue Code will be considered to be 
‘‘a business entity organized for profit’’ 
for purposes of 13 CFR 121.105(a)(1). As 
a result, such entities are eligible PPP 
borrowers, as long as other eligibility 
requirements are met. To be eligible, a 
telephone cooperative must satisfy the 
employee-based size standard 
established in the CARES Act, SBA’s 
employee-based size standard 
corresponding to its primary industry, if 
higher, or both tests in SBA’s 
‘‘alternative size standard.’’ 20 
v. Are housing cooperatives as 
defined in section 216(b) of the Internal 
Revenue Code eligible for PPP loans? 21 
Yes. Housing cooperatives (as defined 
in section 216(b) of the Internal Revenue 
Code of 1986) that employ not more 
than 300 employees are eligible to apply 
for PPP loans as long as other eligibility 
requirements are met. In addition, the 
provisions applicable to affiliation, 
described in section 3, apply to housing 
cooperatives in the same manner as 
with respect to a small business 
concern. 
vi. Are nonprofit and tax-exempt 
news organizations eligible for PPP 
loans? 22 
Yes. A public broadcasting entity (as 
defined in section 397(11) of the 
Communications Act of 1934 (47 U.S.C. 
397(11)) that is a nonprofit organization 
or any organization otherwise subject to 
section 511(a)(2)(B) of the Internal 
Revenue Code of 1986, and 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 the entity’s industry) 
per location is eligible for a PPP loan if 
the organization has a trade or business 
that is assigned a NAICS code beginning 
with 511110 or 5151, and makes a good 
faith certification that proceeds of the 
loan will be used to support expenses at 
the component of the organization that 
produces or distributes locally focused 
or emergency information.23 See 
subsection B.1.f. for information on how 
the 500 employee limit applies to news 
organizations with more than one 
physical location. See section 3 for the 
applicability of SBA’s affiliation rules to 
news organizations. 
vii. Are destination marketing 
organizations eligible for PPP loans? 24 
Yes. Under the Economic Aid Act, 
any destination marketing 
organization 25 is eligible to receive a 
PPP loan as long as other eligibility 
requirements are met and if: (1) The 
destination marketing organization does 
not receive more than 15 percent of its 
receipts from lobbying activities; (2) the 
lobbying activities of the destination 
marketing organization do not comprise 
more than 15 percent of the total 
activities of the organization; (3) the cost 
of the lobbying activities of the 
destination marketing organization did 
not exceed $1,000,000 during the most 
recent tax year of the destination 
marketing organization that ended prior 
to February 15, 2020; (4) the destination 
marketing organization employs not 
more than 300 employees; and (5) the 
destination marketing organization: (a) 
Is described in section 501(c) of the 
Internal Revenue Code and is exempt 
from taxation under section 501(a) of 
such Code; or (b) is a quasi- 
governmental entity or is a political 
subdivision of a State or local 
government, including any 
instrumentality of those entities.26 
viii. Are 501(c)(6) organizations 
eligible for PPP loans? 27 
Yes. Any organization that is 
described in section 501(c)(6) of the 
Internal Revenue Code and that is 
exempt from taxation under section 
501(a) of such Code (excluding 
professional sports leagues and 
organizations with the purpose of 
promoting or participating in a political 
campaign or other activity) shall be 
eligible to receive a PPP loan as long as 
other eligibility requirements are met 
and 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. 
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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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 conform to 
subsequent interim final rules or guidance and the 
Economic Aid Act and for readability. 
29 Added to conform to section 310 of the 
Economic Aid Act. This provision is effective as if 
included in the CARES Act and applies 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. 
30 Added to conform to section 310 of the 
Economic Aid Act. This provision applies to PPP 
loans made on or after December 27, 2020. 
31 Added to conform to section 322 of the 
Economic Aid Act. This provision applies to any 
loan made on or after December 27, 2020. For any 
loan made under section 7(a)(36) to a covered entity 
before December 27, 2020, see subsection B.16 of 
this interim final rule. 
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. 
34 This provision prohibits an entity that has gone 
out of business and has no intention of reopening 
from receiving a PPP loan. The Administrator, in 
consultation with the Secretary, has determined 
this provision is necessary to maintain program 
integrity, prevent abuse, and prevent PPP loans 
being made to businesses that have permanently 
closed. Preserving funds for businesses in operation 
is necessary because only businesses that are still 
in operation will retain employees, which is a 
primary purposes of the PPP. PPP was not intended 
to support businesses that have permanently closed. 
A borrower that has temporarily closed or 
temporarily suspended its business but intends to 
reopen remains eligible for a PPP loan. 
35 This subsection replaces the subsection 
originally published at 85 FR 20811, subsection 
III.2.c. (‘‘How do I determine if I am ineligible’’) 
(April 15, 2020) and modified to conform to the 
Economic Aid Act. 
36 SOP 50 10 6 can be found at https://
www.sba.gov/document/sop-50-10-lender- 
development-company-loan-programs-0. For PPP 
loans approved before December 27, 2020, see SOP 
50 10 5(K), Subpart B, Chapter 2 for ineligible types 
of businesses. SOP 50 10 5(K) can be found at 
https://www.sba.gov/document/sop-50-10-5-lender- 
development-company-loan-programs. 
37 This subsection was originally published at 85 
FR 23450, subsection III.4. (April 28, 2020) and has 
been modified for readability. 
38 This subsection was originally published at 85 
FR 23450, subsection III.2.a. (April 28, 2020) and 
has been modified for readability. 
39 The text of this subsection was originally 
published at 85 FR 20817 (April 15, 2020). 
40 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, 
waives the affiliation rules contained in § 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 
licensed under section 301 of the Small Business 
Investment Act of 1958 (15 U.S.C. 681); and (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 section 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 
You are ineligible for a PPP loan if, for 
example: 
i. You are engaged in any activity that 
is illegal under Federal, state, or local 
law; 
ii. You are a household employer 
(individuals who employ household 
employees such as nannies or 
housekeepers); 
iii. An owner of 20 percent or more 
of the equity of the applicant is 
presently incarcerated or, for any felony, 
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, pleaded guilty 
or nolo contendere to, or commenced 
any form of parole or probation 
(including probation before judgment) 
for, 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; 
iv. You, or any business owned or 
controlled by you or any of your 
owners, has ever obtained a direct or 
guaranteed loan from SBA or any other 
Federal agency that is currently 
delinquent or has defaulted within the 
last seven years and caused a loss to the 
government; 
v. Your business or organization was 
not in operation on February 15, 
2020; 29 
vi. You or your business received or 
will receive a grant under the Shuttered 
Venue Operator Grant program under 
section 324 of the Economic Aid Act; 30 
vii. The President, the Vice President, 
the head of an Executive Department, or 
a Member of Congress, or the spouse of 
such person as determined under 
applicable common law, directly or 
indirectly holds a controlling interest in 
your business; 31 
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. is affiliated 
with an entity, which includes any 
entity that owns or controls such news 
organization, that is an issuer 33); or 
ix. Your business has permanently 
closed.34 
b. Are businesses that are generally 
ineligible for 7(a) loans under 13 CFR 
120.110 eligible for a PPP loan? 35 
Paragraphs (a), (g), and (k), of 13 CFR 
120.110 do not apply to PPP loans. For 
PPP loans, the ineligibility restriction in 
13 CFR 120.110(n) is superseded by 
subsection B.2.a.iii. of this interim final 
rule. Otherwise, a business is not 
eligible for a PPP loan if it is a type of 
business concern (or would be, if the 
entity were a business concern) 
described in 13 CFR 120.110, except as 
permitted by subsections B.1.d and 
B.1.g of this rule or otherwise permitted 
by PPP rules. Businesses that are not 
generally eligible for a 7(a) loan under 
13 CFR 120.110 are described further in 
SBA’s Standard Operating Procedure 
(SOP) 50 10 6, Part 2, Section A, 
Chapter 3.36 
c. Will I be approved for a PPP loan 
if my business is in bankruptcy? 37 
No. If the applicant or the owner of 
the applicant is the debtor in a 
bankruptcy proceeding, either at the 
time it submits the application or at any 
time before the loan is disbursed, the 
applicant is ineligible to receive a PPP 
loan. If the applicant or the owner of the 
applicant becomes the debtor in a 
bankruptcy proceeding after submitting 
a PPP application but before the loan is 
disbursed, it is the applicant’s 
obligation to notify the lender and 
request cancellation of the application. 
Failure by the applicant to do so will be 
regarded as a use of PPP funds for 
unauthorized purposes. 
The Borrower Application Form for 
PPP loans (SBA Form 2483), which 
reflects this restriction in the form of a 
borrower certification, is a loan program 
requirement. Lenders may rely on an 
applicant’s representation concerning 
the applicant’s or an owner of the 
applicant’s involvement in a bankruptcy 
proceeding. 
d. Is a hedge fund or private equity 
firm eligible for a PPP loan? 38 
No. Hedge funds and private equity 
firms are primarily engaged in 
investment or speculation, and such 
businesses are therefore ineligible to 
receive a PPP loan. 
3. Affiliation Rules Generally 
a. Are affiliates considered together 
for purposes of determining 
eligibility? 39 
In most cases, a borrower will be 
considered together with its affiliates for 
purposes of determining eligibility for 
the PPP.40 Under SBA rules, entities 
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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. 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 section 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 states that, with respect to a 
business concern made eligible under paragraph 
7(a)(36)(D)(iii)(II) or (iv)(IV) (certain news 
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, is an issuer. 
41 In order to help potential borrowers identify 
other businesses with which they may be deemed 
to be affiliated under the common management 
standard, the Borrower Application Form, SBA 
Form 2483, released on April 2, 2020, requires 
applicants to list other businesses with which they 
have common management (including under a 
management agreement). The information supplied 
by the applicant in response to that information 
request should be used by applicants as they assess 
whether they have affiliates that should be included 
in their number of employees reported on SBA 
Form 2483. 
42 The text of this subsection was originally 
published at 85 FR 20817 (April 15, 2020) and has 
been modified to conform to the Economic Aid Act. 
43 For housing cooperatives, section 501(c)(6) 
organizations, and destination marketing 
organizations, the applicable size standard is not 
more than 300 employees. 
44 The text of this subsection was originally 
published at 85 FR 20817 (April 15, 2020) and has 
been modified for readability. 
45 This subsection was originally published at 85 
FR 23450, subsection III.2.b. (April 28, 2020). 
46 However, the CARES Act waives the affiliation 
rules if the borrower receives financial assistance 
from an SBA-licensed Small Business Investment 
Company (SBIC) in any amount. This includes any 
type of financing listed in 13 CFR 107.50, such as 
loans, debt with equity features, equity, and 
guarantees. Affiliation is waived even if the 
borrower has investment from other non-SBIC 
investors. 
47 This subsection was originally published at 85 
FR 23450, section III.3. (April 28, 2020) and has 
been modified for readability. 
48 This subsection was originally published at 85 
FR 20811, subsection III.2.d. (April 15, 2020) and 
has been modified to conform to additional interim 
final rules or guidance and the Economic Aid Act. 
49 See subsection 4.d. for maximum loan amount 
applicable to certain farmers and ranchers. For the 
maximum loan amount for Second Draw PPP 
Loans, see the the interim final rule on Second 
Draw PPP Loans that is being published separately. 
may be considered affiliates based on 
factors including but not limited to 
stock ownership, overlapping 
management,41 and identity of interest. 
See 13 CFR 121.301(f). 
b. How do SBA’s affiliation rules 
affect my eligibility and apply to me 
under the PPP? 42 
An entity generally is eligible for the 
PPP if it, combined with its affiliates, (i) 
is a small business as defined in section 
3 of the Small Business Act (15 U.S.C. 
632), (ii)(1) has 500 or fewer 
employees 43 or is a business that 
operates in a certain industry and meets 
applicable SBA employee-based size 
standards for that industry, if higher, 
and (2) is a tax-exempt nonprofit 
organization described in section 
501(c)(3) of the Internal Revenue Code 
(IRC), a housing cooperative, 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, a 
section 501(c)(6) organization, a 
destination marketing organization, or 
any other business concern, or (iii) has 
500 or fewer employees per location (or 
an applicable SBA employee-based size 
standard for that industry, if higher) and 
is either majority owned or controlled 
by a NAICS code 511110 or 5151 
business or is a nonprofit public 
broadcasting entity with a trade or 
business under NAICS code 511110 or 
5151. Prior to the CARES Act, the 
nonprofit organizations listed above 
were not eligible for SBA Business Loan 
Programs under section 7(a) of the Small 
Business Act; only for-profit small 
business concerns were eligible. The 
CARES Act made such nonprofit 
organizations not only eligible for the 
PPP, but also subjected them to SBA’s 
affiliation rules. As amended, section 
7(a) of the Small Business Act (15 U.S.C. 
636(a)) now provides that the provisions 
applicable to affiliations under 13 CFR 
121.103 apply with respect to nonprofit 
organizations, housing cooperatives, 
and veterans organizations in the same 
manner as with respect to small 
business concerns. However, the 
detailed affiliation standards contained 
in § 121.103 currently do not apply to 
PPP borrowers, because § 121.103(a)(8) 
provides that applicants in SBA’s 
Business Loan Programs (which include 
the PPP) are subject to the affiliation 
rules contained in 13 CFR 121.301. 
c. Faith-Based Organizations 44 
This rule exempts otherwise qualified 
faith-based organizations from the 
SBA’s affiliation rules, including those 
set forth in 13 CFR part 121, where the 
application of the affiliation rules would 
substantially burden those 
organizations’ religious exercise. For the 
reasons described in 85 FR 20817, the 
SBA’s affiliation rules, including those 
set forth in 13 CFR part 121, do not 
apply to the relationship of any church, 
convention or association of churches, 
or other faith-based organization or 
entity to any other person, group, 
organization, or entity that is based on 
a sincere religious teaching or belief or 
otherwise constitutes a part of the 
exercise of religion. This includes any 
relationship to a parent or subsidiary 
and other applicable aspects of 
organizational structure or form. A faith- 
based organization seeking loans under 
this program may rely on a reasonable, 
good faith interpretation in determining 
whether its relationship to any other 
person, group, organization, or entity is 
exempt from the affiliation rules under 
this provision, and SBA will not assess, 
and will not require participating 
lenders to assess, the reasonableness of 
the faith-based organization’s 
determination. 
d. Do the SBA affiliation rules 
prohibit a portfolio company of a 
private equity fund from being eligible 
for a PPP loan? 45 
Borrowers must apply the affiliation 
rules that appear in 13 CFR 121.301(f), 
as set forth in the Second PPP Interim 
Final Rule (85 FR 20817). The affiliation 
rules apply to private equity-owned 
businesses in the same manner as any 
other business subject to outside 
ownership or control.46 However, in 
addition to applying any applicable 
affiliation rules, all borrowers should 
carefully review the required 
certification on the Paycheck Protection 
Program Borrower Application Form 
(SBA Form 2483) stating that ‘‘[c]urrent 
economic uncertainty makes this loan 
request necessary to support the 
ongoing operations of the Applicant.’’ 
e. Does participation in an employee 
stock ownership plan (ESOP) trigger 
application of the affiliation rules? 47 
No. For purposes of the PPP, a 
business’s participation in an ESOP (as 
defined in 15 U.S.C. 632(q)(6)) does not 
result in an affiliation between the 
business and the ESOP. 
4. I Have Determined That I Am Eligible. 
How much can I borrow? 48 
Under the PPP, the maximum loan 
amount for First Draw PPP Loans is the 
lesser of $10 million or an amount that 
you will calculate using a payroll-based 
formula authorized by the Act, as 
explained below.49 PPP loans approved 
in 2020 used 2019 or the 1-year before 
the date on which the loan is made to 
calculate payroll costs for purposes of 
calculating the maximum loan amount. 
Borrowers who apply for PPP loans 
2021 and who are not self-employed 
(including sole proprietorships and 
independent contractors) are also 
permitted to use the precise 1-year 
period before the date on which the loan 
is made to calculate payroll costs if they 
choose not to use 2019 or 2020. Since 
most borrowers will use 2019 or 2020 
the rule text refers only to 2019 or 2020 
for simplicity and readability. 
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50 This subsection was originally published at 85 
FR 20811, subsection III.2.d. (April 15, 2020) and 
has been modified to conform to additional rules or 
guidance and the Economic Aid Act. 
51 See subsection 4.j for treatment of amounts 
paid to independent contractors. 
52 This subsection clarifies the documentation 
that must be submitted with an applicant’s loan 
application to substantiate the borrower’s payroll 
costs. This requirement applies to loans made after 
December 27, 2020. For documentation 
requirements for PPP loans made before December 
27, 2020, see 85 FR 20811, subsection III.1.e. (April 
15, 2020). 
53 This subsection was originally published at 85 
FR 21747, subsection III.1.b. (April 20, 2020) and 
has been modified to conform to additional rules or 
guidance and the Economic Aid Act. 
a. How do I calculate the maximum 
amount I can borrow? 50 
The following methodology, which is 
one of the methodologies authorized by 
the Act, will be most useful for many 
applicants. 
i. Step 1: Aggregate payroll costs 
(defined in detail below in subsections 
4.g. and 4.h.) from 2019 or 2020 for 
employees whose principal place of 
residence is the United States. 
ii. Step 2: Subtract any compensation 
paid to an employee in excess of 
$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.51 
iii. Step 3: Calculate average monthly 
payroll costs (divide the amount from 
Step 2 by 12). 
iv. Step 4: Multiply the average 
monthly payroll costs from Step 3 by 
2.5. 
v. Step 5: Add the outstanding 
amount of an Economic Injury Disaster 
Loan (EIDL) made between January 31, 
2020 and April 3, 2020 that you seek to 
refinance. Do not include the amount of 
any ‘‘advance’’ under an EIDL COVID– 
19 loan (because it does not have to be 
repaid). 
The examples below illustrate this 
methodology. 
i. Example 1—No employees make more 
than $100,000 
Annual payroll: $120,000 
Average monthly payroll: $10,000 
Multiply by 2.5 = $25,000 
Maximum loan amount is $25,000 
ii. Example 2—Some employees make 
more than $100,000 
Annual payroll: $1,500,000 
Subtract compensation amounts in 
excess of an annual salary of 
$100,000: $1,200,000 
Average monthly qualifying payroll: 
$100,000 
Multiply by 2.5 = $250,000 
Maximum loan amount is $250,000 
iii. Example 3—No employees make 
more than $100,000, outstanding 
EIDL loan of $10,000. 
Annual payroll: $120,000 
Average monthly payroll: $10,000 
Multiply by 2.5 = $25,000 
Add EIDL loan of $10,000 = $35,000 
Maximum loan amount is $35,000 
iv. Example 4—Some employees make 
more than $100,000, outstanding 
EIDL loan of $10,000 
Annual payroll: $1,500,000 
Subtract compensation amounts in 
excess of an annual salary of 
$100,000: $1,200,000 
Average monthly qualifying payroll: 
$100,000 
Multiply by 2.5 = $250,000 
Add EIDL loan of $10,000 = $260,000 
Maximum loan amount is $260,000 
You must provide your Form 941 (or 
other tax forms containing similar 
information) and state quarterly wage 
unemployment insurance tax reporting 
forms from each quarter in 2019 or 2020 
(whichever you used to calculate loan 
amount), or equivalent payroll processor 
records, along with evidence of any 
retirement and health insurance 
contributions. A payroll statement or 
similar documentation from the pay 
period that covered February 15, 2020 
must be provided to establish you were 
in operation on February 15, 2020.52 
b. I have income from self- 
employment and file a Form 1040, 
Schedule C, how do I calculate the 
maximum amount I can borrow and 
what documentation is required?53 
How you calculate your maximum 
loan amount depends upon whether or 
not you employ other individuals. If you 
have no employees, the following 
methodology should be used to 
calculate your maximum loan amount: 
i. Step 1: Find your 2019 or 2020 IRS 
Form 1040 Schedule C line 31 net profit 
amount (if you are using 2020 to 
calculate payroll costs and have not yet 
filed a 2020 return, fill it out and 
compute the value). If this amount is 
over $100,000, reduce it to $100,000. If 
this amount is zero or less, you are not 
eligible for a PPP loan. 
ii. Step 2: Calculate the average 
monthly net profit amount (divide the 
amount from Step 1 by 12). 
iii. Step 3: Multiply the average 
monthly net profit amount from Step 2 
by 2.5. 
iv. Step 4: Add the outstanding 
amount of any Economic Injury Disaster 
Loan (EIDL) made between January 31, 
2020 and April 3, 2020 that you seek to 
refinance. Do not include the amount of 
any advance under an EIDL COVID–19 
loan (because it does not have to be 
repaid). 
You must provide the 2019 or 2020 
(whichever you used to calculate loan 
amount) Form 1040 Schedule C with 
your PPP loan application to 
substantiate the applied-for PPP loan 
amount and a 2019 or 2020 (whichever 
you used to calculate loan amount) IRS 
Form 1099–MISC detailing 
nonemployee compensation received 
(box 7), invoice, bank statement, or book 
of record that establishes you are self- 
employed. If using 2020 to calculate 
loan amount, this is required regardless 
of whether you have filed a 2020 tax 
return with the IRS. You must provide 
a 2020 invoice, bank statement, or book 
of record to establish you were in 
operation on or around February 15, 
2020. 
If you have employees, the following 
methodology should be used to 
calculate your maximum loan amount: 
i. Step 1: Compute 2019 or 2020 
payroll (using the same year for all 
items) by adding the following: 
a. Your 2019 or 2020 Form 1040 
Schedule C line 31 net profit amount (if 
you are using 2020 and have not yet 
filed a 2020 return, fill it out and 
compute the value), up to $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, if this amount is 
over $100,000, reduce it to $100,000, if 
this amount is less than zero, set this 
amount at zero; 
b. 2019 or 2020 gross wages and tips 
paid to your employees whose principal 
place of residence is in the United 
States computed using 2019 or 2020 IRS 
Form 941 Taxable Medicare wages & 
tips (line 5c—column 1) from each 
quarter plus any pre-tax employee 
contributions for health insurance or 
other fringe benefits excluded from 
Taxable Medicare wages & tips; subtract 
any amounts paid to any individual 
employee in excess of $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 and any amounts 
paid to any employee whose principal 
place of residence is outside the United 
States; and 
c. 2019 or 2020 employer 
contributions to employee group health, 
life, disability, vision and dental 
insurance (portion of IRS Form 1040 
Schedule C line 14 attributable to those 
contributions); retirement contributions 
(Form 1040 Schedule C line 19), and 
state and local taxes assessed on 
employee compensation (primarily 
under state laws commonly referred to 
as the State Unemployment Tax Act or 
SUTA from state quarterly wage 
reporting forms). 
ii. Step 2: Calculate the average 
monthly amount (divide the amount 
from Step 1 by 12). 
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54 This subsection has been added to conform to 
section 336 of the Economic Aid Act. Except for 
loans made pursuant to section 7(a)(36) of the Small 
Business Act for which SBA has remitted a loan 
forgiveness payment to the lender before December 
27, 2020, it is effective as if included in the CARES 
Act and applies to any loan made before, on, or 
after December 27, 2020, including forgiveness of 
such a loan. Previous guidance issued for seasonal 
employers stated as follows: ‘‘Under section 1102 
of the CARES Act, a seasonal employer may 
determine its maximum loan amount for purposes 
of the PPP by reference to the employer’ average 
total monthly payments for payroll ‘the 12-week 
period beginning February 15, 2019, or at the 
election of the eligible [borrower], March 1, 2019, 
and ending June 30, 2019.’ Under this interim final 
rule issued pursuant to section 1109 of the Act, a 
seasonal employer may alternatively elect to 
determine its maximum loan amount as the average 
total monthly payments for payroll during any 
consecutive 12-week period between May 1, 2019 
and September 15, 2019.’’ 85 FR 23917 (April 30, 
2020). 
55 This subsection has been added to conform to 
section 313 of the Economic Aid Act. This 
provision applies to a farmer or rancher who (1) 
operates as a sole proprietorship, an independent 
contractor, or is an eligible self-employed 
individual; (2) reports farm income or expenses on 
a Schedule F (or any equivalent successor 
schedule); and (3) was in business as of February 
15, 2020. This provision is effective as if included 
in the CARES Act and applies to any loan made 
before, on, or after December 27, 2020, unless SBA 
has remitted a loan forgiveness payment to the 
lender on the PPP loan. 
56 Any employee payroll costs should be 
subtracted from the farmer’s or rancher’s gross 
income to avoid double-counting amounts that 
represent pay to the employees of the farmer or 
rancher. 
iii. Step 3: Multiply the average 
monthly amount from Step 2 by 2.5. 
iv. Step 4: Add the outstanding 
amount of any EIDL made between 
January 31, 2020 and April 3, 2020 that 
you seek to refinance. Do not include 
the amount of any advance under an 
EIDL COVID–19 loan (because it does 
not have to be repaid). 
You must supply your 2019 or 2020 
(whichever you used to calculate loan 
amount) Form 1040 Schedule C, Form 
941 (or other tax forms or equivalent 
payroll processor records containing 
similar information) and state quarterly 
wage unemployment insurance tax 
reporting forms from each quarter in 
2019 or 2020 (whichever you used to 
calculate loan amount) or equivalent 
payroll processor records, along with 
evidence of any retirement and health 
insurance contributions, if applicable. A 
payroll statement or similar 
documentation from the pay period that 
covered February 15, 2020 must be 
provided to establish you were in 
operation on February 15, 2020. 
c. How does a seasonal employer 
calculate the maximum PPP loan 
amount? 54 
As defined by section 315 of the 
Economic Aid Act, a borrower is a 
seasonal employer if it does not operate 
for more than 7 months in any calendar 
year or, during the preceding calendar 
year, it had gross receipts for any 6 
months of that year that were not more 
than 33.33 percent of the gross receipts 
for the other 6 months of that year. 
Under section 336 of the Economic Aid 
Act, a seasonal employer must 
determine its maximum loan amount for 
purposes of the PPP by using the 
employer’s average total monthly 
payments for payroll for any 12-week 
period selected by the seasonal 
employer beginning February 15, 2019, 
and ending February 15, 2020. 
d. How do farmers and ranchers 
calculate the maximum PPP loan 
amount? 55 
How you calculate your maximum 
loan amount depends upon whether you 
employ other individuals. If you have 
no employees, the following 
methodology should be used to 
calculate your maximum loan amount: 
i. Step 1: Find your 2019 or 2020 IRS 
Form 1040 Schedule F line 9 gross 
income (if you are using 2020 and you 
have not yet filed a 2020 return, fill it 
out and compute the value). If this 
amount is over $100,000, reduce it to 
$100,000. If this amount is zero or less, 
you are not eligible for a PPP loan. 
ii. Step 2: Divide the amount from 
Step 1 by 12. 
iii. Step 3: Multiply the average 
monthly gross income amount from 
Step 2 by 2.5. 
iv. Step 4: Add the outstanding 
amount of any Economic Injury Disaster 
Loan (EIDL) made between January 31, 
2020 and ending on April 3, 2020 that 
you seek to refinance. Do not include 
the amount of any advance under an 
EIDL COVID–19 loan (because it does 
not have to be repaid). 
You must provide the 2019 or 2020 
(whichever you used to calculate loan 
amount) Form 1040 Schedule F with 
your PPP loan application to 
substantiate the applied-for PPP loan 
amount and a 2019 or 2020 (whichever 
you used to calculate loan amount) IRS 
Form 1099–MISC detailing 
nonemployee compensation received 
(box 7), invoice, bank statement, or book 
of record that establishes you are self- 
employed. You must provide a 2020 
invoice, bank statement, or book of 
record to establish you were in 
operation on or around February 15, 
2020. 
If you have employees, the following 
methodology should be used to 
calculate your maximum loan amount: 
i. Step 1: Compute 2019 or 2020 
payroll (using the same year for all 
items) by adding the following: 
a. The difference between your 2019 
or 2020 Form 1040 Schedule F line 9 
gross income amount (if you are using 
2020 and you have not yet filed a 2020 
return, fill it out and compute the 
value), and the sum of Schedule F lines 
15, 22 and 23, up to $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, if this amount is 
over $100,000, reduce it to $100,000, if 
this amount is less than zero, set this 
amount at zero; 56 
b. 2019 or 2020 gross wages and tips 
paid to your employees whose principal 
place of residence is in the United 
States computed using 2019 or 2020 IRS 
Form 941 Taxable Medicare wages & 
tips (line 5c—column 1) from each 
quarter plus any pre-tax employee 
contributions for health insurance or 
other fringe benefits excluded from 
Taxable Medicare wages & tips; subtract 
any amounts paid to any individual 
employee in excess of $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 and any amounts 
paid to any employee whose principal 
place of residence is outside the United 
States; and 
c. 2019 or 2020 employer 
contributions for employee group 
health, life, disability, vision and dental 
insurance (portion of IRS Form 1040 
Schedule F line 15 attributable to those 
contributions), employer contributions 
for employee retirement contributions 
(Form 1040 Schedule F line 23, and 
state and local taxes assessed on 
employers for employee compensation 
(primarily under state laws commonly 
referred to as the State Unemployment 
Tax Act or SUTA from state quarterly 
wage reporting forms). 
ii. Step 2: Calculate the average 
monthly amount (divide the amount 
from Step 1 by 12). 
iii. Step 3: Multiply the average 
monthly amount from Step 2 by 2.5. 
iv. Step 4: Add the outstanding 
amount of any EIDL made between 
January 31, 2020 and April 3, 2020 that 
you seek to refinance. Do not include 
the amount of any advance under an 
EIDL COVID–19 loan (because it does 
not have to be repaid). 
You must supply your 2019 or 2020 
(whichever you used to calculate loan 
amount) Form 1040 Schedule F, Form 
941 (or other tax forms or equivalent 
payroll processor records containing 
similar information) and state quarterly 
wage unemployment insurance tax 
reporting forms from each quarter in 
2019 or 2020 (whichever you used to 
calculate loan amount) or equivalent 
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57 This treatment follows the computation of self- 
employment tax from IRS Form 1040 Schedule SE 
Section A line 4 and removes the ‘‘employer’’ share 
of self-employment tax, consistent with how payroll 
costs for employees in the partnership are 
determined. 
58 This subsection was originally published at 85 
FR 26324, subsection III.1. (May 4, 2020). 
59 The Administrator has authority to issue ‘‘such 
rules and regulations as [the Administrator] deems 
necessary to carry out the authority vested in [her] 
by or pursuant to’’ 15 U.S.C. Chapter 14A, 
including authorities established under section 
1102 of the CARES Act. Section 1102 provides that 
the Administrator ‘‘may’’ guarantee loans under the 
terms and conditions set forth in section 7(a) of the 
Small Business Act, and those conditions specify a 
‘‘maximum’’—but not a minimum—loan amount. 
See 15 U.S.C. 636(a)(36)(B), (E); see also CARES Act 
section 1106(k) (authorizing SBA to issue 
regulations to govern loan forgiveness). To preserve 
finite appropriations for PPP loans and ensure 
broad access for eligible borrowers, the 
Administrator, in consultation with the Secretary, 
has determined that an aggregate limitation on 
loans to a single corporate group is necessary and 
appropriate. 
60 See Section 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; 13 CFR 121.103(b). 
61 This subsection was originally published at 85 
FR 20811, subsection III.2.f. (April 15, 2020) and 
has been modified to conform to the Economic Aid 
Act. 
payroll processor records, along with 
evidence of any retirement and health 
insurance contributions, if applicable. A 
payroll statement or similar 
documentation from the pay period that 
covered February 15, 2020 must be 
provided to establish you were in 
operation on February 15, 2020. 
A farmer or rancher who received a 
PPP loan before December 27, 2020 may 
request a recalculation of the maximum 
loan amount based on the formula 
described above regarding gross income, 
if doing so would result in a larger 
covered loan amount and may receive 
an increase in its PPP loan based on the 
recalculation. 
e. How do partnerships calculate the 
maximum loan amount? 
The following methodology should be 
used to calculate the maximum amount 
that partnerships can borrow: 
(i) Step 1: Compute 2019 or 2020 
payroll (using the same year for all 
items) by adding (1) net earnings from 
self-employment of individual general 
partners in 2019 or 2020, as reported on 
IRS Form 1065 K–1, reduced by section 
179 expense deduction claimed, 
unreimbursed partnership expenses 
claimed, and depletion claimed on oil 
and gas properties, multiplied by 
0.9235,57 that is not more than $100,000 
per partner; (2) 2019 or 2020 gross 
wages and tips paid to your employees 
whose principal place of residence is in 
the United States, if any, which can be 
computed using 2019 or 2020 IRS Form 
941 Taxable Medicare wages and tips 
(line 5c—column 1) from each quarter 
plus any pre-tax employee contributions 
for health insurance or other fringe 
benefits excluded from Taxable 
Medicare wages and tips, subtracting 
any amounts paid to any individual 
employee in excess of $100,000 and any 
amounts paid to any employee whose 
principal place of residence is outside 
the U.S.; (3) 2019 or 2020 employer 
contributions for employee group 
health, life, disability, vision and dental 
insurance, if any (portion of IRS Form 
1065 line 19 attributable to those 
contributions); (4) 2019 or 2020 
employer contributions to employee 
retirement plans, if any (IRS Form 1065 
line 18); and (5) 2019 or 2020 employer 
state and local taxes assessed on 
employee compensation, primarily state 
unemployment insurance tax (from state 
quarterly wage reporting forms), if any. 
(ii) Step 2: Calculate the average 
monthly payroll costs (divide the 
amount from Step 1 by 12). 
(iii) Step 3: Multiply the average 
monthly payroll costs from Step 2 by 
2.5. 
(iv) Step 4: Add any outstanding 
amount of any EIDL made between 
January 31, 2020 and April 3, 2020 that 
you seek to refinance. Do not include 
the amount of any advance under an 
EIDL COVID–19 loan (because it does 
not have to be repaid). 
You must supply 2019 or 2020 
(whichever you used to calculate loan 
amount) IRS Form 1065 (including K– 
1s) and other relevant supporting 
documentation if the partnership has 
employees, including the 2019 or 2020 
(whichever you used to calculate loan 
amount) IRS Form 941 and state 
quarterly wage unemployment 
insurance tax reporting form from each 
quarter (or equivalent payroll processor 
records or IRS Wage and Tax 
Statements) along with records of any 
retirement or health insurance 
contributions. If the partnership has 
employees, a payroll statement or 
similar documentation from the pay 
period that covered February 15, 2020 
must be provided to establish the 
partnership was in operation and had 
employees on that date. If the 
partnership has no employees, an 
invoice, bank statement, or book of 
record establishing the partnership was 
in operation on February 15, 2020 must 
instead be provided. 
f. Can a single corporate group receive 
unlimited PPP loans? 58 
No. To preserve the limited resources 
available to the PPP program, and in 
light of the previous lapse of PPP 
appropriations and the high demand for 
PPP loans, businesses that are part of a 
single corporate group shall in no event 
receive more than $20,000,000 of PPP 
loans in the aggregate.59 For purposes of 
this limit, businesses are part of a single 
corporate group if they are majority 
owned, directly or indirectly, by a 
common parent. 
It is the responsibility of an applicant 
for a PPP loan to notify the lender if the 
applicant has applied for or received 
PPP loans in excess of the amount 
permitted by this interim final rule and 
withdraw or request cancellation of any 
pending PPP loan application or 
approved PPP loan not in compliance 
with the limitation set forth in this rule. 
Failure by the applicant to do so will be 
regarded as a use of PPP funds for 
unauthorized purposes, and the loan 
will not be eligible for forgiveness. A 
lender may rely on an applicant’s 
representation concerning the 
applicant’s compliance with this 
limitation. 
The Administrator, in consultation 
with the Secretary, determined that 
limiting the amount of PPP loans that a 
single corporate group may receive will 
promote the availability of PPP loans to 
the largest possible number of 
borrowers, consistent with the CARES 
Act. The Administrator has concluded 
that a limitation of $20,000,000 strikes 
an appropriate balance between broad 
availability of PPP loans and program 
resource constraints. 
SBA’s affiliation rules, which relate to 
an applicant’s eligibility for PPP loans, 
and any waiver of those rules under the 
CARES Act, continue to apply 
independent of this limitation. 
Businesses are subject to this limitation 
even if the businesses are eligible for the 
waiver-of-affiliation provision under the 
CARES Act or are otherwise not 
considered to be affiliates under SBA’s 
affiliation rules.60 
This rule has no effect on lender 
obligations required to obtain an SBA 
guarantee for PPP loans. 
g. What qualifies as ‘‘payroll 
costs? ’’ 61 
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 
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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 
62 This provision has been modified to conform 
to section 308 of the Economic Aid Act. This 
revision is effective as if included in the CARES Act 
and applies to any loan made before, on, or after 
December 27, 2020, including forgiveness of such 
a loan. 
63 This subsection was originally published at 85 
FR 20811, subsection III.2.g. (April 15, 2020) and 
has been modified to conform to section 344 the 
Economic Aid Act. 
64 This subsection was originally published at 85 
FR 39066, subsection III.1. (June 30, 2020) and has 
been modified to conform to section 344 the 
Economic Aid Act and for readability. 
65 This subsection was originally published at 85 
FR 20811, subsection III.2.h. (April 15, 2020). 
66 See subsection 4.i. regarding fishing boat 
owners including payroll costs for their 
crewmembers in the calculation of the PPP loan 
amount. 
67 This subsection was originally published at 85 
FR 27287, section III.2. (May 8, 2020) and has been 
modified for readability. 
68 The Department of Education’s Federal Work- 
Study Programs described at 34 CFR part 675 are 
(1) the Federal Work-Study Program, (2) the Job 
Location and Development Program, and (3) Work 
Colleges Program. 
69 This subsection was originally published at 85 
FR 20811, subsection III.2.i. (April 15, 2020) and 
has been modified to conform to additional interim 
final rules or guidance and the Economic Aid Act. 
70 Revised to conform to section 339 of the 
Economic Aid Act. The revision applies to PPP 
loans made on or after December 27, 2020, but may 
apply with respect to a PPP loan made before that 
date upon the mutual agreement of the lender and 
the borrower. A one percent interest rate provides 
low cost funds to borrowers to meet eligible payroll 
costs and other eligible expenses during this 
temporary period of economic dislocation caused 
by the coronavirus. Second, for lenders, the 100 
basis points offers an attractive interest rate relative 
to the cost of funding for comparable maturities. 
71 This subsection was originally published at 85 
FR 36308, subsection III.1.b. (June 16, 2020) and has 
been modified for readability. 
72 This subsection was originally published at 85 
FR 20811, subsection III.2.i. (‘‘Can I apply for more 
than one PPP loan?’’) (April 15, 2020) and has been 
modified to conform to the Economic Aid Act and 
for readability. PPP borrowers may be eligible for 
a loan under section 7(a)(37) of the Small Business 
Act, ‘‘Paycheck Protection Program Second Draw 
Loans,’’ see interim final rule on Second Draw PPP 
Loans that is being published separately. 
73 See interim final rule on Second Draw PPP 
Loans for eligibility criteria for Second Draw PPP 
Loans, which is being published separately. 
74 This subsection was originally published at 85 
FR 20811, subsection III.2.l. (April 15, 2020). 
75 This subsection was originally published at 85 
FR 20811, subsection III.2.n. (April 15, 2020), as 
amended by 85 FR 36038 (June 16, 2020), and has 
been modified to conform to the Economic Aid Act. 
insurance,62 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. 
h. Is there anything that is expressly 
excluded from the definition of payroll 
costs? 63 
Yes. The Act expressly excludes the 
following: 
i. Any compensation of an employee 
whose principal place of residence is 
outside of the United States; 
ii. The compensation of an individual 
employee in excess of $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; 
iii. Federal employment taxes 
imposed or withheld during the 
applicable period, including the 
employee’s and employer’s share of 
FICA (Federal Insurance Contributions 
Act) and Railroad Retirement Act taxes, 
and income taxes required to be 
withheld from employees; and 
iv. Qualified sick and family leave 
wages for which a credit is allowed 
under sections 7001 and 7003 of the 
Families First Coronavirus Response 
Act (Pub. L. 116–127). 
i. May fishing boat owners include 
payroll costs in their PPP loan 
applications that are attributable to 
crewmembers described in section 
3121(b)(20) of the Internal Revenue 
Code? 64 
Yes. A fishing boat owner may 
include compensation reported on Box 
5 of IRS Form 1099–MISC and paid to 
a crewmember described in section 
3121(b)(20) of the Code, up to $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, as a payroll cost 
in its PPP loan application. 
j. Do independent contractors count 
as employees for purposes of PPP loan 
calculations? 65 
No, independent contractors have the 
ability to apply for a PPP loan on their 
own so they do not count for purposes 
of a borrower’s PPP loan calculation.66 
k. Do student workers count when 
determining the number of employees 
for PPP loan eligibility? 67 
Yes. Student workers generally count 
as employees, unless (a) the applicant is 
an institution of higher education, as 
defined in the Department of 
Education’s Federal Work-Study 
regulations, 34 CFR 675.2, and (b) the 
student worker’s services are performed 
as part of a Federal Work-Study Program 
(as defined in those regulations 68) or a 
substantially similar program of a State 
or political subdivision thereof. 
Institutions of higher education must 
exclude work study students when 
determining the number of employees 
for PPP loan eligibility, and must also 
exclude payroll costs for work study 
students from the calculation of payroll 
costs used to determine their PPP loan 
amount. 
5. What is the interest rate on a PPP 
loan? 69 
The interest rate will be 100 basis 
points or one percent, calculated on a 
non-compounding, non-adjustable 
basis.70 
6. What will be the maturity date on a 
PPP loan? 71 
The maturity is five years. 
7. Can I apply for more than one First 
Draw PPP Loan? 72 
No. Except as set forth in subsection 
D.8, the Administrator, in consultation 
with the Secretary, determined that no 
eligible borrower may receive more than 
one First Draw PPP Loan. This means 
that if you apply for a PPP loan you 
should consider applying for the 
maximum amount. Any borrower who 
received a PPP loan in 2020 received a 
First Draw PPP Loan and is not eligible 
to receive another First Draw PPP Loan, 
but may be eligible for a second draw 
PPP loan.73 
8. Can I use e-signatures or e-consents 
if a borrower has multiple owners? 74 
Yes, e-signature or e-consents can be 
used regardless of the number of 
owners. 
9. When will I have to begin paying 
principal and interest on my PPP 
loan? 75 
If you submit to your lender a loan 
forgiveness application within 10 
months after the end of your loan 
forgiveness covered period, you will not 
have to make any payments of principal 
or interest on your loan before the date 
on which SBA remits the loan 
forgiveness amount on your loan to your 
lender (or notifies your lender that no 
loan forgiveness is allowed). 
Your ‘‘loan forgiveness covered 
period’’ is the period beginning on the 
date the lender disburses the PPP loan 
and ending on any 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. Your lender 
must notify you of remittance by SBA of 
the loan forgiveness amount (or notify 
you that SBA determined that no loan 
forgiveness is allowed) and the date 
your first payment is due. Interest 
continues to accrue during the 
deferment period. 
If you do not submit to your lender a 
loan forgiveness application within 10 
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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 
76 This subsection was originally published at 85 
FR 20811, subsection III.2.q. (April 15, 2020). 
77 This subsection was originally published at 85 
FR 20811, subsection III.2.r. (April 15, 2020), as 
amended by 85 FR 36308 (June 16, 2020) and has 
been modified to conform to the Economic Aid Act. 
78 Under paragraph 7(a)(36)(Q) of the Small 
Business Act, as amended by section 341 of the 
Economic Aid Act, an EIDL loan used for purposes 
other than paying payroll costs and other eligible 
PPP expenditures is not considered a duplication of 
the assistance available under the PPP. 
79 Items viii. through xi. were added to conform 
to section 304 of the Economic Aid Act. These 
provisions are effective as if included in the CARES 
Act and apply to any loan made before, on, or after 
December 27, 2020, including forgiveness of such 
loan, unless SBA has remitted a loan forgiveness 
payment to the lender on the PPP loan. Section 
1106 of the CARES Act (15 U.S.C. 9005) was 
redesignated as section 7A, transferred to the Small 
Business Act (15 U.S.C. 631 et seq.), and inserted 
so as to appear after section 7 of the Small Business 
Act (15 U.S.C. 636) in section 304(b) of the 
Economic Aid Act. 
80 This subsection was originally published at 85 
FR 21747, subsection III.1.d. (April 20, 2020) and 
has been modified to conform to the Economic Aid 
Act. 
months after the end of your loan 
forgiveness covered period, you must 
begin paying principal and interest after 
that period. For example, if a borrower’s 
PPP loan is disbursed on January 25, 
2021, the 24-week period ends on July 
12, 2021. If the borrower does not 
submit a loan forgiveness application to 
its lender by May 12, 2022, the borrower 
must begin making payments on or after 
May 12, 2022. 
10. What forms do I need and how do 
I submit an application for a PPP 
loan? 76 
The applicant must submit Paycheck 
Protection Program Borrower 
Application Form (SBA Form 2483), or 
lender’s equivalent form, and payroll 
documentation, as described above. The 
lender must submit SBA Form 2484, 
Paycheck Protection Program Lender’s 
Application for 7(a) Loan Guaranty, 
electronically in accordance with 
program requirements and maintain the 
forms and supporting documentation in 
its files. 
11. How can PPP loans be used? 77 
a. The proceeds of a PPP loan are to 
be used for: 
i. Payroll costs (as defined in the 
CARES Act, Economic Aid Act and this 
interim final rule); 
ii. costs related to the continuation of 
group health care, life, disability, vision, 
or dental benefits during periods of paid 
sick, medical, or family leave, and group 
health care, life, disability, vision, or 
dental insurance premiums; 
iii. mortgage interest payments (but 
not mortgage prepayments or principal 
payments); 
iv. rent payments; 
v. utility payments; 
vi. interest payments on any other 
debt obligations that were incurred 
before February 15, 2020; 
vii. refinancing an SBA EIDL loan 
made between January 31, 2020 and 
April 3, 2020; 78 
viii. covered operations expenditures 
(payments 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); 79 
ix. covered property damage costs 
(costs 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); 
x. covered supplier costs 
(expenditures 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); and 
xi. covered worker protection 
expenditures ((A) operating or a capital 
expenditures 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, during the period 
beginning on March 1, 2020 and ending 
the date on which the national 
emergency with respect to the COVID– 
19 expires related to the maintenance of 
standards for sanitation, social 
distancing, or any other worker or 
customer safety requirement related to 
COVID–19; (B) such expenditures may 
include—(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 subparagraph 
(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 
section 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 (C) such 
expenditures do not include residential 
real property or intangible property). 
At least 60 percent of the PPP loan 
proceeds shall be used for payroll costs. 
For purposes of determining the 
percentage of use of proceeds for payroll 
costs, the amount of any EIDL 
refinanced will be included. For 
purposes of loan forgiveness, however, 
the borrower will have to document the 
proceeds used for payroll costs in order 
to determine the amount of forgiveness. 
While the Act provides that PPP loan 
proceeds may be used for the purposes 
listed above and for other allowable 
uses described in section 7(a) of the 
Small Business Act (15 U.S.C. 636(a)), 
the Administrator believes that finite 
appropriations and the structure of the 
Act warrant a requirement that 
borrowers use a substantial portion of 
the loan proceeds for payroll costs, 
consistent with Congress’ overarching 
goal of keeping workers paid and 
employed. This percentage is consistent 
with the limitation on the forgiveness 
amount set forth in the Flexibility Act. 
This limitation on use of the loan funds 
will help to ensure that the finite 
appropriations available for these loans 
are directed toward payroll protection, 
as each loan that is issued depletes the 
appropriation, regardless of whether 
portions of the loan are later forgiven. 
b. How can PPP loans be used by 
individuals with income from self- 
employment who file a Form 1040, 
Schedule C? 80 
The proceeds of a PPP loan are to be 
used for the following. 
i. Owner compensation replacement, 
calculated based on 2019 or 2020 (using 
the same year that was used to calculate 
the loan amount) net profit as described 
in subsection 4.b. 
ii. Employee payroll costs (as defined 
in this interim final rule) for employees 
whose principal place of residence is in 
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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 
81 Under section 7(a)(36)(Q) of the Small Business 
Act, as amended by section 341 of the Economic 
Aid Act, an EIDL loan used for purposes other than 
paying payroll costs and other eligible PPP 
expenditures is not considered a duplication of the 
assistance available under the PPP. 
82 Items vi. through ix. were added to conform to 
section 304 of the Economic Aid Act. These 
provisions are effective as if included in the CARES 
Act and apply to any loan made before, on, or after 
December 27, 2020, including forgiveness of such 
loan, unless SBA has remitted a loan forgiveness 
payment to the lender on the PPP loan. 
83 This subsection has been added to conform to 
section 319 of the Economic Aid Act. 
84 This subsection was originally published at 85 
FR 20811, subsection III.2.s. (April 15, 2020). 
85 This subsection was originally published at 85 
FR 20811, subsection III.2.s. (April 15, 2020), as 
amended by 85 FR 36308 (June 16, 2020) and has 
been modified to conform to the Economic Aid Act 
and the revised PPP Borrower Application Form 
(SBA Form 2483). 
86 A representative of the applicant can certify for 
the business as a whole if the representative is 
legally authorized to do so. The certifications have 
been revised to conform to the Economic Aid Act 
and the revised PPP Borrower Application Form 
(SBA Form 2483). 
the United States, if you have 
employees. 
iii. Mortgage interest payments (but 
not mortgage prepayments or principal 
payments) on any business mortgage 
obligation on real or personal property 
(e.g., the interest on your mortgage for 
the warehouse you purchased to store 
business equipment or the interest on an 
auto loan for a vehicle you use to 
perform your business), business rent 
payments (e.g., the warehouse where 
you store business equipment or the 
vehicle you use to perform your 
business), and business utility payments 
(e.g., the cost of electricity in the 
warehouse you rent or gas you use 
driving your business vehicle). You 
must have claimed or be entitled to 
claim a deduction for such expenses on 
your 2019 or 2020 (whichever you used 
to calculate loan amount) Form 1040 
Schedule C for them to be a permissible 
use. For example, if you did not claim 
or are not entitled to claim utilities 
expenses on your 2019 or 2020 Form 
1040 Schedule C, you cannot use the 
proceeds for utilities. 
iv. Interest payments on any other 
debt obligations that were incurred 
before February 15, 2020 (such amounts 
are not eligible for PPP loan 
forgiveness). 
v. Refinancing an SBA EIDL loan 
made between January 31, 2020 and 
April 3, 2020 (maturity will be reset to 
PPP’s maturity of two years for PPP 
loans made before June 5, 2020 unless 
the borrower and lender mutually agree 
to extend the maturity of such loans to 
five years, or PPP’s maturity of five 
years for PPP loans made on or after 
June 5).81 
vi. Covered operations expenditures, 
as defined in section 7A(a) of the Small 
Business Act, to the extent they is 
deductible on Form 1040 Schedule C. 
vii. Covered property damage costs, as 
defined in section 7A(a) of the Small 
Business Act, to the extent they is 
deductible on Form 1040 Schedule C. 
viii. Covered supplier costs, as 
defined in section 7A(a) of the Small 
Business Act, to the extent they is 
deductible on Form 1040 Schedule C. 
ix. Covered worker protection 
expenditures, as defined in section 
7A(a) of the Small Business Act, to the 
extent they is deductible on Form 1040 
Schedule C.82 
The Administrator, in consultation 
with the Secretary, determined that it is 
appropriate to limit self-employed 
individuals’ (who file a Form 1040 
Schedule C) use of loan proceeds to 
those types of allowable uses for which 
the borrower made expenditures in 2019 
or 2020 or that were used on covered 
property damage, as defined in section 
7A(a). The Administrator has 
determined that this limitation on self- 
employed individuals who file a Form 
1040 Schedule C is consistent with the 
borrower certification required by the 
Act; specifically, that the PPP loan is 
necessary ‘‘to support the ongoing 
operations’’ of the borrower. The 
Administrator and the Secretary thus 
believe that this limitation is consistent 
with the structure of the Act to maintain 
existing operations and payroll and not 
for business expansion. This limitation 
on the use of PPP loan proceeds will 
also help to ensure that the finite 
appropriations available for these loans 
are directed toward maintaining existing 
operations and payroll, as each loan that 
is made depletes the appropriation. 
c. Can PPP proceeds be used for 
lobbying activities or expenditures? 83 
No. None of the proceeds of a PPP 
loan may be used for (1) lobbying 
activities, as defined in section 3 of the 
Lobbying Disclosure Act of 1995 (2 
U.S.C. 1602); (2) lobbying expenditures 
related to a State or local election; or (3) 
expenditures designed to influence the 
enactment of legislation, appropriations, 
regulation, administrative action, or 
Executive order proposed or pending 
before Congress or any State 
government, State legislature, or local 
legislature or legislative body. 
d. What happens if PPP loan funds 
are misused? 84 
If you use PPP funds for unauthorized 
purposes, SBA will direct you to repay 
those amounts. If you knowingly use the 
funds for unauthorized purposes, you 
will be subject to additional liability 
such as charges for fraud. If one of your 
shareholders, members, or partners uses 
PPP funds for unauthorized purposes, 
SBA will have recourse against the 
shareholder, member, or partner for the 
unauthorized use. 
12. What certifications need to be 
made? 85 
On the PPP borrower application, an 
authorized representative of the 
applicant must certify in good faith to 
all of the below: 86 
i. The Applicant was in operation on 
February 15, 2020, has not permanently 
closed, and was either an eligible self- 
employed individual, independent 
contractor, or sole proprietorship with 
no employees, or had employees for 
whom it paid salaries and payroll taxes 
or paid independent contractors, as 
reported on a Form 1099–MISC. 
ii. Current economic uncertainty 
makes this loan request necessary to 
support the ongoing operations of the 
applicant. 
iii. The funds will be used to retain 
workers and maintain payroll; or make 
payments for mortgage interest, rent, 
utilities, covered operations 
expenditures, covered property damage 
costs, covered supplier costs, and 
covered worker protection expenditures 
as specified under the Paycheck 
Protection Program Rules; I understand 
that if the funds are knowingly used for 
unauthorized purposes, the federal 
government may hold me legally liable 
such as for charges of fraud. (As 
explained above, not more than 40 
percent of loan proceeds may be used 
for nonpayroll costs.) 
iv. I understand that loan forgiveness 
will be provided for the sum of 
documented payroll costs, covered 
mortgage interest payments, covered 
rent payments, covered utilities, 
covered operations expenditures, 
covered property damage costs, covered 
supplier costs, and covered worker 
protection expenditures, and not more 
than 40% of the forgiven amount may 
be for non-payroll costs. If required, the 
Applicant will provide to the Lender 
and/or SBA documentation verifying 
the number of full-time equivalent 
employees on the Applicant’s payroll as 
well as the dollar amounts of eligible 
expenses for the covered period 
following this loan. 
v. The Applicant has not and will not 
receive another loan under the Paycheck 
Protection Program, section 7(a)(36) of 
the Small Business Act (15 U.S.C. 
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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 
87 This subsection has been added to codify the 
safe harbor contained in FAQ 46 (posted May 13, 
2020). 
88 This subsection replaces the rule originally 
published at 85 FR 20811, subsection III.2.o (April 
15, 2020), as amended by 85 FR 36308 (June 16, 
2020) and has been modified to conform to the 
Economic Aid Act. 
89 Covered operations expenditures, covered 
property damage costs, covered supplier costs, and 
covered worker protection expenditures were added 
as eligible expenses in section 304 of the Economic 
Aid Act. Except for loans made pursuant to section 
7(a)(36) of the Small Business Act for which SBA 
has remitted a loan forgiveness payment to the 
lender before December 27, 2020, these eligible 
expenses apply to any loan made before, on, or after 
December 27, 2020, including forgiveness of such 
a loan. 
636(a)(36)) (this does not include 
Paycheck Protection Program second 
draw loans, section 7(a)(37) of the Small 
Business Act (15 U.S.C. 636(a)(37)). 
vi. The Applicant has not and will not 
receive a Shuttered Venue Operator 
grant from SBA. 
vii. The President, the Vice President, 
the head of an Executive department, or 
a Member of Congress, or the spouse of 
such person as determined under 
applicable common law, does not 
directly or indirectly hold a controlling 
interest in the Applicant, with such 
terms having the meanings provided in 
section 322 of the Economic Aid to 
Hard-Hit Small Businesses, Nonprofits, 
and Venues Act. 
viii. The Applicant is not 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). 
ix. I further certify that the 
information provided in this application 
and the information provided in all 
supporting documents and forms is true 
and accurate in all material respects. I 
understand that knowingly making a 
false statement to obtain a guaranteed 
loan from SBA is punishable under the 
law, including under 18 U.S.C. 1001 
and 3571 by imprisonment of not more 
than five years and/or a fine of up to 
$250,000; under 15 U.S.C. 645 by 
imprisonment of not more than two 
years and/or a fine of not more than 
$5,000; and, if submitted to a federally 
insured institution, under 18 U.S.C. 
1014 by imprisonment of not more than 
thirty years and/or a fine of not more 
than $1,000,000. 
x. I acknowledge that the Lender will 
confirm the eligible loan amount using 
required documents submitted. I 
understand, acknowledge, and agree 
that the Lender can share the tax 
information with SBA’s authorized 
representatives, including authorized 
representatives of the SBA Office of 
Inspector General, for the purpose of 
compliance with SBA Loan Program 
Requirements and all SBA reviews. 
13. Limited Safe Harbor With Respect to 
Certification Concerning Need for PPP 
Loan Request 87 
The CARES Act requires each 
applicant applying for a PPP loan to 
certify in good faith ‘‘that the 
uncertainty of current economic 
conditions makes necessary the loan 
request to support the ongoing 
obligations’’ of the applicant. SBA, in 
consultation with the Department of the 
Treasury, issued additional guidance on 
May 13, 2020 concerning how SBA will 
review the required good-faith 
certification. See FAQ 46 (posted May 
13, 2020). This guidance included a safe 
harbor providing that any PPP borrower, 
together with its affiliates, that received 
PPP loans with an original principal 
amount of less than $2 million will be 
deemed to have made the required 
certification concerning the necessity of 
the loan request in good faith. 
14. Can my PPP loan be forgiven in 
whole or in part? 88 
Yes. The amount of loan forgiveness 
can be up to the full principal amount 
of the loan and any accrued interest. An 
eligible borrower will not be responsible 
for any loan payment if the borrower 
uses all of the loan proceeds for 
forgivable purposes and employee and 
compensation levels are maintained or, 
if not, an applicable safe harbor or 
exemption applies. The actual amount 
of loan forgiveness will depend, in part, 
on the total amount of payroll costs 
(including employer contributions for 
group health, life, disability, vision and 
dental insurance), payments of interest 
on mortgage obligations incurred before 
February 15, 2020, rent payments on 
leases dated before February 15, 2020, 
utility payments for service that began 
before February 15, 2020, covered 
operations expenditures, covered 
property damage costs, covered supplier 
costs, and covered worker protection 
expenditures over the loan forgiveness 
covered period.89 Payroll costs that are 
qualified wages taken into account in 
determining the Employer Retention 
Credit are not eligible for loan 
forgiveness. The ‘‘loan forgiveness 
covered period’’ is the period beginning 
on the date the lender disburses the PPP 
loan and ending on any 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. 
To receive full loan forgiveness, a 
borrower must use at least 60 percent of 
the PPP loan for payroll costs, and not 
more than 40 percent of the loan 
forgiveness amount may be attributable 
to nonpayroll costs. For example, if a 
borrower uses 59 percent of its PPP loan 
for payroll costs, it will not receive the 
full amount of loan forgiveness it might 
otherwise be eligible to receive. Instead, 
the borrower will receive partial loan 
forgiveness, based on the requirement 
that 60 percent of the forgiveness 
amount must be attributable to payroll 
costs. For example, if a borrower 
receives a $100,000 PPP loan, and 
during the covered period the borrower 
spends $54,000 (or 54 percent) of its 
loan on payroll costs, then because the 
borrower used less than 60 percent of its 
loan on payroll costs, the maximum 
amount of loan forgiveness the borrower 
may receive is $90,000 (with $54,000 in 
payroll costs constituting 60 percent of 
the forgiveness amount and $36,000 in 
nonpayroll costs constituting 40 percent 
of the forgiveness amount). Because the 
Economic Aid Act changed the loan 
forgiveness covered period from either 
an 8- or 24-week period to a covered 
period between 8 and 24 weeks at the 
election of the borrower, SBA is 
eliminating the ‘‘alternative covered 
period’’ as defined in the interim final 
rule published at 85 FR 33004, 33006 
(June 1, 2020), as amended. 
Additionally, an eligible borrower 
that received a loan of $150,000 or less 
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 paragraph 7A(l)(1)(A) of the Small 
Business Act. Such borrowers must 
retain records relevant to the form that 
prove compliance with the PPP 
requirements—with respect to 
employment records, for the 4-year 
period following submission of the loan 
forgiveness application, and with 
respect to other records, for the 3-year 
period following submission of the loan 
forgiveness application. All other 
borrowers must follow the existing 
requirements for loan forgiveness 
applications and records retention. SBA 
may review and audit PPP loans of 
$150,000 or less and access any records 
the borrower is required to retain. All 
borrowers with loans of any size must 
provide documentation independently 
to a lender to satisfy relevant Federal, 
State, local or other statutory or 
regulatory requirements or in 
connection with an SBA loan review. 
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 
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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 
90 This subsection was originally published at 85 
FR 20811, subsection III.2.p. (April 15, 2020). 
91 This subsection was originally published at 85 
FR 20811, subsection III.3.a. (April 15, 2020) and 
has been modified to conform to additional interim 
final rules or guidance and sections 323 and 343 of 
the Economic Aid Act. 
92 Section 314 of the Economic Aid Act contains 
the following information related to Farm Credit 
System Institutions: ‘‘(1) APPLICABLE RULES.— 
Solely with respect to loans under paragraphs (36) 
and (37) of section 7(a) of the Small Business Act 
(15 U.S.C. 636(a)), Farm Credit Administration 
regulations and guidance issued as of July 14, 2020, 
and compliance with such regulations and 
guidance, shall be deemed functionally equivalent 
to requirements referenced in section 3(a)(iii)(II) of 
the interim final rule of the Administration entitled 
‘Business Loan Program Temporary Changes; 
Paycheck Protection Program’ (85 FR 20811 (April 
15, 2020)) or any similar requirement referenced in 
that interim final rule in implementing such 
paragraph (37).’’ 
93 This subsection c.iii. was modified to 
implement the rule originally published at 85 FR 
26324, subsection III.2.a. (May 4, 2020). 
94 Lenders described in this subsection (e.) should 
follow the special instructions in footnote 1 of the 
1102 Lender Agreement—Non-Bank and Non- 
Insured Depository Institution Lenders (SBA Form 
3507). This subsection (e.) was adapted from the 
rule originally published at 85 FR 26324, subsection 
III.2.b. (May 4, 2020). 
95 This subsection adds a new requirement that 
all PPP lenders must register in SAM.gov. See 2 CFR 
25.110(c)(2)(iii). 
96 This subsection was originally published at 85 
FR 20811, subsection III.3.b. (April 15, 2020) and 
has been modified to conform to additional rules or 
guidance and the Economic Aid Act. 
by SBA to the lender. 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. 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. 
15. Do independent contractors count as 
employees for purposes of PPP loan 
forgiveness? 90 
No, independent contractors have the 
ability to apply for a PPP loan on their 
own so they do not count for purposes 
of a borrower’s PPP loan forgiveness. 
16. For loans made prior to December 
27, 2020, 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 PPP loans 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 such person as determined 
under applicable common law, directly 
or indirectly holds a controlling interest 
in the borrower, the principal executive 
officer, or individual performing a 
similar function, of the borrower must 
disclose that information to SBA. Such 
disclosure must be made not later than 
January 26, 2021, if the borrower 
submitted an application for forgiveness 
before December 27, 2020, or not later 
than 30 days after submitting an 
application for forgiveness. 
C. What do lenders need to know and 
do? 
1. Who is eligible to make PPP loans? 91 
a. All SBA 7(a) lenders are 
automatically approved to make PPP 
loans on a delegated basis. 
b. The Act provides that the authority 
to make PPP loans can be extended to 
additional lenders determined by the 
Administrator and the Secretary to have 
the necessary qualifications to process, 
close, disburse, and service loans made 
with the SBA guarantee. Since SBA is 
authorized to make PPP loans (and 
loans under section 7(a)(37) of the Small 
Business Act) up to $806.45 billion by 
March 31, 2021, the Adminstrator and 
the Secretary have jointly determined 
that authorizing additional lenders is 
necessary to achieve the purpose of 
allowing as many eligible borrowers as 
possible to receive loans by the March 
31, 2021 deadline. 
c. The following types of lenders have 
been determined to meet the criteria and 
are eligible to make PPP loans unless 
they currently are designated in 
Troubled Condition by their primary 
Federal regulator or are subject to a 
formal enforcement action with their 
primary Federal regulator that addresses 
unsafe or unsound lending practices: 
i. Any federally insured depository 
institution or any federally insured 
credit union; 
ii. Any Farm Credit System 
institution 92 (other than the Federal 
Agricultural Mortgage Corporation) as 
defined in 12 U.S.C. 2002(a) that applies 
the requirements under the Bank 
Secrecy Act and its implementing 
regulations (collectively, BSA) as a 
federally regulated financial institution, 
or functionally equivalent requirements 
that are not altered by this rule; and 
iii. Any depository or non-depository 
financing provider that originates, 
maintains, and services business loans 
or other commercial financial 
receivables and participation interests; 
has a formalized compliance program; 
applies the requirements under the BSA 
as a federally regulated financial 
institution, or the BSA requirements of 
an equivalent federally regulated 
financial institution; has been operating 
since at least February 15, 2019, and has 
originated, maintained, or serviced more 
than $50 million in business loans or 
other commercial financial receivables 
during a consecutive 12 month period 
in the past 36 months, or is a service 
provider to any insured depository 
institution that has a contract to support 
such institution’s lending activities in 
accordance with 12 U.S.C. 1867(c) and 
is in good standing with the appropriate 
Federal banking agency.93 
d. Qualified institutions described in 
1.c.i. and ii. will be automatically 
qualified under delegated authority by 
the SBA upon transmission of CARES 
Act Section 1102 Lender Agreement 
(SBA Form 3506) unless they currently 
are designated in Troubled Condition by 
their primary Federal regulator or are 
subject to a formal enforcement action 
by their primary Federal regulator that 
addresses unsafe or unsound lending 
practices. 
e. A non-bank lender may be 
approved to make PPP loans if it has 
originated, maintained, or serviced more 
than $10 million in business loans or 
other commercial financial receivables 
during a 12-month period in the past 36 
months, if the non-bank lender is (1) a 
community development financial 
institution (other than a federally 
insured bank or federally insured credit 
union) or (2) a majority minority-, 
women-, or veteran/military-owned 
lender.94 
2. Do lenders have to register in 
SAM.gov to make PPP loans? 95 
Yes. Given the exigent circumstances 
in which small businesses and lenders 
currently find themselves due to the 
COVID–19 pandemic, PPP lenders will 
have thirty (30) days from the date of 
the first PPP loan disbursement made by 
them after December 27, 2020 to 
complete SAM registration and provide 
SBA with the lender’s unique entity 
identifier. 
3. What do lenders have to do in terms 
of loan underwriting? 96 
Each lender shall: 
a. Confirm receipt of borrower 
certifications contained in Paycheck 
Protection Program Borrower 
Application Form (SBA Form 2483) 
issued by the Administration or lender’s 
equivalent form; 
b. Confirm receipt of information 
demonstrating that a borrower was 
either an eligible self-employed 
individual, independent contractor, or 
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97 See PPP FAQ 1 (April 3, 2020) for further 
information on this step. 
98 This paragraph was added to conform to 
section 305 of the Economic Aid Act. This shall be 
effective as if included in the CARES Act and shall 
apply to any loan made before, on, or after 
December 27, 2020, including forgiveness of such 
a loan. 
99 This subsection was originally published at 85 
FR 20811, subsection III.3.c. (April 15, 2020) and 
has been modified for readability. SBA also intends 
to issue a consolidated interim final rule governing 
all aspects of loan forgiveness and the loan review 
process. 
100 This subsection was originally published at 85 
FR 20811, subsection III.3.d. (April 15, 2020) and 
has been modified to conform to section 340 of the 
Economic Aid Act. 
101 This subsection was originally published at 85 
FR 20811, subsection III.4.d (April 15, 2020) and 
modified to reflect that advance purchases are not 
available. 
102 This subsection was originally published at 85 
FR 21747, subsection III.3. (April 20, 2020). 
sole proprietorship with no employees 
or had employees for whom the 
borrower paid salaries and payroll taxes 
on or around February 15, 2020; 
c. Confirm the dollar amount of 
average monthly payroll costs for 2019 
or 2020 by reviewing the payroll 
documentation submitted with the 
borrower’s application; 97 and 
d. Follow applicable BSA 
requirements: 
i. Federally insured depository 
institutions and federally insured credit 
unions should continue to follow their 
existing BSA protocols when making 
PPP loans to either new or existing 
customers who are eligible borrowers 
under the PPP. PPP loans for existing 
customers will not require re- 
verification under applicable BSA 
requirements, unless otherwise 
indicated by the institution’s risk-based 
approach to BSA compliance. 
ii. Entities that are not presently 
subject to the requirements of the BSA, 
should, prior to engaging in PPP lending 
activities, including making PPP loans 
to either new or existing customers who 
are eligible borrowers under the PPP, 
establish an anti-money laundering 
(AML) compliance program equivalent 
to that of a comparable federally 
regulated institution. Depending upon 
the comparable federally regulated 
institution, such a program may include 
a customer identification program (CIP), 
which includes identifying and 
verifying their PPP borrowers’ identities 
(including e.g., date of birth, address, 
and taxpayer identification number), 
and, if that PPP borrower is a company, 
following any applicable beneficial 
ownership information collection 
requirements. Alternatively, if available, 
entities may rely on the CIP of a 
federally insured depository institution 
or federally insured credit union with 
an established CIP as part of its AML 
program. In either instance, entities 
should also understand the nature and 
purpose of their PPP customer 
relationships to develop customer risk 
profiles. Such entities will also 
generally have to identify and report 
certain suspicious activity to the U.S. 
Department of the Treasury’s Financial 
Crimes Enforcement Network (FinCEN). 
If such entities have questions with 
regard to meeting these requirements, 
they should contact the FinCEN 
Regulatory Support Section at FRC@
fincen.gov. In addition, FinCEN has 
created a COVID–19-specific contact 
channel, via a specific drop-down 
category, for entities to communicate to 
FinCEN COVID–19-related concerns 
while adhering to their BSA obligations. 
Entities that wish to communicate such 
COVID–19-related concerns to FinCEN 
should go to www.FinCEN.gov, click on 
‘‘Need Assistance,’’ and select 
‘‘COVID19’’ in the subject drop-down 
list. 
Each lender’s underwriting obligation 
under the PPP is limited to the items 
above and reviewing the ‘‘Paycheck 
Protection Borrower Application Form.’’ 
Borrowers must submit such 
documentation as is necessary to 
establish eligibility such as payroll 
records, payroll tax filings, or Form 
1099–MISC, Schedule C or F, income 
and expenses from a sole 
proprietorship, or bank records. For 
borrowers that do not have any such 
documentation, the borrower must 
provide other supporting 
documentation, such as bank records, 
sufficient to demonstrate the qualifying 
payroll amount. 
A lender may rely on any certification 
or documentation submitted by an 
applicant for a PPP loan or an eligible 
recipient or eligible entity that (A) is 
submitted pursuant to all applicable 
statutory requirements, regulations, and 
guidance related to a PPP loan, 
including under paragraph 7(a)(36) of 
the Small Business Act (15 U.S.C. 
636(a)(36)); and (B) attests that the 
applicant, eligible recipient, or eligible 
entity, as applicable, has accurately 
provided the certification or 
documentation to the lender in 
accordance with the statutory 
requirements, regulations, and guidance 
related to PPP loans. With respect to a 
lender that relies on such a certification 
or documentation related to a PPP loan, 
an enforcement action may not be taken 
against the lender, and the lender shall 
not be subject to any penalties relating 
to loan origination or forgiveness of the 
PPP loan, if—(A) the lender acts in good 
faith relating to loan origination or 
forgiveness of the PPP loan based on 
that reliance; and (B) all other relevant 
Federal, State, local, and other statutory 
and regulatory requirements applicable 
to the lender are satisfied with respect 
to the PPP loan.98 
4. Can lenders rely on borrower 
documentation for loan forgiveness? 99 
Yes. 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. 
5. What fees will lenders be paid? 100 
For PPP loans made on or after 
December 27, 2020, SBA will pay 
lenders fees, based on the balance of the 
financing outstanding at the time of 
disbursement of the loan, for processing 
PPP loans in the following amounts: 
i. For loans of not more than $50,000, 
an amount equal to the lesser of fifty 
(50) percent or $2,500; 
ii. Five (5) percent for loans of more 
than $50,000 and not more than 
$350,000; 
iii. Three (3) percent for loans of more 
than $350,000 and less than $2,000,000; 
and 
iv. One (1) percent for loans of at least 
$2,000,000. 
SBA will pay the fee not later than 5 
days after the reported disbursement of 
the PPP loan and, as required by the 
Economic Aid Act, may not require the 
fee to be repaid by the lender unless the 
lender is found guilty of an act of fraud 
in connection with the PPP loan. 
6. Can PPP loans be sold into the 
secondary market? 101 
Yes. A PPP loan may be sold on the 
secondary market after the loan is fully 
disbursed. A PPP loan may be sold on 
the secondary market at a premium or 
a discount to par value. 
7. Do the requirements for loan pledges 
under 13 CFR 120.434 apply to PPP 
loans pledged for borrowings from a 
Federal Reserve Bank (FRB) or advances 
by a Federal Home Loan Bank 
(FHLB)? 102 
No. Pursuant to SBA regulations at 13 
CFR 120.435(d) and (e), a pledge of 7(a) 
loans to a FRB or FHLB does not require 
SBA’s prior written consent or notice to 
SBA. SBA, in consultation with 
Treasury, has determined that for 
purposes of loans made under the PPP, 
the additional requirements set forth in 
120.434 shall also not apply. This 
would mean, for example, that SBA 
would not have to approve loan 
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103 This subsection was originally published at 85 
FR 23450, subsection III.1.a. (April 28, 2020). 
104 This subsection was originally published at 85 
FR 23450, subsection III.1.b. (April 28, 2020) and 
has been modified to conform to the Economic Aid 
Act. 
105 This requirement is satisfied by a lender when 
the lender completes the process of submitting a 
loan through the E-Tran system; no transmission or 
retention of a physical copy of Form 2484 is 
required. 
106 This subsection was originally published at 85 
FR 26321, subsection III.1.b. (May 4, 2020) and has 
been modified to conform to the Economic Aid Act 
and for readability. 
107 This subsection was added to conform to the 
Economic Aid Act. 
108 This subsection was originally published at 85 
FR 20811, subsection III.4.a. (April 15, 2020) and 
modified to conform to the Economic Aid Act. 
109 This subsection (d) was revised to conform to 
section 339 of the Economic Aid Act. The revision 
applies to PPP loans made on or after December 27, 
2020, but may apply with respect to a PPP loan 
made before that date upon the mutual agreement 
of the lender and the borrower. 
110 This subsection was originally published at 85 
FR 20811, subsection III.3.e. (April 15, 2020). 
111 This subsection was originally published at 85 
FR 20811, subsection III.4.a. (April 15, 2020). 
112 This subsection was originally published at 85 
FR 20811, subsection III.4.c. (April 15, 2020) and 
modified to conform to section 340 of the Economic 
Aid Act. This revision is effective as if included in 
the CARES Act and applies to PPP loans made 
before, on, or after December 27, 2020, including 
forgiveness of such a loan. 
documents or require a multi-party 
agreement among SBA, the lender, and 
others. 
8. Are lenders required to use a 
promissory note provided by SBA or 
may they use their own? 103 
Lenders may use their own 
promissory note or an SBA form of 
promissory note. 
9. Are lenders required to use a separate 
SBA Authorization document to issue 
PPP loans? 104 
No. A lender does not need a separate 
SBA Authorization for SBA to guarantee 
a PPP loan. However, lenders must have 
executed SBA Form 2484 (the Lender 
Application Form—Paycheck Protection 
Program Loan Guaranty) 105 to issue PPP 
loans and receive a loan number for 
each originated PPP loan. Lenders may 
include in their promissory notes for 
PPP loans any terms and conditions, 
including relating to amortization and 
disclosure, that are not inconsistent 
with section 1102 of the CARES Act and 
section 7A of the Small Business Act, 
the PPP Interim Final Rules and 
guidance, and SBA Form 2484. See FAQ 
21 (posted April 13, 2020). The decision 
not to require a separate SBA 
Authorization in order to ensure that 
critical PPP loans are disbursed as 
efficiently as practicable. 
10. By when must a lender electronically 
submit an SBA Form 1502 indicating 
that PPP loan funds have been 
disbursed? 106 
SBA has made available a specific 
SBA Form 1502 reporting process 
through which PPP lenders report on 
PPP loans and collect the processing fee 
on fully disbursed loans to which they 
are entitled. Lenders must electronically 
upload SBA Form 1502 information 
within 20 calendar days after a PPP loan 
is approved. The lender must report on 
SBA Form 1502 whether it has fully 
disbursed PPP loan proceeds. A lender 
will not receive a processing fee: (1) 
Prior to full disbursement of the PPP 
loan; (2) if the PPP loan is cancelled 
before disbursement; or (3) if the PPP 
loan is cancelled or voluntarily 
terminated and repaid after 
disbursement (including if a borrower 
repays the PPP loan proceeds to 
conform to the borrower’s certification 
regarding the necessity of the PPP loan 
request). If the lender has received a 
processing fee on a loan that was 
cancelled or voluntarily terminated and 
repaid after disbursement (including if a 
borrower repaid the PPP loan proceeds 
to conform to the borrower’s 
certification regarding the necessity of 
the PPP loan request), SBA will not 
require the lender to repay the 
processing fee unless the lender is 
found guilty of an act of fraud in 
connection with the PPP loan. In 
addition to providing ACH credit 
information to direct payment of the 
requested processing fee, lenders will be 
required to confirm that all PPP loans 
for which the lender is requesting a 
processing fee have been fully disbursed 
on the disbursement dates and in the 
loan amounts reported. A lender must 
report through either E-Tran Servicing 
or the SBA Form 1502 report any PPP 
loans that have been cancelled before 
disbursement or that have been 
cancelled or voluntarily terminated and 
repaid after disbursement. 
11. How do lenders report 
disbursements on PPP loans that are 
approved for loan increases due to the 
Economic Aid Act? 107 
Lenders must submit the SBA Form 
1502 information within 20 calendar 
days after a PPP loan increase is 
approved following the SBA Form 1502 
reporting process. See subsection C.10. 
for more information. 
D. What do both borrowers and lenders 
need to know and do? 
1. What are the loan terms and 
conditions? 108 
Loans will be guaranteed under the 
PPP under the same terms, conditions 
and processes as other 7(a) loans, with 
certain changes including but not 
limited to: 
a. The guarantee percentage is 100 
percent. 
b. No collateral will be required. 
c. No personal guarantees will be 
required. 
d. The interest rate will be 100 basis 
points or one percent, calculated on a 
non-compounding, non-adjustable 
basis.109 
e. All loans will be processed by all 
lenders under delegated authority and 
lenders will be permitted to rely on 
certifications of the borrower in order to 
determine eligibility of the borrower 
and the use of loan proceeds. 
2. Do lenders have to apply the ‘‘credit 
elsewhere test’’? 110 
No. When evaluating an applicant’s 
eligibility lenders will not be required to 
apply the ‘‘credit elsewhere test’’ (as set 
forth in section 7(a)(1)(A) of the Small 
Business Act (15 U.S.C. 636) and SBA 
regulations at 13 CFR 120.101). 
3. Are there any fee waivers? 111 
a. There will be no up-front guarantee 
fee payable to SBA by the borrower; 
b. There will be no lender’s annual 
service fee (‘‘on-going guaranty fee’’) 
payable to SBA; 
c. There will be no subsidy 
recoupment fee; and 
d. There will be no fee payable to SBA 
for any guarantee sold into the 
secondary market. 
4. Who pays the fee to an agent who 
provides assistance in connection with a 
PPP loan? 112 
Agent fees may not be paid out of the 
proceeds of a PPP loan. If a borrower 
has knowingly retained an agent, such 
fees will be paid by the borrower. A 
lender is only responsible for paying 
fees to an agent for services for which 
the lender directly contracts with the 
agent. The total amount that an agent 
may collect from the lender for 
assistance in preparing an application 
for a PPP loan (including referral to the 
lender) may not exceed: 
a. One (1) percent for loans of not 
more than $350,000; 
b. 0.50 percent for loans of more than 
$350,000 and less than $2 million; and 
c. 0.25 percent for loans of at least $2 
million. 
The Act authorizes the Administrator 
to establish limits on agent fees. The 
Administrator, in consultation with the 
Secretary, determined that the agent fee 
limits set forth above are reasonable 
based upon the application 
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113 This subsection was originally published at 85 
FR 26321, subsection III.1.a. (May 4, 2020), as 
amended by 85 FR 26321 (June 19, 2020), and has 
been modified for readability. 
114 If the tenth calendar day is a Saturday, 
Sunday, or legal holiday, the period continues to 
run until the end of the next business day. 
115 This subsection was originally published at 85 
FR 29842, subsection III.1.a. (May 19, 2020) and has 
been revised to conform to sections 312 and 344 of 
the Economic Aid Act. 
116 A partner in a partnership may not submit a 
separate PPP loan application as a self-employed 
individual. Instead, the self-employment income of 
general active partners may be reported as a payroll 
cost, up to $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, on a PPP loan application filed by or 
on behalf of the partnership. 
117 This subsection was originally published at 85 
FR 29842, subsection III.1.b. (May 19, 2020) and has 
been revised to conform to sections 312 and 336 of 
the Economic Aid Act. 
118 This subsection was added to conform to 
section 312 of the Economic Aid Act. See also 
recalculation available under subsection B.4.d. 
above for farmers and ranchers. 
119 This subsection was originally published at 85 
FR 29842, subsection III.2.a. (May 19, 2020) and 
revised to conform to section 312 of the Economic 
Aid Act. 
120 This subsection was originally published at 85 
FR 27287, section III.1. (May 8, 2020). 
requirements and the fees that lenders 
receive for making PPP loans. 
5. Can a borrower take multiple draws 
from a PPP loan and thereby delay the 
start of the covered period? 113 
No. The lender must make a one-time, 
full disbursement of the PPP loan 
within ten calendar days of loan 
approval; for the purposes of this rule, 
a loan is considered approved when the 
loan is assigned a loan number by 
SBA.114 
Notwithstanding this limitation, 
lenders are not responsible for delays in 
disbursement attributable to a 
borrower’s failure to timely provide 
required loan documentation, including 
a signed promissory note. Loans for 
which funds have not been disbursed 
because a borrower has not submitted 
required loan documentation within 20 
calendar days of loan approval shall be 
cancelled by the lender. When 
disbursing loans, lenders must send any 
amount of loan proceeds designated for 
the refinance of an EIDL loan directly to 
SBA and not to the borrower. 
6. If a partnership received a PPP loan 
that did not include any compensation 
for its partners, can the loan amount be 
increased to include partner 
compensation? 115 
Yes. If a partnership received a PPP 
loan that only included amounts 
necessary for payroll costs of the 
partnership’s employees and other 
eligible operating expenses, but did not 
include any amount for partner 
compensation,116 the lender may 
electronically submit a request through 
SBA’s E-Tran Servicing site to increase 
the PPP loan amount to include 
appropriate partner compensation, even 
if the loan has been fully disbursed and 
even if the lender’s first SBA Form 1502 
report to SBA on the PPP loan has 
already been submitted. In no event can 
the increased loan amount exceed the 
maximum loan amount allowed under 
the PPP Program, which is $10 million 
for an individual borrower or $20 
million for a corporate group. 
Additionally, the borrower must 
provide the lender with required 
documentation to support the 
calculation of the increase. Any request 
for an increase must be submitted 
electronically in E-Tran on or before 
March 31, 2021, and is subject to the 
availability of funds. 
As described in subsection B.1.c., 
partnerships, rather than individual 
partners, are eligible for a PPP loan. As 
described in subsection B.4.e., self- 
employment income of general active 
partners could be reported as a payroll 
cost, up to $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, on a PPP loan application 
filed by or on behalf of the partnership. 
For guidance describing how to 
calculate partnership PPP loan amounts 
and defining the self-employment 
income of partners, see How to 
Calculate Maximum Loan Amounts, 
Question 4 at https://www.sba.gov/sites/ 
default/files/2020-04/How-to-Calculate- 
Loan-Amounts.pdf (April 20, 2020). 
7. If a seasonal employer received a PPP 
loan before December 27, 2020, can the 
loan amount be increased based on a 
revised calculation of the maximum 
loan amount? 117 
Yes. If a seasonal employer received 
a PPP loan before December 27, 2020, 
and such employer would be eligible for 
a higher maximum loan amount under 
section 336 of the Economic Aid Act, as 
described in subsection B.4.c., the 
lender may electronically submit a 
request through SBA’s E-Tran Servicing 
site to increase the PPP loan amount, 
even if the loan has been fully disbursed 
and even if the lender’s first SBA Form 
1502 report to SBA on the PPP loan has 
already been submitted. In no event can 
the increased loan amount exceed the 
maximum PPP loan amount ($10 
million for an individual borrower or 
$20 million for a corporate group). 
Additionally, the borrower must 
provide the lender with required 
documentation to support the 
calculation of the increase. Any request 
for an increase must be submitted 
electronically in E-Tran on or before 
March 31, 2021, and is subject to the 
availability of funds. 
8. Which other PPP borrowers can 
reapply or request an increase in their 
PPP loan amount? 118 
The following borrowers can reapply 
or request an increase in their PPP loan 
amount: 
a. If a borrower returned all of a PPP 
loan, the borrower may reapply for a 
PPP loan in an amount the borrower is 
eligible for under current PPP rules. 
b. If a borrower returned part of a PPP 
loan, the borrower may reapply for an 
amount equal to the difference between 
the amount retained and the amount 
previously approved. 
c. If a borrower did not accept the full 
amount of a PPP loan for which it was 
approved, the borrower may request an 
increase in the amount of the PPP loan 
up to the amount previously approved. 
Any request for an increase must be 
submitted electronically in E-Tran on or 
before March 31, 2021, and is subject to 
the availability of funds. SBA will issue 
additional guidance on the process to 
reapply or request a loan increase under 
subsections D.6, D.7, and D.8. 
9. If a borrower’s PPP loan has already 
been fully disbursed, can the lender 
make an additional disbursement for 
the increased loan proceeds? 119 
Yes. Notwithstanding the requirement 
set forth in paragraph 1.a. of the interim 
final rule on disbursements posted on 
April 28, 2020, i.e., that lenders make a 
one-time, full disbursement of the PPP 
loan within ten calendar days of loan 
approval, if a PPP loan is increased 
under subsections D.6., D.7., or D.8., the 
lender may make a single additional 
disbursement of the increased loan 
proceeds. 
10. Are recipients of PPP loans entitled 
to exemptions on the grounds provided 
in Federal nondiscrimination laws for 
sex-specific admissions practices, sex- 
specific domestic violence shelters, 
coreligionist housing, or Indian tribal 
preferences in connection with adoption 
or foster care practices? 120 
Yes. With respect to any loan or loan 
forgiveness under the PPP, the 
nondiscrimination provisions in the 
applicable SBA regulations incorporate 
the limitations and exemptions 
provided in corresponding Federal 
statutory or regulatory 
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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 
nondiscrimination provisions for sex- 
specific admissions practices at 
preschools, non-vocational elementary 
or secondary schools, and private 
undergraduate higher education 
institutions under Title IX of the 
Education Amendments of 1972 (20 
U.S.C. 1681 et seq.), for sex-specific 
emergency shelters and coreligionist 
housing under the Fair Housing Act of 
1968 (42 U.S.C. 3601 et seq.), and for 
adoption or foster care practices giving 
child placement preferences to Indian 
tribes under the Indian Child Welfare 
Act of 1978 (25 U.S.C. 1901 et seq.). 
In addition, for purposes of the PPP, 
SBA regulations do not bar a religious 
nonprofit entity from making decisions 
with respect to the membership or the 
employment of individuals of a 
particular religion to perform work 
connected with the carrying on by such 
nonprofit of its activities. 
E. Additional Information 
All loans guaranteed by the SBA 
pursuant to the CARES Act and the 
Economic Aid Act will be made 
consistent with constitutional, statutory, 
and regulatory protections for religious 
liberty, including the First Amendment 
to the Constitution, the Religious 
Freedom Restoration Act, 42 U.S.C. 
2000bb–1 and bb–3, and SBA regulation 
at 13 CFR 113.3–1h, which provides 
that nothing in SBA nondiscrimination 
regulations shall apply to a religious 
corporation, association, educational 
institution or society with respect to the 
membership or the employment of 
individuals of a particular religion to 
perform work connected with the 
carrying on by such corporation, 
association, educational institution or 
society of its religious activities. 
SBA may provide further guidance, if 
needed, through SBA notices and a 
program guide which will be posted on 
SBA’s website at www.sba.gov. 
Questions on the Paycheck Protection 
Program 7(a) Loans 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 the Office of Management 
and Budget’s Office of Information and 
Regulatory Affairs (OIRA) has 
determined that this is a major rule 
under the Congressional Review Act (5 
U.S.C. 804(2)). 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 OIRA has 
determined that this is a major rule for 
purposes of the Congressional Review 
Act (5 U.S.C. 801 et seq.) (CRA). Under 
section 801(3) of the CRA, a major rule 
takes effect 60 days after the rule is 
published in the Federal Register. 
Notwithstanding this requirement, 
section 808(2) of 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. Pursuant to section 
808(2) of the CRA, SBA finds, for good 
cause, that a 60-day delay in the 
effective date is unnecessary and 
contrary to the public interest. 
As discussed elsewhere in this 
interim final rule, 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, 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 give small businesses 
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 effect but does have 
some retroactive effect consistent with 
specific applicability provisions of the 
Economic Aid Act (such provisions are 
identified in the footnotes). 
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 
requires 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 Borrower 
Application Form (SBA Form 2483), the 
PPP Lender Application Form (SBA 
Form 2484), the Lender Application 
Form for Federally Insured Depository 
Institutions, Federally Insured Credit 
Unions, and Farm Credit System 
Institutions (SBA Form 3506), and the 
Lender Application Form for Non-Bank 
and Non-Insured Depository Institution 
Lenders (SBA Form 3507). 
SBA Form 2483 has been revised to 
add housing cooperatives, section 
501(c)(6) organizations, destination 
marketing organizations, and certain 
news organizations to the categories of 
eligible entities; to collect the NAICS 
code of the applicant; to add additional 
eligible use of proceeds; and to add or 
revise the certifications to incorporate 
the Economic Aid Act amendments. 
Changes were made to SBA Form 2484 
to conform to the changes made to SBA 
Form 2483. SBA Forms 3506 and 3507 
were revised to extend the term through 
March 31, 2021; restate the way interest 
rate is calculated; and make clarifying 
changes for consistency with program 
requirements. 
SBA is developing a process to collect 
the information necessary for eligible 
borrowers to reapply or request an 
increase in their PPP loan amount as 
described in this interim final rule. 
SBA has requested emergency 
approval of the revisions to this PPP 
information collection to enable the 
Agency to resume the reauthorized PPP 
as quickly as possible. Without such 
emergency approval, the authority for 
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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 
the program would expire before the 
procedural steps, including the 
comment periods generally required by 
the Paperwork Reduction Act, could be 
completed. 
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 small government jurisdictions with 
a population of less than 50,000, neither 
State nor local governments are ‘‘small 
entities.’’ 
The requirement to conduct a 
regulatory impact analysis does not 
apply if the head of the agency ‘‘certifies 
that the rule will not, if promulgated, 
have a significant economic impact on 
a substantial number of small entities.’’ 
5 U.S.C. 605(b). The agency must, 
however, publish the certification in the 
Federal Register at the time of 
publication of the rule, ‘‘along with a 
statement providing the factual basis for 
such certification.’’ If the agency head 
has not waived the requirements for a 
regulatory flexibility analysis in 
accordance with the RFA’s waiver 
provision, and no other RFA exception 
applies, the agency must prepare the 
regulatory flexibility analysis and 
publish it in the Federal Register at the 
time of promulgation or, if the rule is 
promulgated in response to an 
emergency that makes timely 
compliance impracticable, within 180 
days of publication of the final rule. 5 
U.S.C. 604(a), 608(b). 
Rules that are exempt from notice and 
comment are also exempt from the RFA 
requirements, including conducting a 
regulatory flexibility analysis, when 
among other things the agency for good 
cause finds that notice and public 
procedure are impracticable, 
unnecessary, or contrary to the public 
interest. Small Business 
Administration’s Office of Advocacy 
guide: How to Comply with the 
Regulatory Flexibility Ac. 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. 
Jovita Carranza, Michael Faulkender, 
Assistant Secretary for Economic Policy. 
[FR Doc. 2021–00451 Filed 1–12–21; 4:15 pm] 
BILLING CODE 8026–03–P 
SMALL BUSINESS ADMINISTRATION 
13 CFR Parts 120 and 121 
[Docket No. SBA–2021–0002] 
RIN 3245–AH63 
Business Loan Program Temporary 
Changes; Paycheck Protection 
Program Second Draw Loans 
AGENCY: U.S. Small Business 
Administration. 
ACTION: Interim final rule. 
SUMMARY: This interim final rule 
announces the implementation of 
section 311 of the Economic Aid to 
Hard-Hit Small Businesses, Nonprofits, 
and Venues Act (the Economic Aid Act). 
The Economic Aid Act authorizes the 
U.S. Small Business Administration to 
guarantee additional loans under the 
temporary Paycheck Protection 
Program, which was originally 
established under the Coronavirus Aid, 
Relief, and Economic Security Act to 
provide economic relief to small 
businesses nationwide adversely 
impacted under the Coronavirus Disease 
2019 (COVID–19) Emergency 
Declaration (COVID–19 Emergency 
Declaration) issued by President Trump 
on March 13, 2020. Section 311 of the 
Economic Aid Act adds a second 
temporary program to SBA’s 7(a) Loan 
Program titled, ‘‘Paycheck Protection 
Program Second Draw Loans.’’ This 
interim final rule implements the key 
provisions of section 311 of the 
Economic Aid Act and requests public 
comment. 
DATES: 
Effective Date: This interim final rule 
is effective January 12, 2021. 
Applicability Date: This interim final 
rule applies to loan applications and 
applications for loan forgiveness 
submitted for Paycheck Protection 
Program Second Draw Loans. 
Comment Date: Comments must be 
received on or before February 16, 2021. 
ADDRESSES: You may submit comments, 
identified by number SBA–2021–0002 
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. 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: 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 December 27, 2020, President 
Trump signed the Economic Aid to 
Hard-Hit Small Businesses, Nonprofits, 
and Venues Act (the Economic Aid Act) 
(Pub. L. 116–260) into law to provide 
continued assistance to individuals and 
businesses that have been financially 
impacted by the ongoing coronavirus 
pandemic. Section 311 of the Economic 
Aid Act added a new temporary section 
7(a)(37) to the Small Business Act (15 
U.S.C. 636(a)(37)). This new section 
authorizes the U.S. Small Business 
Administration (SBA or the 
Administration) to guarantee Paycheck 
Protection Program Second Draw Loans 
(PPP Second Draw Program), under 
generally the same terms and conditions 
available under the Paycheck Protection 
Program (PPP) established under section 
7(a)(36) of the Small Business Act (15 
U.S.C. 636(a)(36)). Under section 311, 
SBA may guarantee loans under the PPP 
Second Draw Program through March 
31, 2021 (‘‘Second Draw PPP Loans’’) to 
borrowers that previously received a 
PPP loan under section 7(a)(36) of the 
Small Business Act (‘‘First Draw PPP 
Loans’’) and have used or will use the 
full amount of the initial PPP loan for 
authorized purposes on or before the 
expected date of disbursement of the 
Second Draw PPP Loan. 
Like First Draw PPP Loans, Second 
Draw PPP Loans are intended to provide 
expeditious relief to America’s small 
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