Business Loan Program Temporary Changes; Paycheck Protection Program — Revisions to Loan Amount Calculation and Eligibility

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Summary

An interim final rule issued by the U.S. Small Business Administration and published in the Federal Register on Monday, March 8, 2021 (Vol. 86, No. 43), Docket Number SBA-2021-0010, RIN 3245-AH67, amending 13 CFR Part 120. The rule makes three changes to the Paycheck Protection Program: it allows individuals who file an IRS Form 1040, Schedule C to calculate their maximum loan amount using gross income; it removes the restriction on businesses whose owners have non-financial fraud felony convictions in the last year; and it removes the restriction on businesses whose owners are delinquent or in default on Federal student loans. The background traces the program to section 1102 of the CARES Act, Pub. L. 116-136, and to the Economic Aid Act, Pub. L. 116-260, which reauthorized lending through March 31, 2021. The rule is effective March 4, 2021, with comments due April 7, 2021.

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This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.
Rules and Regulations
Federal Register
13149 
Vol. 86, No. 43 
Monday, March 8, 2021 
1 86 FR 3692 (Jan. 14, 2021) (which we refer to 
as the ‘‘consolidated interim final rule 
implementing updates to the PPP’’); 86 FR 3712 
(Jan. 14, 2021) (which we refer to as the ‘‘interim 
final rule on second draw PPP loans’’). 
2 86 FR 8283 (Feb. 5, 2021) (which we refer to as 
the ‘‘consolidated interim final rule on loan 
forgiveness requirements and loan review 
procedures’’). 
SMALL BUSINESS ADMINISTRATION 
13 CFR Part 120 
[Docket Number SBA–2021–0010] 
RIN 3245–AH67 
Business Loan Program Temporary 
Changes; Paycheck Protection 
Program—Revisions to Loan Amount 
Calculation and Eligibility 
AGENCY: U.S. Small Business 
Administration. 
ACTION: Interim final rule. 
SUMMARY: This interim final rule 
implements changes related to loans 
made under the Paycheck Protection 
Program (PPP), which was originally 
established under the Coronavirus Aid, 
Relief, and Economic Security Act 
(CARES Act) to provide economic relief 
to small businesses nationwide 
adversely impacted by the Coronavirus 
Disease 2019 (COVID–19). On December 
27, 2020, the Economic Aid to Hard-Hit 
Small Businesses, Nonprofits, and 
Venues Act (Economic Aid Act) was 
enacted, extending the authority to 
make PPP loans through March 31, 
2021, revising certain PPP requirements, 
and permitting second draw PPP loans. 
This interim final rule allows 
individuals who file an IRS Form 1040, 
Schedule C to calculate their maximum 
loan amount using gross income, 
removes the eligibility restriction that 
prevents businesses with owners who 
have non-financial fraud felony 
convictions in the last year from 
obtaining PPP loans, and removes the 
eligibility restriction that prevents 
businesses with owners who are 
delinquent or in default on their Federal 
student loans from obtaining PPP loans. 
DATES:
Effective date: Unless otherwise 
specified in this interim final rule, the 
provisions of this interim final rule are 
effective March 4, 2021. 
Applicability date: Unless otherwise 
specified, this interim final rule applies 
to Paycheck Protection Programs loans 
approved after the effective date of this 
rule. 
Comment date: Comments must be 
received on or before April 7, 2021. 
ADDRESSES: You may submit comments, 
identified by number SBA–2021–0010 
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: A 
Call Center Representative at 833–572– 
0502, or the local SBA Field Office; the 
list of offices can be found at https://
www.sba.gov/tools/local-assistance/ 
districtoffices. 
SUPPLEMENTARY INFORMATION: 
I. Background Information 
On March 27, 2020, the Coronavirus 
Aid, Relief, and Economic Security Act 
(the CARES Act) (Pub. L. 116–136) was 
enacted to provide emergency assistance 
and health care response for 
individuals, families, and businesses 
affected by the coronavirus disease 2019 
(COVID–19) pandemic. Section 1102 of 
the CARES Act temporarily permitted 
the Small Business Administration 
(SBA) to guarantee 100 percent of 7(a) 
loans under a new program titled the 
‘‘Paycheck Protection Program,’’ 
pursuant to section 7(a)(36) of the Small 
Business Act (15 U.S.C. 636(a)(36)) 
(First Draw PPP Loans). Section 1106 of 
the CARES Act provided for forgiveness 
of up to the full principal amount of 
qualifying loans guaranteed under the 
Paycheck Protection Program (PPP). 
On December 27, 2020, the Economic 
Aid to Hard-Hit Small Businesses, 
Nonprofits and Venues Act (Economic 
Aid Act) (Pub. L. 116–260) was enacted. 
The Economic Aid Act reauthorized 
lending under the PPP through March 
31, 2021. The Economic Aid Act added 
a new temporary section 7(a)(37) to the 
Small Business Act, which authorizes 
SBA to guarantee additional PPP loans 
(Second Draw PPP Loans) to eligible 
borrowers under generally the same 
terms and conditions available under 
section 7(a)(36) of the Small Business 
Act through March 31, 2021. The 
Economic Aid Act also redesignated 
section 1106 of the CARES Act as 
section 7A of the Small Business Act, to 
appear after section 7 of the Small 
Business Act. 
SBA, in consultation with the 
Department of the Treasury (Treasury), 
initially published an interim final rule 
implementing the PPP on April 15, 2020 
and subsequently issued additional 
interim final rules. On January 14, 2021, 
SBA published interim final rules 
implementing the Economic Aid Act 
amendments to the PPP.1 On February 
5, 2021, SBA published an additional 
interim final rule implementing 
Economic Aid Act changes related to 
the forgiveness and review of PPP 
loans.2 As described below, this interim 
final rule revises the consolidated 
interim final rule implementing updates 
to the PPP, the interim final rule on 
second draw PPP loans, and the 
consolidated interim final rule on loan 
forgiveness requirements and loan 
review procedures, to allow individuals 
who file an IRS Form 1040, Schedule C 
to calculate their maximum loan 
amount using gross income. This 
interim final rule also revises the 
consolidated interim final rule 
implementing updates to the PPP to 
remove the eligibility restriction that 
prevents businesses with owners who 
have non-financial fraud felony 
convictions in the last year from 
obtaining PPP loans and remove the 
eligibility restriction that prevents 
businesses with owners who are 
delinquent or in default on their Federal 
student loans from obtaining PPP loans. 
The changes apply to both First Draw 
PPP Loans and Second Draw PPP Loans. 
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3 15 U.S.C. 636(a)(36)(A)(viii)(I)(bb). 
4 See A Look at Nonemployer Businesses, SBA 
Office of Advocacy, August, 2018, A Look at 
Nonemployer Businesses (sba.gov). 
5 See 15 U.S.C. 636(a)(36)(P)(iv). 
6 For a Schedule C filer without employees, 
owner compensation is the only component of the 
borrower’s payroll costs. For a Schedule C filer with 
employees, owner compensation is added to 
employee payroll costs to determine the borrower’s 
total payroll costs. 
7 This is consistent with the approach for 
calculating payroll costs for farmers and ranchers in 
subsection B.4.d. of the consolidated interim final 
rule implementing updates to the PPP. 
II. Comments and Immediate Effective 
Date 
This interim final rule is being issued 
without advance notice and public 
comment because section 1114 of the 
CARES Act and section 303 of the 
Economic Aid Act authorize SBA to 
issue regulations to implement the 
Paycheck Protection Program without 
regard to notice requirements. In 
addition, this rule is being issued to 
allow for immediate implementation of 
these changes. The intent of both the 
CARES Act and the Economic Aid Act 
is that SBA provide relief to America’s 
small businesses expeditiously. Given 
the urgent need to provide borrowers 
with timely relief and the short period 
of time before the program ends on 
March 31, 2021, SBA in consultation 
with Treasury has determined that it is 
impractical and not in the public 
interest to provide a 30-day delayed 
effective date. An immediate effective 
date will allow SBA to give small 
businesses affected by this interim final 
rule the maximum amount of time to 
apply for loans and lenders the 
maximum amount of time to process 
applications before the program ends. 
This good cause justification also 
supports waiver of the 60-day delayed 
effective date for major rules under the 
Congressional Review Act at 5 U.S.C. 
808(2). Although this interim final rule 
is effective immediately, comments are 
solicited from interested members of the 
public on all aspects of the interim final 
rule. 
These comments must be submitted 
on or before April 7, 2021. SBA will 
consider these comments and the need 
for making any revisions as a result of 
these comments. 
III. Paycheck Protection Program— 
Revisions to Rules Implementing the 
Economic Aid Act 
1. Gross Income 
The statutory definition of ‘‘payroll 
costs’’ applicable to sole proprietors and 
independent contractors refers to ‘‘a 
wage, commission, income, net earnings 
from self-employment, or similar 
compensation and that is in an amount 
that is not more than $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.’’ 3 Previously, 
PPP rules defined payroll costs for 
individuals who file an IRS Form 1040, 
Schedule C as payroll costs (if 
employees exist) plus net profits, which 
is net earnings from self-employment. 
SBA is aware of significant concerns 
with this definition, because it does not 
take into account fixed and other 
business expenses that a small business 
must cover to stay in operation and 
therefore keep the owner employed. 
Thus, the support for employment for 
sole proprietors includes covering 
business expenses as well as net profits. 
This change would affect many sole 
proprietors who have been effectively 
excluded from the PPP, especially those 
with very little or negative net profit, 
many of which are located in 
underserved communities. Businesses 
that file Schedule C have higher 
concentrations of ownership by 
members of underserved groups. An 
analysis by the SBA Office of Advocacy 
of Census data found that firms with no 
employees are 70 percent owned by 
women and minorities, compared to 40 
percent for businesses with employees.4 
SBA has determined that changing the 
calculation for sole proprietors, 
independent contractors, and self- 
employed individuals will reduce 
barriers to accessing the PPP and 
expand funding among the smallest 
businesses. 
Based on the statutory language of the 
CARES Act, SBA, in consultation with 
Treasury, has determined that SBA has 
discretion to establish an alternative 
calculation methodology for payroll 
costs for sole proprietors and 
independent contractors. For these 
borrowers, the statutory definition of 
‘‘payroll costs’’ includes both ‘‘income’’ 
as well as ‘‘net earnings from self- 
employment.’’ The inclusion of both 
these terms in the statutory language 
indicates that they may have different 
meanings. Therefore, the term ‘‘income’’ 
as used in the definition of payroll costs 
for sole proprietors and independent 
contractors may be construed broadly to 
encompass a borrower’s net income and 
a borrower’s gross income. 
Defining ‘‘income’’ to include gross 
income is consistent with Congress’s 
intent that the PPP provide broad relief 
to small businesses and keep 
individuals employed, and that the PPP 
prioritize loans to, among others, small 
business concerns and entities in 
underserved markets, and small 
business concerns owned and 
controlled by socially and economically 
disadvantaged individuals and women.5 
As described above, under the prior 
rules, many of these borrowers may not 
have received meaningful amounts from 
the PPP to support their own 
employment due to having small net 
profits. Allowing a borrower to receive 
a loan amount based on their gross 
business income will provide the 
borrower a loan amount that is 
sufficient to meet the borrower’s fixed 
expenses that are necessary to stay in 
business and keep the owner employed. 
SBA is implementing this change with 
respect to PPP loans that are approved 
after the effective date of this rule. A 
borrower whose PPP loan has already 
been approved as of the effective date of 
this rule cannot increase its PPP loan 
amount based on the new calculation 
methodology. 
Therefore, SBA, in consultation with 
Treasury, has determined that a 
Schedule C filer may elect to calculate 
the owner compensation share of its 
payroll costs—that is, the share of its 
payroll costs that represents 
compensation of the owner—based on 
either (i) net profit or (ii) gross income, 
as calculated under the rule below.6 
Gross income is the amount the 
borrower reports on line 7 of Schedule 
C. If a Schedule C filer has no 
employees, the borrower may elect 
simply to calculate its loan amount 
based on either net profit or gross 
income. If a Schedule C filer has 
employees, the borrower may elect to 
calculate the owner compensation share 
of its payroll costs based on either (i) net 
profit or (ii) gross income minus 
expenses reported on lines 14 
(employee benefit programs), 19 
(pension and profit-sharing plans), and 
26 (wages (less employment credits)) of 
IRS Form 1040, Schedule C. Expenses 
reported on lines 14, 19, and 26 of the 
IRS Form 1040, Schedule C represent 
employee payroll costs and are 
subtracted from the owner 
compensation share of payroll costs if 
the owner uses gross income to 
calculate its loan amount in order to 
avoid double-counting these costs.7 In 
the context of determining a borrower’s 
eligible expenses and forgiveness 
amount, this interim final rule refers to 
the owner compensation share of a 
Schedule C filer’s loan amount as 
‘‘proprietor expenses.’’ Proprietor 
expenses encompass an owner’s 
business expenses and own 
compensation but do not include 
employee payroll costs. This proprietor 
expenses calculation limits a Schedule 
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8 SBA is not applying this safe harbor exclusion 
to Second Draw PPP Loans, because those 
applicants are required to certify that they have 
realized a reduction in gross receipts in excess of 
25% relative to the relevant comparison time 
period. 
9 SBA has developed a new borrower application 
form, SBA Form 2483–C, for First Draw PPP Loan 
borrowers that elect to use the new gross income 
calculation. Borrowers will be required to disclose 
their total amount of gross income on the form. 
10 See part V. of the consolidated interim final 
rule on loan forgiveness requirements and loan 
review procedures. 
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. 
C filer that included employee payroll 
costs in determining the PPP loan 
amount from taking the full loan 
amount as owner compensation. This 
promotes Congress’s goal of keeping 
workers paid and employed. However, 
the use of gross income by Schedule C 
filers may, in some cases, increase the 
risk of waste, fraud, or abuse, because it 
will substantially increase the 
maximum loan amount for relevant 
applicants, and in some cases an 
applicant’s gross income may not 
accurately reflect the extent to which a 
PPP loan is necessary to support the 
ongoing operations of the applicant’s 
business. To mitigate this risk, if a 
Schedule C filer elects to use gross 
income to calculate its loan amount on 
a First Draw PPP Loan and the borrower 
reported more than $150,000 in gross 
income on the Schedule C that was used 
to calculate the borrower’s loan amount, 
the borrower will not automatically be 
deemed to have made the statutorily 
required certification concerning the 
necessity of the loan request in good 
faith, and the borrower may be subject 
to a review by SBA of its certification.8 
The safe harbor that SBA previously 
provided for borrowers that, together 
with their affiliates, receive PPP Loans 
with an original principal amount of 
less than $2 million, will not apply to 
Schedule C filers that elect to use gross 
income to calculate their loan amount 
on a First Draw PPP Loan if they report 
more than $150,000 in gross income on 
the Schedule C that was used to 
calculate the borrower’s loan amount. 
SBA is eliminating the loan necessity 
safe harbor for these borrowers as they 
may be more likely to have other 
available sources of liquidity to support 
their business’s operations than 
Schedule C filers with lower levels of 
gross income. SBA will review a sample 
of the population of First Draw PPP 
Loans made to Schedule C filers using 
the gross income calculation if the gross 
income on the Schedule C used to 
calculated the borrower’s loan amount 
exceeds the threshold of $150,000.9 If 
the borrower exceeds this threshold, 
then SBA will, for the sample drawn, 
assess whether these borrowers 
complied with the PPP eligibility 
criteria, including the good faith loan 
necessity certification. This will serve as 
an additional deterrent to fraud, waste, 
and abuse because higher income 
borrowers that elect to use gross income 
rather than net profit to calculate their 
loan amount will face the prospect of a 
heightened review, which would 
include a review of their good faith loan 
necessity certification. The $150,000 
gross income threshold is necessary in 
light of the potentially large volume of 
applications SBA will receive from First 
Draw PPP Loan applicants that are 
eligible to use the gross income 
calculation. Maintaining the safe harbor 
for borrowers under this threshold is 
also necessary in light of the deterrent 
effect of auditing risk for many 
underresourced borrowers whose fixed 
cost of bookkeeping is higher in 
proportion to their income. This 
approach will enable SBA to conserve 
its finite audit resources and focus its 
reviews of First Draw PPP Loans using 
the new calculation on larger loans, 
where the compliance effort may yield 
higher returns. The reviews of loans to 
Schedule C filers that used the gross 
income calculation will follow the same 
processes that apply to PPP loans 
generally, except as specified above.10 
Therefore, the following changes are 
made to PPP rules: 
a. Subsection B.4.b of the 
consolidated interim final rule 
implementing updates to the PPP (86 FR 
3692, 3700) is revised to read as follows: 
b. I have income from self- 
employment and file an IRS 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 you 
employ other individuals. If you have 
no employees, use the following 
methodology to calculate your 
maximum loan amount: 
i. Step 1: From your 2019 or 2020 IRS 
Form 1040, Schedule C, you may elect 
to use either your line 31 net profit 
amount or your line 7 gross income 
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 
both your net profit and gross income 
are zero or less, you are not eligible for 
a PPP loan. 
ii. Step 2: Calculate the average 
monthly net profit or gross income 
amount (divide the amount from Step 1 
by 12). 
iii. Step 3: Multiply the average 
monthly net profit or gross income 
amount from Step 2 by 2.5. This amount 
cannot exceed $20,833. 
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 your 
loan amount) IRS 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 your 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 
your 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, use the 
following methodology 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. At your election, either (1) the net 
profit amount from line 31 of your 2019 
or 2020 IRS Form 1040, Schedule C, or 
(2) your 2019 or 2020 gross income 
minus employee payroll costs, 
calculated as your gross income 
reported on IRS Form 1040, Schedule C, 
line 7, minus your employee payroll 
costs reported on lines 14, 19, and 26 of 
IRS Form 1040, Schedule C (for either 
option, if you are using 2020 amounts 
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, or 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 
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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. 
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. 
87 This subsection has been added to codify the 
safe harbor contained in FAQ 46 (posted May 13, 
2020). 
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 
(IRS 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). 
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 your 
loan amount) IRS 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 your 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. 
b. Subsection B.11.b of the 
consolidated interim final rule 
implementing updates to the PPP (86 FR 
3692, 3704) is revised to read as follows 
(footnotes are not restated): 
b. How can PPP loans be used by 
individuals with income from self- 
employment who file an IRS Form 1040, 
Schedule C? 80 
The proceeds of a PPP loan are to be 
used for the following: 
i. For borrowers that use net profit to 
calculate loan amount, 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 B.4.b. For borrowers that use 
gross income to calculate loan amount, 
proprietor expenses (business expenses 
plus owner compensation), calculated 
based on 2019 or 2020 (using the same 
year that was used to calculate the loan 
amount) gross income as described in 
subsection B.4.b (this amount cannot 
exceed $20,833). For borrowers who 
used gross income to calculate the loan 
amount and have no employees, 
proprietor expenses equal gross income. 
For borrowers who used gross income to 
calculate the loan amount and have 
employees, proprietor expenses equal 
the difference between gross income 
and employee payroll costs. 
ii. Employee payroll costs (as defined 
in subsection B.4.g. of the consolidated 
interim final rule implementing updates 
to the PPP) for employees whose 
principal place of residence is in 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) IRS 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 
IRS 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 are 
deductible on IRS Form 1040, Schedule 
C. 
vii. Covered property damage costs, as 
defined in section 7A(a) of the Small 
Business Act, to the extent they are 
deductible on IRS Form 1040, Schedule 
C. 
viii. Covered supplier costs, as 
defined in section 7A(a) of the Small 
Business Act, to the extent they are 
deductible on IRS Form 1040, Schedule 
C. 
ix. Covered worker protection 
expenditures, as defined in section 
7A(a) of the Small Business Act, to the 
extent they are deductible on Form IRS 
1040, Schedule C.82 
c. Subsection B.13 of the consolidated 
interim final rule implementing updates 
to the PPP (86 FR 3692, 3706) is revised 
to read as follows: 
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 Treasury, issued 
additional guidance concerning how 
SBA will review the required good-faith 
certification. See FAQ 46 (as originally 
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. In light of the 
additional flexibility being provided to 
certain borrowers to use their gross 
income amount, as reported on line 7 of 
IRS Form 1040, Schedule C, borrowers 
that elect to use gross income to 
calculate their maximum loan amount 
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13153 
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19 For First Draw PPP loans made in 2020, 
borrowers use 2019. For First Draw PPP loans made 
in 2021 and Second Draw PPP Loans, borrowers use 
the year (2019 or 2020) that was used to calculate 
the borrower’s loan amount. 
20 For self-employed borrowers with no 
employees that file IRS Form 1040, Schedule C, 
who used gross income to calculate the loan 
amount, proprietor expenses equal gross income. 
For self-employed borrowers with employees that 
file IRS Form 1040, Schedule C, who used gross 
income to calculate the loan amount, proprietor 
expenses equal the difference between gross income 
and employee payroll costs. See subsections B.4.b 
and B.11.b of the consolidated interim final rule 
implementing updates to the PPP as amended by 
this interim final rule. For self-employed borrowers 
that file IRS Form 1040, Schedule F and have no 
employees, gross income may be used instead of net 
profit throughout this calculation. For self- 
employed borrowers that file IRS Form 1040, 
Schedule F and have employees, the difference 
between gross income and employee payroll costs 
may be used instead of net profit throughout this 
calculation. See section 313 of the Economic Aid 
Act. This calculation for Schedule F filers is 
equivalent to proprietor expenses for Schedule C 
filers. 
21 Section 306 of the Economic Aid Act allows the 
borrower to select a covered period between 8 
weeks and 24 weeks. 
37 This subsection was originally published at 85 
FR 33004, subsection III.3.c. (June 1, 2020) and 
amended by 85 FR 38304, subsection III.1.d (June 
26, 2020) and has been modified to conform to 
sections 308 and 344 of the Economic Aid Act and 
for readability. 
38 For First Draw PPP loans made in 2020, 
borrowers use 2019. For First Draw PPP loans made 
in 2021 and Second Draw PPP loans, borrowers use 
the year (2019 or 2020) that was used to calculate 
the borrower’s loan amount. 
39 Use whichever year was used to calculate the 
borrower’s loan amount. 
40 Use whichever year was used to calculate the 
borrower’s loan amount. 
for a First Draw PPP Loan and that 
report more than $150,000 in gross 
income on the Schedule C that was used 
to calculate the borrower’s loan amount 
will not automatically be deemed to 
have made the required certification 
concerning the necessity of the loan 
request in good faith. SBA may review 
their certification that ‘‘Current 
economic uncertainty makes this loan 
request necessary to support the 
ongoing operations of the Applicant.’’ If 
SBA determines that a borrower lacked 
an adequate basis for the required 
certification concerning the necessity of 
the loan request, SBA may determine 
that the borrower was not eligible for 
the loan, for the loan amount, or for loan 
forgiveness. 
d. Subsection (f)(7) of the interim final 
rule for Second Draw PPP Loans (86 FR 
3712, 3720) is revised to read as follows: 
(7) The maximum amount of a Second 
Draw PPP Loan to a borrower that has 
income from self-employment and files 
an IRS Form 1040, Schedule C, is 
calculated as follows, depending on 
whether the borrower has employees: 
(i) For a borrower that has income 
from self-employment and does not 
have any employees, the maximum loan 
amount is the lesser of: 
(A) The product obtained by 
multiplying: 
(1) The net profit or gross income of 
the borrower in 2019 or 2020, as 
reported on IRS Form 1040, Schedule C, 
that is not more than $100,000, divided 
by 12; and 
(2) 2.5 (or, only for a borrower 
assigned a NAICS code beginning with 
72 as defined in subsection (f)(10) at the 
time of disbursement, 3.5). This amount 
cannot exceed $29,167 for NAICS code 
72 borrowers and $20,833 for all other 
borrowers. 
(ii) For a borrower that has income 
from self-employment and has 
employees, the maximum loan amount 
is the lesser of: 
(A) The product obtained by 
multiplying: 
(1) The sum of (i) one of the two 
following options, up to $100,000; if 
this amount is less than zero, set this 
amount at zero (if you are using 2020 
and have not yet filed a 2020 return, fill 
it out and compute the value): 
• The borrower’s net profit reported 
on IRS Form 1040, Schedule C for 2019 
or 2020, divided by 12; or 
• line 7 from the borrower’s 2019 or 
2020 IRS Form 1040, Schedule C, minus 
lines 14, 19, and 26, divided by 12; and 
(ii) the average total monthly payment 
for employee payroll costs incurred or 
paid by the borrower during the same 
year elected by the borrower; by 
(2) 2.5 (or, only for a borrower 
assigned a NAICS code beginning with 
72 at the time of disbursement as 
defined in subsection (f)(10), 3.5); or 
(B) $2,000,000. 
e. Subsection IV.1.b.ii of the interim 
final rule on loan forgiveness 
requirements and loan review 
procedures (86 FR 8283, 8287) is revised 
to read as follows: 
ii. Owner compensation replacement, 
calculated based on 2019 or 2020 19 net 
profit or proprietor expenses, if 
applicable,20 as described in subsection 
3.c. below; forgiveness of such amounts 
is limited to either (a) the prorated 
portion of 2019 or 2020 net profit or 
gross income, if applicable, for a 
covered period up to 2.5 months, or (b) 
2.5 months’ worth (2.5/12) of 2019 or 
2020 net profit or gross income, if 
applicable, (up to $20,833) for a covered 
period greater than 2.5 months,21 
excluding any qualified sick leave 
equivalent amount for which a credit is 
claimed under section 7002 of the 
Families First Coronavirus Response 
Act (FFCRA) (Pub. L. 116–127) or 
qualified family leave equivalent 
amount for which a credit is claimed 
under section 7004 of FFCRA; 
f. Subsection IV.3.c of the interim 
final rule on loan forgiveness 
requirements and loan review 
procedures (86 FR 8283, 8289) is revised 
to read as follows: 
c. Are there caps on the amount of 
loan forgiveness available for owner- 
employees and self-employed 
individuals’ own payroll 
compensation? 37 
Yes. Forgiveness is capped at 2.5 
months’ worth (2.5/12) of an owner- 
employee or self-employed individual’s 
2019 or 2020 38 compensation (up to a 
maximum $20,833 per individual in 
total across all businesses). The 
individual’s total compensation may not 
exceed $100,000 on an annualized basis, 
as prorated for the period during which 
the payments are made or the obligation 
to make the payments is incurred. For 
example, for borrowers that elect to use 
an eight-week covered period, the 
amount of loan forgiveness requested for 
owner-employees and self-employed 
individuals’ payroll compensation is 
capped at eight weeks’ worth (8/52) of 
2019 or 2020 compensation (i.e., 
approximately 15.38 percent of 2019 or 
2020 compensation) or $15,385 per 
individual, whichever is less, in total 
across all businesses. For borrowers that 
elect to use a ten-week covered period, 
the cap is ten weeks’ worth (10/52) of 
2019 or 2020 compensation 
(approximately 19.23 percent) or 
$19,231 per individual, whichever is 
less, in total across all businesses. For 
a covered period longer than 2.5 
months, the amount of loan forgiveness 
requested for owner-employees and self- 
employed individuals’ payroll 
compensation is capped at 2.5 months’ 
worth (2.5/12) of 2019 or 2020 
compensation (up to $20,833) in total 
across all businesses. 
In particular, C-corporation owner- 
employees are capped by the prorated 
amount of their 2019 or 2020 39 
employee cash compensation and 
employer retirement and health, life, 
disability, vision and dental insurance 
contributions made on their behalf. S- 
corporation owner-employees are 
capped by the prorated amount of their 
2019 or 2020 40 employee cash 
compensation and employer retirement 
contributions made on their behalf. 
However, employer health, life, 
disability, vision and dental insurance 
contributions made on their behalf 
cannot be separately added; those 
payments are already included in their 
employee cash compensation. Schedule 
C or F filers are capped by the prorated 
amount of their owner compensation 
replacement (calculated based on 2019 
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13154 
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41 For self-employed borrowers with no 
employees that file IRS Form 1040, Schedule C, 
who used gross income to calculate the loan 
amount, proprietor expenses equal gross income. 
For self-employed borrowers with employees that 
file IRS Form 1040, Schedule C, who used gross 
income to calculate the loan amount, proprietor 
expenses equal the difference between gross income 
and employee payroll costs. See subsections B.4.b 
and B.11.b of the consolidated interim final rule 
implementing updates to the PPP as amended by 
this interim final rule. For self-employed borrowers 
that file IRS Form 1040, Schedule F and have no 
employees, gross income may be used instead of net 
profit. For self-employed borrowers that file IRS 
Form 1040, Schedule F and have employees, the 
difference between gross income and employee 
payroll costs may be used. See section 313 of the 
Economic Aid Act. 
67 This subsection was originally published at 85 
FR 21747, subsection III.1.g. (Apr. 20, 2020) and has 
been modified to conform to sections 304, 307, 308, 
and 313 of the Economic Aid Act and for 
readability. 
68 See subsection (g)(2)(v) of the interim final rule 
on Second Draw PPP Loans. 86 FR 3712, 3721 (Jan. 
14, 2021). 
69 For self-employed borrowers with no 
employees that file IRS Form 1040, Schedule C, 
who used gross income to calculate the loan 
amount, proprietor expenses equal gross income. 
For self-employed borrowers with employees that 
file IRS Form 1040, Schedule C, who used gross 
income to calculate the loan amount, proprietor 
expenses equal the difference between gross income 
and employee payroll costs. See subsections B.4.b 
and B.11.b of the consolidated interim final rule 
implementing updates to the PPP as amended by 
this interim final rule. For self-employed borrowers 
that file IRS Form 1040, Schedule F and have no 
employees, gross income may be used instead of net 
profit. For self-employed borrowers that file IRS 
Form 1040, Schedule F and have employees, the 
difference between gross income and employee 
payroll costs may be used instead of net profit. 
11 See Paycheck Protection Program Second 
Chance Act, S. 3865, 116th Congress (introduced in 
the Senate on June 2, 2020). 
or 2020 net profit) or proprietor 
expenses (calculated based on 2019 or 
2020 gross income).41 General partners 
are capped by the prorated amount of 
their 2019 or 2020 net earnings from 
self-employment (reduced by claimed 
section 179 expense deduction, 
unreimbursed partnership expenses, 
and depletion from oil and gas 
properties) multiplied by 0.9235. For 
self-employed individuals, including 
Schedule C or F filers and general 
partners, retirement and health, life, 
disability, vision or dental insurance 
contributions are included in their net 
self-employment income and therefore 
cannot be separately added to their 
payroll calculation. LLC members are 
subject to the rules based on their LLC’s 
tax filing status in the reference year 
used to determine their loan amount. 
g. Subsection IV.6.b of the interim 
final rule on loan forgiveness 
requirements and loan review 
procedures (86 FR 8283, 8293) is revised 
to read as follows: 
b. What documentation are borrowers 
who are individuals with self- 
employment income who file an IRS 
Form 1040, Schedule C or F required to 
submit to their lender with their request 
for loan forgiveness? 67 
For borrowers that received loans of 
$150,000 or less that use the SBA Form 
3508S, the borrower must submit the 
certification and information required 
by section 7A(l)(1)(A) of the Small 
Business Act and, for a Second Draw 
PPP Loan, revenue reduction 
documentation if such documentation 
was not provided at the time of 
application.68 All other borrowers must 
submit the certification required by 
section 7A(e)(3) of the Small Business 
Act, and (if the borrower has employees) 
IRS Form 941 and state quarterly 
business and individual employee wage 
reporting and unemployment insurance 
tax forms or equivalent payroll 
processor records that best correspond 
to the covered period (with evidence of 
any retirement and group health, life, 
disability, vision, and dental insurance 
contributions). Whether or not the 
borrower has employees, the borrower 
must submit evidence of business rent, 
business mortgage interest payments on 
real or personal property, business 
utility payments, or payments for a 
covered operations expenditure, 
covered property damage cost, covered 
supplier cost, or covered worker 
protection expenditure during the 
covered period if the borrower used 
loan proceeds for those purposes. This 
documentation may include cancelled 
checks, payment receipts, transcripts of 
accounts, purchase orders, orders, 
invoices, or other documents verifying 
payments on nonpayroll costs. 
For all loans, the 2019 or 2020 IRS 
Form 1040, Schedule C or F that the 
borrower provided at the time of the 
PPP loan application must be used to 
determine the amount of net profit or 
proprietor expenses allocated to the 
owner for the covered period.69 
h. SBA has developed new Borrower 
Application Forms for use by borrowers 
that are Schedule C filers and elect to 
calculate their loan amount using gross 
income, as allowed under this interim 
final rule. SBA Form 2483–C will be 
used by such borrowers when applying 
for First Draw PPP Loans and SBA Form 
2483–SD–C will be used by such 
borrowers when applying for Second 
Draw PPP Loans. All references to the 
Borrower Application Form in the 
consolidated interim final rule 
implementing updates to the PPP, the 
interim final rule on second draw PPP 
loans, and the consolidated interim final 
rule on loan forgiveness requirements 
and loan review procedures include the 
SBA Form 2483–C and the SBA Form 
2483–SD–C, as applicable. 
2. Eligibility 
The consolidated interim final rule 
implementing updates to the PPP 
provided, among other things, that a 
PPP loan applicant is ineligible if an 
owner of 20 percent or more of the 
equity of the applicant has been 
convicted of, pleaded guilty or nolo 
contendere to, or commenced any form 
of parole or probation (including 
probation before judgment) for (1) 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 (2) any other felony 
within the last year. This provision 
reflected the PPP eligibility 
requirements as revised in an interim 
final rule titled ‘‘Business Loan Program 
Temporary Changes; Paycheck 
Protection Program—Additional 
Revisions to First Interim Final Rule,’’ 
published on June 18, 2020 (85 FR 
36717). SBA has further reviewed these 
eligibility restrictions and, in 
consultation with Treasury, has 
determined that modification to the 
consolidated interim final rule 
implementing updates to the PPP is 
appropriate to ensure consistency with 
Congressional intent to provide relief to 
small businesses and their employees, 
expand access to the PPP, and remove 
barriers people with prior convictions 
face when working to restart their lives 
and contribute to our economy. SBA has 
determined that the one-year lookback 
restriction related to non-financial fraud 
felonies should be removed and only 
the five-year lookback restriction for 
those felonies involving fraud, bribery, 
embezzlement, or a false statement in a 
loan application or an application for 
federal financial assistance will limit an 
applicant’s eligibility for the PPP. 
Removing the one-year lookback 
restriction related to non-financial fraud 
felonies is consistent with 
Congressional support for reducing 
criminal background checks in the 
PPP 11 and the important policies 
underlying recent criminal justice 
reforms in Congress, such as last year’s 
Fair Chance to Compete for Jobs Act of 
2019 (Pub. L. 116–92, Div. A, Tit. XI, 
Subtit. B,) and the First Step Act of 2018 
(Pub. L. 115–391). 
In light of the unique, emergency 
nature of the PPP and the higher fraud 
risk that exists due to the PPP’s 
emphasis on speed in loan approvals 
and disbursements, the remaining 
restrictions on eligibility related to an 
applicant or owner’s criminal history 
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12 ‘‘Federal student loans’’ mean programs under 
Parts B, D and E of the Higher Education Act of 
1965, as amended, as well as other programs now 
administered by the Department. These include 
loans under the under the William D. Ford Federal 
Direct Loan program, the Federal Family Education 
Loan (FFEL) program, the Federal Perkins Loan 
program, the Health Education Assistance Loan 
(HEAL) program, and the Teacher Education 
Assistance for College and Higher Education 
(TEACH) Grant program if those awards have 
converted into loans. These delinquencies include 
loans owed directly to the Department of Education 
as well as Federal student loans held by institutions 
of higher education or those guaranteed or insured 
by the Department of Education and which are held 
by private lenders or guaranty agencies. 
13 See 15 U.S.C. 636(a)(36)(P)(iv). 
14 See letter from Department of Education to 
Department of the Treasury requesting an 
exemption under 31 CFR 285.13 of the ban on 
Federal financial assistance to debtors with 
delinquent Federal student loans, for the PPP 
program, dated February 27, 2021. 
15 See Department of Education, Coronavirus and 
Forbearance Info for Students, Borrowers, and 
Parents, https://studentaid.gov/announcements- 
events/coronavirus. 
will help mitigate the risk of default, 
fraud, or misuse of PPP loan funds that 
are intended to benefit small business 
employees. By removing barriers for 
applicants with non-financial fraud 
felonies, this interim final rule balances 
the need to increase access to the PPP 
and remove barriers for people with 
prior convictions while still ensuring 
basic guardrails against fraud exist for 
this emergency program. Preserving the 
five-year lookback for financial fraud- 
related felonies is one of these 
guardrails. 
The consolidated interim final rule 
implementing updates to the PPP also 
provided that a PPP loan applicant is 
ineligible for a PPP loan if the applicant, 
or any business owned or controlled by 
the applicant or any of its 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. 
SBA, in consultation with Treasury, has 
decided to eliminate the restriction in 
the consolidated interim final rule to the 
extent it applies to Federal student 
loans.12 SBA has determined that 
eliminating consideration of delinquent 
or defaulted Federal student loans is 
appropriate to ensure consistency with 
Congressional intent to provide relief to 
small businesses and their employees 
and expand access to the PPP. This 
change will make PPP loans available to 
more borrowers with financial need and 
is consistent with Congress’s intent that 
PPP loans be prioritized for small 
business concerns owned and 
controlled by socially and economically 
disadvantaged individuals as defined in 
section 8(d)(3)(c) of the Small Business 
Act.13 According to the Department of 
Eduction, ‘‘Black and Brown students 
rely more heavily on student loan debt 
than their peers and experience 
delinquency at disproportionately high 
rates. As a result prohibiting delinquent 
student loan borrowers from obtaining 
PPP loans is more likely to exclude 
business owners of color from access to 
the loans they need.’’ 14 In addition, this 
change is consistent with the policy set 
in section 3513 of the CARES Act and 
the Department of Education’s ongoing 
actions to provide economic relief to 
student loan borrowers whose loans are 
held by the agency by suspending 
Federal student loan payments and 
collections during the pandemic and 
keeping the interest rate at 0 percent.15 
At the request of the Department of 
Education by letter dated February 27, 
2021, Treasury also has granted an 
exemption from the bar in 31 U.S.C. 
3720B and 31 CFR 285.13, with respect 
to PPP borrowers with Federal student 
loans in delinquent status. 
The change in PPP regulations 
relating to Federal student loans and the 
Treasury exemption apply to new PPP 
applicants as well as those borrowers 
who have already received a PPP loan. 
In this way, PPP borrowers with 
delinquent or defaulted student loan 
debts are treated equally, without regard 
to when they submitted their PPP 
application. Although PPP applications 
previously required applicants to 
disclose whether they had a delinquent 
Federal debt, student loan borrowers 
may have been confused about the 
status of their loans due to the current 
suspension on the payment and 
collection of Federal student loans or 
uncertain about whether loans not 
directly serviced or held by the 
Department of Education constitute 
Federal debt. This confusion may have 
led some borrowers to make innocent 
errors on their PPP application. For 
these reasons, SBA will apply this 
change to any First Draw PPP Loan or 
Second Draw PPP Loan, regardless of 
when the PPP loan was made. 
Part IV.(e) of the interim final rule 
titled ‘‘Business Loan Program 
Temporary Changes; Paycheck 
Protection Program Second Draw 
Loans,’’ published on January 14, 2021 
(‘‘Second Draw Interim Final Rule’’) (86 
FR 3712), provides that an applicant is 
not eligible for a Second Draw PPP Loan 
if the applicant is excluded from 
eligibility under the consolidated 
interim final rule implementing updates 
to the PPP. The following revisions to 
Part III.B.2.a. of the consolidated interim 
final rule implementing updates to the 
PPP also affect eligibility for Second 
Draw PPP Loans. 
Therefore, subsections B.2.a.iii. and 
B.2.a.iv of the consolidated interim final 
rule implementing updates to the PPP 
(86 FR 3692, 3698) are revised to read 
as follows: 
2. What businesses, organizations, and 
individuals are ineligible? 
a. Could I be ineligible even if I meet the 
eligibility requirements in section 1? 
You are ineligible for a PPP loan if, for 
example: 
* 
* 
* 
* 
* 
iii. An owner of 20 percent or more 
of the equity of the applicant is 
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 
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 (other than a Federal 
student loan made under Parts B, D, and 
E of the Higher Education Act of 1965, 
as amended, or other programs now 
administered by the U.S. Department of 
Education, which include the William 
D. Ford Federal Direct Loan program, 
the Federal Family Education Loan 
(FFEL) program, the Federal Perkins 
Loan program, the Health Education 
Assistance Loan (HEAL) program, or the 
Teacher Education Assistance for 
College and Higher Education (TEACH) 
program) that is currently delinquent or 
has defaulted within the last seven years 
and caused a loss to the government; 
* 
* 
* 
* 
* 
Subsection B.2.a. is amended to add 
after subsection B.2.a.ix: 
The exclusion of Federal student 
loans from the restriction on applicants 
with delinquent or defaulted Federal 
debt in subsection (iv) applies to any 
loan made pursuant to section 7(a)(36) 
or 7(a)(37) of the Small Business Act, 
including forgiveness of such a loan, 
regardless of when the loan was made. 
3. Additional Information 
SBA may provide further guidance, if 
needed, through SBA notices that will 
be posted on SBA’s website at 
www.sba.gov. Questions on the 
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13156 
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Paycheck Protection Program may be 
directed to the Lender Relations 
Specialist in the local SBA Field Office. 
The local SBA Field Office may be 
found at https://www.sba.gov/tools/ 
local-assistance/districtoffices. 
Compliance With Executive Orders 
12866, 12988, 13132 and 13563 the 
Congressional Review Act, the 
Administrative Procedure Act, the 
Paperwork Reduction Act (44 U.S.C. 
Ch. 35), and the Regulatory Flexibility 
Act (5 U.S.C. 601–612) 
Executive Orders 12866 and 13563 
This interim final rule is 
economically significant for the 
purposes of Executive Orders 12866 and 
13563. SBA, however, is proceeding 
under the emergency provision at 
Executive Order 12866 section 6(a)(3)(D) 
based on the need to move 
expeditiously to mitigate the current 
economic conditions arising from the 
COVID–19 emergency. 
This rule is necessary to provide 
economic relief to small businesses 
nationwide adversely impacted under 
the COVID–19 Emergency Declaration. 
We anticipate that this rule will result 
in substantial benefits to small 
businesses, their employees, and the 
communities they serve. However, we 
lack data to estimate the effects of this 
rule. 
The Administrator of the Office of 
Management and Budget’s Office of 
Information and Regulatory Affairs 
(OIRA) has determined that this is a 
major rule for purposes of Subtitle E of 
the Small Business Regulatory 
Enforcement and Fairness Act of 1996 
(also known as the Congressional 
Review Act or CRA) (5 U.S.C. 804(2) et 
seq.). Under the CRA, a major rule takes 
effect 60 days after the rule is published 
in the Federal Register. 5 U.S.C. 
801(a)(3). 
Notwithstanding this requirement, the 
CRA allows agencies to dispense with 
the requirements of section 801 when 
the agency for good cause finds that 
such procedure would be impracticable, 
unnecessary, or contrary to the public 
interest and the rule shall take effect at 
such time as the agency promulgating 
the rule determines. 5 U.S.C. 808(2). 
Pursuant to § 808(2), SBA for good cause 
finds that a 60-day delay to provide 
public notice is impracticable and 
contrary to the public interest. Likewise, 
for the same reasons, SBA for good 
cause finds that there are grounds to 
waive the 30-day effective date delay 
under the Administrative Procedure 
Act. 5 U.S.C. 553(d)(3). 
The last day to apply for and receive 
a PPP loan is March 31, 2021. Given the 
short duration of this program, and the 
urgent need to issue loans quickly, SBA, 
in consultation with Treasury, 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 
affected by this interim final rule the 
maximum amount of time to apply for 
loans and lenders the maximum amount 
of time to process applications before 
the program ends. 
Executive Order 12988 
SBA has drafted this rule, to the 
extent practicable, in accordance with 
the standards set forth in section 3(a) 
and 3(b)(2) of Executive Order 12988, to 
minimize litigation, eliminate 
ambiguity, and reduce burden. The rule 
has no preemptive effect but the change 
to remove the eligibility restriction that 
prevents businesses with owners who 
are delinquent on their Federal student 
loans from obtaining PPP loans is 
retroactive to March 27, 2020. 
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 
Paperwork Reduction Act, 44 U.S.C. 
Chapter 35 
SBA has determined that this rule 
will require revisions to existing 
recordkeeping or reporting requirements 
of the Paycheck Protection Program 
(PPP) information collections (OMB 
Control Numbers 3245–0407 and 3245– 
0417. The revisions will affect SBA 
Form 2483, Borrower Application Form 
Revised February 17, 2021, SBA Form 
2483–SD, Second Draw Borrower 
Application Form Revised February 17, 
2021, SBA Form 2484, Lender’s 
Application—Paycheck Protection 
Program Loan Guaranty Revised January 
8, 2021, and SBA Form 2484–SD, 
Lender’s Application—Second Draw 
Loan Guaranty. SBA Forms 2483 and 
2483–SD were amended to implement 
to the revisions to the criminal history 
and delinquent student loan restrictions 
as set forth in this interim final rule. 
SBA Forms 2484 and 2484–SD were 
amended to implement the new loan 
amount calculation option for Schedule 
C filers, and the revisions to the 
criminal history and delinquent student 
loan restrictions as set forth in this 
interim final rule. 
Additionally, to implement the new 
loan amount calculation option for 
Schedule C filers, SBA has developed 
two new forms, SBA Form 2483–C, PPP 
Borrower Application Form for 
Schedule C Filers Using Gross Income, 
and SBA Form 2483–SD–C, PPP Second 
Draw Borrower Application Form for 
Schedule C Filers Using Gross Income, 
which are required for applicants who 
are Schedule C filers and choose the 
gross income loan amount calculation 
option. 
SBA has requested Office of 
Management and Budget (OMB) 
emergency approval of the revisions to 
the information collections to give small 
businesses affected by this interim final 
rule the maximum amount of time to 
apply for loans and lenders the 
maximum amount of time to process 
applications before the program ends. 
Regulatory Flexibility Act (RFA) 
The Regulatory Flexibility Act (RFA) 
generally requires that when an agency 
issues a proposed rule, or a final rule 
pursuant to section 553(b) of the 
Administrative Procedure Act or 
another law, the agency must prepare a 
regulatory flexibility analysis that meets 
the requirements of the RFA and 
publish such analysis in the Federal 
Register. 5 U.S.C. 603, 604. 
Rules that are exempt from notice and 
comment are also exempt from the RFA 
requirements, including conducting a 
regulatory flexibility analysis, when 
among other things the agency for good 
cause finds that notice and public 
procedure are impracticable, 
unnecessary, or contrary to the public 
interest. SBA Office of Advocacy guide: 
How to Comply with the Regulatory 
Flexibility Act, Ch.1. p.9. Since this rule 
is exempt from notice and comment, 
SBA is not required to conduct a 
regulatory flexibility analysis. 
Authority: 15 U.S.C. 636(a)(36); 15 U.S.C. 
636(a)(37); 15 U.S.C. 636m; Coronavirus Aid, 
Relief, and Economic Security Act, Pub. L. 
116–136, section 1114 and Economic Aid to 
Hard-Hit Small Businesses, Nonprofits, and 
Venues Act (Pub. L. 116–260), section 303. 
Tami Perriello, 
Acting Administrator, Small Business 
Administration. 
[FR Doc. 2021–04795 Filed 3–4–21; 8:45 am] 
BILLING CODE 8026–03–P 
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