Business Loan Program Temporary Changes; Paycheck Protection Program — COVID Revenue Reduction Score, Direct Borrower Forgiveness Process,…

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Summary

An interim final rule of the U.S. Small Business Administration, published in the Federal Register of July 30, 2021 (Vol. 86, No. 144), 13 CFR Part 120, Docket Number SBA-2021-0015, RIN 3245-AH79. The rule streamlines forgiveness of Paycheck Protection Program loans of $150,000 or less by allowing lenders to use a COVID Revenue Reduction Score to document the required revenue reduction for Second Draw PPP Loans and by establishing a direct borrower forgiveness process for lenders that opt in. It also extends the loan deferment period where a borrower timely files an appeal of a final SBA loan review decision with the SBA Office of Hearings and Appeals. The rule states it is effective July 28, 2021 and that comments must be received on or before August 30, 2021. The background states SBA guaranteed over 11.8 million PPP loans totaling more than $806 billion.

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40921 
Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 
1 By way of contrast, in a normal fiscal year, for 
example FY 2019, SBA guaranteed 51,907 7(a) 
Continued 
SMALL BUSINESS ADMINISTRATION 
13 CFR Part 120 
[Docket Number SBA–2021–0015] 
RIN 3245–AH79 
Business Loan Program Temporary 
Changes; Paycheck Protection 
Program—COVID Revenue Reduction 
Score, Direct Borrower Forgiveness 
Process, and Appeals Deferment 
AGENCY: U.S. Small Business 
Administration. 
ACTION: Interim final rule. 
SUMMARY: This interim final rule 
implements changes related to the 
forgiveness of loans made under the 
Paycheck Protection Program (PPP), 
which was originally established under 
the Coronavirus Aid, Relief, and 
Economic Security Act (CARES Act) to 
provide economic relief to small 
businesses nationwide adversely 
impacted by the Coronavirus Disease 
2019 (COVID–19), as amended. SBA has 
issued a number of interim final rules 
implementing the PPP Program. This 
interim final rule further streamlines the 
forgiveness process for PPP loans of 
$150,000 or less by allowing lenders to 
use a COVID Revenue Reduction Score 
at the time of forgiveness to document 
the required revenue reduction for 
Second Draw PPP Loans, and 
establishing a direct borrower 
forgiveness process for lenders that 
choose to opt-in as an alternative 
method of processing loan forgiveness 
applications. This interim final rule also 
extends the loan deferment period for 
those PPP loans where the borrower 
timely files an appeal of a final SBA 
loan review decision with the SBA 
Office of Hearings and Appeals. 
DATES: 
Effective date: The provisions of this 
interim final rule are effective July 28, 
2021. 
Applicability date: The COVID 
Revenue Reduction Score portion of this 
interim final rule applies to all Second 
Draw PPP Loans for which the lender 
has not yet issued a loan forgiveness 
decision to SBA as of the effective date 
of this rule. The direct borrower 
forgiveness process portion of this rule 
applies to all PPP loans for which a loan 
forgiveness application has not been 
submitted by the borrower to the lender 
as of the effective date of this rule. The 
deferment portion of the rule applies to 
PPP appeals filed after the effective date 
of this rule and to those PPP appeals 
filed before the effective date of this rule 
for which a Notice and Order has not 
been issued. 
Comment date: Comments must be 
received on or before August 30, 2021. 
ADDRESSES: You may submit comments, 
identified by docket number SBA– 
2021–0015 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. If you use a 
telecommunications device for the deaf 
(TDD) or a text telephone (TTY), call the 
Federal Relay Service (FRS), toll free, at 
1–800–877–8339. Individuals with 
disabilities can obtain this document in 
an accessible format that may be 
provided in Rich Text Format (RTF) or 
text format (txt), a thumb drive, an mp3 
file, Braille, large print, audiotape, or 
compact disc, or other accessible 
formats. 
SUPPLEMENTARY INFORMATION: 
I. Background Information 
On March 27, 2020, the Coronavirus 
Aid, Relief, and Economic Security Act 
(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 April 24, 
2020, the Paycheck Protection Program 
and Health Care Enhancement Act (Pub. 
L. 116–139) was enacted, which 
provided additional funding and 
authority for the PPP Program. 
On June 5, the Paycheck Protection 
Program Flexibility Act of 2020 (PPP 
Flexibility Act) (Pub. L. 116–142) was 
enacted, which changed provisions of 
the PPP relating to the maturity of PPP 
loans, the deferral of PPP loan 
payments, and the forgiveness of PPP 
loans. On July 4, 2020, Public Law 116– 
147 extended the authority 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. 
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 certain 
eligible borrowers that previously 
received a First Draw PPP Loan under 
generally the same terms and conditions 
available under section 7(a)(36) of the 
Small Business Act. Among other 
things, to be eligible for a Second Draw 
PPP Loan, the borrower must have 
experienced a revenue reduction of not 
less than 25% in at least one quarter of 
2020 compared to the same quarter in 
2019. 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. Additionally, the 
Economic Aid Act provided for a 
simplified forgiveness application 
process for PPP loans of $150,000 or 
less. 
On March 11, 2021, the American 
Rescue Plan Act (ARPA) (Pub. L. 117– 
2) was enacted, and among other things, 
expanded eligibility for First Draw PPP 
Loans and Second Draw PPP Loans and 
revised exclusions from payroll costs for 
purposes of forgiveness. On March 30, 
2021, the PPP Extension Act of 2021 
(Pub. L. 117–6) was enacted, extending 
SBA’s PPP program authority through 
June 30, 2021. 
From April 3, 2020, through August 8, 
2020, when the 2020 round of PPP 
expired, SBA guaranteed over 5.2 
million PPP loans made by over 5,000 
PPP lenders under delegated authority. 
From January 11, 2021, when the PPP 
reopened, through June 30, 2021, when 
the PPP program authority expired, SBA 
guaranteed over 6.6 million additional 
PPP loans. Thus, the total number of 
PPP loans guaranteed by SBA exceeds 
11.8 million.1 The total dollar amount of 
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loans. The astronomical increase in SBA’s 7(a) 
portfolio, of which the PPP is a part, has strained 
SBA’s resources and will continue to strain SBA’s 
resources going forward. 
2 As of July 12, 2021, SBA has received over 4.5 
million forgiveness decisions from PPP lenders 
through the Platform. 
3 Although borrowers with loans of $150,000 or 
less may now use SBA Form 3508S, only those 
borrowers with loans of $50,000 or less may use the 
de minimis exemption from the FTE and salary/ 
wage reduction penalty. 
the PPP loans guaranteed by SBA 
exceeds $806 billion. 
SBA posted the first interim final rule 
implementing the PPP on SBA’s website 
on April 2, 2020, and published the rule 
in the Federal Register on April 15, 
2020 (85 FR 20811). SBA subsequently 
issued numerous additional interim 
final rules. On June 1, 2020, SBA 
published an interim final rule on loan 
forgiveness requirements (85 FR 33004) 
and an interim final rule on loan review 
procedures (85 FR 33010). Prior to the 
publication of the loan forgiveness and 
loan review interim final rules, on May 
15, 2020, SBA issued SBA Form 3508, 
which was a loan forgiveness 
application to be used by all PPP 
borrowers. 
On June 26, 2020, SBA published an 
interim final rule revising the loan 
forgiveness and loan review procedures 
to conform to the key forgiveness 
changes made by the PPP Flexibility Act 
(85 FR 38304). In conjunction with the 
rule, SBA issued a second loan 
forgiveness application form, SBA Form 
3508EZ, which is a streamlined form 
that incorporates the forgiveness safe 
harbors established under the PPP 
Flexibility Act. 
SBA’s 2020 PPP program authority 
expired on August 8, 2020. On August 
10, 2020, SBA began accepting PPP 
lender decisions on PPP borrower loan 
forgiveness applications through SBA’s 
Paycheck Protection Platform (Platform) 
(forgiveness.sba.gov). PPP borrowers 
were required to submit their loan 
forgiveness applications to their PPP 
lenders, and as required by section 1106 
of the CARES Act (now section 7A of 
the Small Business Act), lenders were 
required to issue a decision to SBA on 
the borrower’s loan forgiveness 
application within 60 days of receipt of 
the application. On August 27, 2020, 
SBA issued an interim final rule on 
Appeals of SBA Loan Review Decisions 
under the Paycheck Protection Program 
(85 FR 52883). On October 2, 2020, SBA 
began remitting forgiveness payments to 
PPP lenders that submitted forgiveness 
decisions to SBA through the Platform. 
SBA continues to remit forgiveness 
payments to PPP lenders, and as of July 
12, 2021, SBA has remitted over 4.3 
million forgiveness payments to 
lenders.2 
On October 19, 2020, in response to 
borrower and lender concerns about the 
complexity of the loan forgiveness 
process for the smallest of borrowers, 
SBA and the Department of the Treasury 
(Treasury) jointly issued an interim final 
rule revising the loan forgiveness and 
loan review procedures to simplify the 
forgiveness process for PPP loans of 
$50,000 or less. Among other things, the 
rule exempted borrowers with loans of 
$50,000 or less from the full-time 
equivalent employee (FTE) and salary/ 
wage reduction penalties included in 
section 1106 of the CARES Act, under 
the joint SBA/Treasury statutory 
authority to make de minimis 
exemptions to those penalties. In 
conjunction with the rule, SBA issued a 
third loan forgiveness application, SBA 
Form 3508S, which was a further 
streamlined loan forgiveness application 
available for use by borrowers with 
loans of $50,000 or less. 
On January 14, 2021, SBA published 
interim final rules implementing the 
Economic Aid Act amendments to the 
PPP. The first interim final rule 
implemented Economic Aid Act 
changes to, among other things, PPP 
eligibility, and consolidated numerous 
prior interim final rules on PPP (86 FR 
3692) (Consolidated Eligibility IFR). The 
second interim final rule implemented 
the Second Draw PPP Loan program 
authorized by the Economic Aid Act 
under section 7(a)(37) of the Small 
Business Act (86 FR 3712) (Second 
Draw IFR). On February 5, 2021, SBA 
published a third interim final rule 
implementing Economic Aid Act 
changes related to the forgiveness and 
review of PPP loans (86 FR 8283) 
(Consolidated Forgiveness and Loan 
Review IFR). Among other things, the 
Consolidated Forgiveness and Loan 
Review IFR implemented the simplified 
forgiveness application process for loans 
of $150,000 or less required by the 
Economic Aid Act. In conjunction with 
this rule, on January 19, 2021, SBA 
issued a revised SBA Form 3508S, 
which increased the loan amount for 
which the form could be used from 
$50,000 to $150,000.3 The new SBA 
Form 3508S was also shortened to one 
page, as required by the Economic Aid 
Act, and no longer requires the 
submission of supporting forgiveness 
documentation, as mandated by the 
Economic Aid Act. 
Following the publication of the 
interim final rules implementing the 
Economic Aid Act, SBA published 
another interim final rule on March 8, 
2021, revising certain loan amount 
calculation and eligibility provisions for 
PPP (86 FR 13149). On March 22, 2021, 
SBA published an interim final rule 
implementing the PPP provisions of 
ARPA (86 FR 15083). 
As described below, this interim final 
rule further streamlines the forgiveness 
process for PPP loans of $150,000 or less 
by (a) allowing lenders to use a COVID 
Revenue Reduction Score at the time of 
loan forgiveness to document the 
required revenue reduction for Second 
Draw PPP loans of $150,000 or less, and 
(b) establishing a direct borrower 
forgiveness process for lenders that 
choose to opt-in as an alternative 
method of processing loan forgiveness 
applications for PPP Loans of $150,000 
or less. This interim final rule also 
extends the loan deferment period for 
those PPP loans where the borrower 
timely files an appeal of a final SBA 
loan review decision with the SBA 
Office of Hearings and Appeals. 
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. Even 
otherwise, SBA finds good cause for 
setting aside the advance notice-and- 
public-comment procedure because that 
procedure would be impracticable and 
contrary to the public interest. The 
intent of the CARES Act and the 
Economic Aid Act is to afford SBA the 
flexibility to provide relief to America’s 
small businesses and nonprofit 
organizations expeditiously. Given the 
urgent need to provide borrowers with 
timely relief, the purpose of the rule is 
to minimize the burdens of the current 
loan forgiveness process that, without 
modification, could result in borrowers 
unnecessarily having to make principal 
and interest payments on loans that 
should be forgiven. If SBA were to 
follow the advance notice-and-public- 
comment process, that would delay 
issuance of the rule by at least three 
months. SBA understands—based on its 
expertise and consistent portfolio 
analysis—that a significant number of 
borrowers will have to apply for loan 
forgiveness in the next three months. 
Therefore, if the proposed rule is still 
undergoing notice and comment during 
that time, these borrowers will be 
applying under the current process, 
which (as noted above) would mean 
these borrowers could unnecessarily 
have to make principal and interest 
payments on loans that should be 
forgiven and would not be positively 
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4 Borrowers may submit and lenders may accept 
paper versions of loan forgiveness applications, but 
given the volume of PPP loans made by lenders, 
electronic processing of loan forgiveness is more 
efficient. 
5 As set forth in the Consolidated Eligibility IFR, 
Lenders must comply with the applicable lender 
obligations set forth in the interim final rule, but 
will 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 
Continued 
impacted by a later rule change. 
Providing for notice and comment 
would render the rule effectively moot 
and useless for millions of intended 
beneficiaries. 
For these same reasons, SBA has 
determined that it is impractical and not 
in the public interest to provide a 30- 
day delayed effective date. An 
immediate effective date will allow SBA 
to expedite loan forgiveness to small 
businesses and nonprofit organizations 
and remit forgiveness payments to 
lenders. 
This good cause justification also 
supports waiver of the 60-day delayed 
effective date for major rules under 
Subtitle E of the Small Business 
Regulatory Enforcement Fairness Act of 
1996 (also known as 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 August 30, 2021. SBA will 
consider these comments and the need 
for making any revisions as a result of 
these comments. 
III. Paycheck Protection Program— 
COVID Revenue Reduction Score, 
Direct Borrower Forgiveness Process, 
and Appeals Deferment 
Overview 
A. Further Streamlining Forgiveness for 
PPP Loans of $150,000 or Less 
A key feature of the PPP is that a 
borrower may obtain forgiveness of up 
to the full amount of its PPP loan 
provided that the borrower complied 
with PPP requirements. Since SBA 
issued the first loan forgiveness 
application form (SBA Form 3508) in 
May 2020 and published the first loan 
forgiveness and loan review rules in 
June 2020, SBA has received comments 
from borrowers and lenders that the 
loan forgiveness process is 
overwhelming and difficult to manage 
and requesting simplification of the 
process. In response to borrower and 
lender requests for simplification of the 
loan forgiveness process, Congress 
enacted the PPP Flexibility Act in June 
2020, which created safe harbors from 
the FTE and salary/wage reduction 
penalties of section 1106 of the CARES 
Act, and in response, SBA issued a new 
streamlined loan forgiveness application 
(SBA Form 3508EZ) implementing those 
changes. 
In October 2020, SBA and Treasury 
exempted borrowers with loans of 
$50,000 or less from the FTE and salary/ 
wage reduction penalties and issued a 
second new streamlined loan 
forgiveness application (SBA Form 
3508S) implementing those changes. 
Borrowers and lenders continued to 
express concerns about the complexity 
of the loan forgiveness process, and in 
December 2020, Congress enacted the 
Economic Aid Act, which provides for 
a simplified loan forgiveness 
application process for borrowers with 
loans of $150,000 or less. SBA 
implemented this requirement by 
revising the second streamlined loan 
forgiveness application (SBA Form 
3508S) to allow all borrowers with loans 
of $150,000 or less to use the form. 
Loans of $150,000 or less represent 93 
percent of the outstanding PPP loans. 
Despite the implementation of the 
streamlined loan forgiveness application 
for borrowers with loans of $150,000 or 
less, many smaller PPP lenders continue 
to express concerns to SBA that they do 
not have the technology or human 
resources to develop efficient electronic 
loan forgiveness platforms to process 
the new streamlined loan forgiveness 
application.4 SBA has also become 
aware that because lenders are 
overwhelmed by the volume of PPP 
loans and are mindful of the statutory 
60-day requirement for lenders to issue 
a forgiveness decision to SBA from 
receipt of the borrower’s loan 
forgiveness application, lenders are 
limiting when loan forgiveness 
applications are accepted from 
borrowers, creating uncertainty among 
borrowers that they are going to have to 
start making payments on their PPP 
loans while they are waiting for their 
lenders to accept and process their loan 
forgiveness applications. 
Additionally, SBA has heard concerns 
from PPP lenders of all sizes that the 
requirement for borrowers to submit and 
lenders to review at the time of 
forgiveness the revenue reduction 
documentation for Second Draw PPP 
Loans of $150,000 or less is delaying the 
forgiveness process for these borrowers. 
To further simplify and streamline the 
forgiveness process for loans $150,000 
or less, SBA is making two changes 
under this interim final rule. First, for 
Second Draw PPP Loans of $150,000 or 
less, where the borrower is required to 
provide revenue reduction 
documentation at the time of loan 
forgiveness, SBA is allowing lenders to 
use a COVID Revenue Reduction Score 
developed by SBA’s contractor as an 
optional method to document the 
borrower’s revenue reduction. Second, 
SBA is making available a direct 
borrower forgiveness process for lenders 
that choose to opt-in as an alternative 
method for processing borrower loan 
forgiveness applications for all PPP 
loans of $150,000 or less. 
1. COVID Revenue Reduction Score 
Among other things, to be eligible for 
a Second Draw PPP Loan, a PPP 
borrower is required to have 
experienced a revenue reduction of not 
less than 25% during one quarter of 
2020 compared to the same quarter in 
2019. Under section 7(a)(37)(I) of the 
Small Business Act, when a borrower 
applies for a Second Draw PPP Loan of 
$150,000 or less, the borrower can 
submit a certification that the borrower 
meets the revenue reduction standard, 
provided that on or before the date on 
which the borrower submits an 
application for loan forgiveness, the 
borrower produces adequate 
documentation that the borrower has 
met the revenue reduction standard. All 
Second Draw PPP Loan borrowers were 
required to certify on their loan 
applications (SBA Forms 2483–SD and 
2483–SD–C) that they realized a 
reduction in gross receipts in excess of 
25% relative to the relevant comparison 
time period. 
The Second Draw PPP Loan IFR and 
the Loan Forgiveness and Loan Review 
IFR implementing the Economic Aid 
Act provide that if a borrower with a 
Second Draw PPP Loan of $150,000 or 
less did not produce documentation of 
revenue reduction at the time of 
application, the borrower must, on or 
before the date the borrower applies for 
loan forgiveness, submit to the lender 
documentation adequate to establish 
that the borrower experienced a revenue 
reduction of 25% or greater in 2020 
relative to 2019, and such 
documentation may include relevant tax 
forms, including annual tax forms, or if 
relevant tax forms are not available, 
quarterly financial statements or bank 
statements. The rules also provide that 
where a borrower with a Second Draw 
PPP Loan of $150,000 or less does not 
provide documentation of revenue 
reduction with its loan application, the 
lender must perform a good faith review 
of the documents provided by the 
borrower at or before forgiveness, 
including the borrower’s calculations 
and supporting documents.5 
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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) (86 FR 3692, 3695). 
6 The independent third-party contractor will use 
a Consumer Demand Recovery Index that combines 
multiple data sources of the consumption of 
products and/or services (foot traffic, third party 
data, credit card spending, etc.) provided by 
businesses. Further, using the Business Operations 
Response Index, the score will measure the 
businesses’ return to operational status, which 
includes employment and unemployment data, 
business to business payment transactions, mobility 
and foot traffic on workplace and visitor frequency 
at physical locations. The resulting score will 
reflect declines in revenue. The contractor has 
advised SBA that this methodology will result in a 
score that will adequately document that the 
borrower met the revenue reduction standard as 
required by section 7(a)(37)(I)(i)(II) of the Small 
Business Act. 
To streamline forgiveness of Second 
Draw PPP Loans of $150,000 or less 
where the borrower did not submit 
documentation of revenue reduction at 
the time of the loan application, SBA 
has determined that an alternative form 
of revenue reduction confirmation is 
warranted to document the borrower’s 
revenue reduction. An independent 
third-party SBA contractor has 
developed a COVID Revenue Reduction 
Score (score) based on a variety of 
inputs including industry, geography, 
and business size. The score uses 
current data on economic recovery and 
return of businesses to operational 
status.6 Each Second Draw PPP Loan of 
$150,000 or less will be assigned a 
score, which will be maintained in the 
Platform and will be visible to lenders 
to use on an optional basis as an 
alternative to document revenue 
reduction. Additionally, the score will 
be visible to those borrowers that submit 
their loan forgiveness applications 
through the Platform using the direct 
borrower forgiveness process. 
When the score meets or exceeds the 
value required for validation of the 
borrower’s revenue reduction, use of the 
score will satisfy the requirement for the 
borrower to document revenue 
reduction. When the score does not 
meet the value required for validation of 
the borrower’s revenue reduction, and if 
the borrower has not already provided 
documentation to the lender that 
validates the borrower’s revenue 
reduction, the borrower must provide 
documentation either directly to the 
lender (for those lenders that do not opt- 
in to the direct borrower forgiveness 
process) or provide documentation to 
the lender by uploading it to the 
Platform. 
Shortly after issuance of this rule, 
SBA will be providing additional 
guidance regarding the procedures for 
lenders and borrowers to use the COVID 
Revenue Reduction Score, including 
when a score meets or exceeds the value 
required for validation of the required 
reductions in gross receipts and thus is 
considered adequate documentation of 
the borrower’s revenue reduction. 
2. Direct Borrower Forgiveness Process 
In response to PPP lender and 
borrower concerns, SBA is 
implementing a direct borrower 
forgiveness process. The direct borrower 
forgiveness process is an optional 
technology solution that SBA is 
providing to PPP lenders that will 
leverage SBA’s existing and proven 
Platform and align with and seamlessly 
integrate the streamlined forgiveness 
application for loans of $150,000 or less 
mandated by the Economic Aid Act. 
When a PPP lender opts-in to the 
direct borrower forgiveness process, the 
Platform will provide a single secure 
location for all of its borrowers with 
loans of $150,000 or less to apply for 
loan forgiveness through the Platform 
using the electronic equivalent of SBA 
Form 3508S. Upon receipt of notice that 
a borrower has applied for forgiveness 
through the Platform, lenders will 
review the loan forgiveness application 
in the Platform and issue a forgiveness 
decision to SBA inside the Platform. 
SBA believes that lenders that opt-in to 
using the direct borrower forgiveness 
process will benefit with reduced costs, 
increased efficiency, and more timely 
remittance of forgiveness payments from 
SBA, while borrowers will benefit from 
the ability to submit loan forgiveness 
applications directly through the 
Platform and reduce the wait time and 
uncertainty associated with submission 
through their lender. 
Shortly after issuance of this rule, 
SBA will be issuing more detailed 
procedural guidance regarding (1) the 
process for lenders to opt-in to the 
direct borrower forgiveness process, (2) 
the process for borrowers with loans of 
$150,000 or less to access the Platform 
and submit their loan forgiveness 
applications directly through the 
Platform, and (3) the process for lenders 
to access the forgiveness applications in 
the Platform to perform reviews of their 
borrowers’ applications, issue 
forgiveness decisions to SBA, and 
request forgiveness payments from SBA. 
During the transition period after the 
launch of the direct borrower 
forgiveness process, lenders that opt-in 
will be expected to complete the 
processing of any loan forgiveness 
applications that have already been 
submitted by borrowers to the lender 
and should inform such borrowers not 
to submit a duplicate loan forgiveness 
application through the Platform. 
After the launch of the direct 
borrower forgiveness process, borrowers 
will continue to submit loan forgiveness 
applications to their lenders, rather than 
through the Platform, under the 
following circumstances: 
• The PPP lender does not opt-in to 
use the direct borrower forgiveness 
process; 
• The borrower’s PPP loan amount is 
greater than $150,000; 
• The borrower does not agree with 
the data as provided by the SBA system 
of record, or cannot validate their 
identity in the Platform (for example, if 
there is an unreported change of 
ownership); or 
• For any other reason where the 
Platform rejects the borrower’s 
submission. 
In such circumstances, borrowers 
must follow instructions from their 
lender regarding how the lender expects 
the borrower to submit a forgiveness 
application for its PPP loan. 
B. Deferment Extension for OHA 
Appeals 
Currently, the rule for appeals of final 
SBA loan review decisions on PPP loans 
provides that because a PPP borrower 
must begin making payments of 
principal and interest on the remaining 
balance of its PPP loan when SBA 
remits the loan forgiveness amount to 
the PPP lender (or notifies the lender 
that no loan forgiveness is allowed), an 
appeal by a PPP borrower of any final 
SBA loan review decision does not 
extend the deferment period of the PPP 
loan. SBA is amending the appeals rule 
to, among other things, provide that a 
borrower’s timely appeal of a final SBA 
loan review decision will extend the 
deferment period for the PPP loan until 
SBA’s Office of Hearings and Appeals 
(OHA) issues a final decision on the 
appeal. The revised OHA rule will 
provide that the borrower should notify 
the lender of the appeal so that the 
lender can extend the deferment period. 
Under the revised OHA rule, an appeal 
petition must be filed with OHA within 
30 calendar days after the appellant’s 
receipt of the final SBA loan review 
decision. 
SBA has determined that, in order to 
avoid the potential administrative 
burden of having to reverse 
implementation of the final SBA loan 
review decision, including the refund of 
borrower payments by the lender and 
the processing of forgiveness payments 
by SBA, a timely appeal by a PPP 
borrower of a final SBA loan review 
decision should extend the deferment 
period of the PPP loan. SBA believes 
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Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 
27 SBA Form 3508, 3508EZ, 3508S, as applicable, 
or lender equivalent. Loan Forgiveness Application 
forms were amended to conform to the Economic 
Aid Act, including section 307, which requires a 
simplified forgiveness application for loans of not 
more than $150,000. The Simplified Forgiveness 
Application is SBA Form 3508S (as amended). 
31 This subsection was originally published at 85 
FR 38304, section III.1.e. (June 26, 2020), was 
modified to conform to sections 306 and 307 of the 
Economic Aid Act by 86 FR 8283, 8288 (February 
5, 2021), and is being further modified to 
incorporate deferments due to appeals. 
68 See subsection (g)(2)(v) of the interim final rule 
on Second Draw PPP Loans. 86 FR 3712, 3721 (Jan. 
14, 2021). 
85 See subsection (h)(2)(i)(D) of the interim final 
rule on Second Draw PPP Loans. 86 FR 3712, 3721 
(Jan. 14, 2021). 
that allowing for continued deferment is 
in the best interest of the borrower. For 
these reasons, SBA is conforming the 
applicable PPP rules to provide that a 
timely appeal by a PPP borrower of a 
final SBA loan review decision extends 
the deferment period of the PPP loan 
until OHA’s decision becomes final 
under 13 CFR 134.1211. 
IV. Revisions to Prior PPP Rules 
Therefore, the following changes are 
made to PPP rules: 
1st Revision: The first sentence of Part 
IV.2.a. of the Consolidated Forgiveness 
and Loan Review IFR (86 FR 8283, 
8287) is revised to read as follows: 
2. Loan Forgiveness Process 
a. What is the general process to 
obtain loan forgiveness? 
To receive loan forgiveness on either 
a First Draw PPP Loan or a Second Draw 
PPP Loan, a borrower must complete 
and submit the Loan Forgiveness 
Application 27 to its lender (or to the 
lender servicing its loan), or for loans of 
$150,000 or less if directed by its lender, 
through the Paycheck Protection 
Platform (forgiveness.sba.gov). * * * 
* 
* 
* 
* 
* 
2nd Revision: Part IV.2.b. of the 
Consolidated Forgiveness and Loan 
Review IFR (86 FR 8283, 8288) is 
revised by adding a sentence to the end 
of the paragraph to read as follows: 
b. When must a borrower apply for 
loan forgiveness or start making 
payments on a loan? 31 
* * * Notwithstanding the foregoing, 
a borrower’s timely appeal of a final 
SBA loan review decision extends the 
deferment period on the PPP loan until 
SBA’s Office of Hearings and Appeals 
issues a final decision on the appeal 
under 13 CFR 134.1211. 
3rd Revision: Part IV.6.a. of the 
Consolidated Forgiveness and Loan 
Review IFR (86 FR 8283, 8293) is 
revised by adding a sentence to the end 
of the first paragraph to read as follows: 
6. Documentation Requirements 
a. What must borrowers submit for 
forgiveness of their PPP loans? 
* * * If a Second Draw PPP Loan 
borrower’s COVID Revenue Reduction 
Score in the Paycheck Protection 
Platform meets or exceeds the value 
required to validate the borrower’s 
revenue reduction, no additional 
documentation is required to be 
submitted by the borrower. 
* 
* 
* 
* 
* 
4th Revision: The first sentence of 
Part IV.6.b. of the Consolidated 
Forgiveness and Loan Review IFR (86 
FR 8283, 8293) is revised to read as 
follows: 
b. What documentation are borrowers 
who are individuals with self- 
employment income who file a Form 
1040, Schedule C or F required to 
submit to their lender with their request 
for loan forgiveness? 
For borrowers that received loans of 
$150,000 or less that use the SBA Form 
3508S, the borrower must submit the 
certification and information required 
by section 7A(l)(1)(A) of the Small 
Business Act and, for a Second Draw 
PPP Loan, revenue reduction 
documentation (which could be the 
COVID Revenue Reduction Score, if 
applicable) if such documentation was 
not provided at the time of 
application.68 * * * 
* 
* 
* 
* 
* 
5th Revision: Part IV.6.c. of the 
Consolidated Forgiveness and Loan 
Review IFR (86 FR 8283, 8293) is 
revised by adding a sentence to the end 
of the third paragraph to read as follows: 
c. What additional documentation 
must a borrower submit when the 
President of the United States, Vice 
President of the United States, the head 
of an Executive department, or a 
Member of Congress, or the spouse of 
any of the preceding, directly or 
indirectly holds a controlling interest in 
the borrower? 
* 
* 
* 
* 
* 
* * * If a borrower with a First Draw 
PPP Loan of $150,000 or less submits its 
loan forgiveness application through the 
Paycheck Protection Platform 
(Platform), the borrower must submit 
any required SBA Form 3508D through 
the Platform not later than 30 days after 
submitting its application through the 
Platform. 
* 
* 
* 
* 
* 
6th Revision: Footnote 82 in Part 
V.1.f. of the Consolidated Forgiveness 
and Loan Review IFR (86 FR 8283, 
8295) is revised to read as follows: 
See 85 FR 52833 (Aug. 27, 2020), as 
amended. 
7th Revision: The SBA Form 3508S 
subsection of Part V.2.a. of the 
Consolidated Forgiveness and Loan 
Review IFR (86 FR 8283, 8296) is 
revised to read as follows: 
2. The Loan Forgiveness Process for 
Lenders 
a. What should a lender review? 
* 
* 
* 
* 
* 
When a borrower submits SBA Form 
3508S or lender’s equivalent form, the 
lender shall: 
i. Confirm receipt of the borrower 
certifications contained in the SBA 
Form 3508S or lender’s equivalent form. 
ii. In the case of a Second Draw PPP 
Loan of $150,000 or less for which the 
borrower did not provide 
documentation of revenue reduction 
with its application and the lender did 
not conduct a review of the 
documentation at the time of 
application: 
If the borrower submits its loan 
forgiveness application to the lender, 
the lender may review the borrower’s 
COVID Revenue Reduction Score (score) 
in the Platform to confirm that it meets 
or exceeds the value required to validate 
the required reduction in gross receipts. 
If the borrower’s score does not meet or 
exceed the required value, the lender 
must confirm the dollar amount and 
percentage of the borrower’s revenue 
reduction by performing a good faith 
review, in a reasonable time, of the 
borrower’s calculations and supporting 
documents concerning the borrower’s 
revenue reduction.85 
If the borrower submits its loan 
forgiveness application through the 
Paycheck Protection Platform 
(Platform), the lender must review the 
borrower’s score in the Platform to 
confirm that it meets or exceeds the 
value required to validate the required 
reduction in gross receipts. If the 
borrower’s score does not meet or 
exceed the required value, the lender 
must review the revenue reduction 
documentation uploaded by the 
borrower into the Platform and confirm 
the dollar amount and percentage of the 
borrower’s revenue reduction by 
performing a good faith review, in a 
reasonable time, of the borrower’s 
calculations and supporting documents 
concerning the borrower’s revenue 
reduction. 
For those borrowers that are required 
to submit documentation regarding 
revenue reduction (other than a COVID 
Revenue Reduction Score), if the lender 
identifies errors in the borrower’s 
calculation or material lack of 
substantiation in the borrower’s 
supporting documents regarding 
revenue reduction, the lender should 
work with the borrower to remedy the 
issue. Providing an accurate calculation 
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40926 
Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 
86 85 FR 20811, 20815–20816 (Apr. 15, 2020). 
of the loan forgiveness amount is the 
responsibility of the borrower, and the 
borrower attests to the accuracy of its 
reported information and calculations 
on the Loan Forgiveness Application. 
The borrower shall not receive 
forgiveness without submitting all 
required documentation to the lender. 
As the First Interim Final Rule 86 and 
section IV.7 above indicate, lenders may 
rely on borrower representations. As 
stated in paragraph III.3.c of the First 
Interim Final Rule, the lender does not 
need to independently verify the 
borrower’s reported information if the 
borrower submits documentation 
supporting its request for loan 
forgiveness (if required) and attests that 
it accurately verified the payments for 
eligible costs. 
8th Revision: The first sentence of the 
first paragraph of Part V.2.b. of the 
Consolidated Forgiveness and Loan 
Review IFR (86 FR 8283, 8296) is 
revised to read as follows: 
b. What is the timeline for the lender’s 
decision on a loan forgiveness 
application? 
The lender must issue a decision to 
SBA on a loan forgiveness application 
not later than 60 days after receipt of a 
complete loan forgiveness application 
from the borrower or, if applicable, 
notification by the Paycheck Protection 
Platform (Platform) that the borrower 
has submitted a loan forgiveness 
application into the Platform. * * * 
* 
* 
* 
* 
* 
9th Revision: Part III.B.9. of the 
Consolidated Eligibility IFR (86 FR 
3692, 3703) is revised to add a fourth 
paragraph at the end that reads as 
follows: 
9. When will I have to begin paying 
principal and interest on my PPP loan? 
* 
* 
* 
* 
* 
Notwithstanding the foregoing, a 
borrower’s timely appeal of a final SBA 
loan review decision extends the 
deferment period on the PPP loan until 
SBA’s Office of Hearings and Appeals 
issues a final decision on the appeal 
under 13 CFR 134.1211. 
10th Revision: Part IV.(g)(2)(v) of the 
Second Draw IFR (86 FR 3712, 3721) is 
revised to read as follows: 
(g) How do I submit an application for 
a Second Draw PPP Loan and what 
documentation must I provide to 
demonstrate eligibility? 
* 
* 
* 
* 
* 
(2) * * * 
(v) For loans with a principal amount 
of $150,000 or less, the applicant must 
submit documentation sufficient to 
establish that the applicant experienced 
a reduction in revenue as provided in 
subsection (c)(1)(i) of this section at the 
time of application, on or before the 
date the borrower submits an 
application for loan forgiveness, or, if 
the borrower does not apply for loan 
forgiveness, at SBA’s request. Such 
documentation may include relevant tax 
forms, including annual tax forms, or, if 
relevant tax forms are not available, a 
copy of the applicant’s quarterly income 
statements or bank statements. A COVID 
Revenue Reduction Score that meets or 
exceeds the value required to validate 
the required reduction in gross receipts 
will be considered adequate 
documentation of the borrower’s 
revenue reduction. 
11th Revision: Part IV.(h)(2)(D) of the 
Second Draw IFR (86 FR 3712, 3721) is 
revised to read as follows: 
(h) What do lenders need to know and 
do? 
(2) * * * 
(D) For a Second Draw PPP Loan 
greater than $150,000 or a loan of 
$150,000 or less where the borrower 
provides documentation of revenue 
reduction, confirm the dollar amount 
and percentage of the borrower’s 
revenue reduction by performing a good 
faith review, in a reasonable time, of the 
borrower’s calculations and supporting 
documents concerning the borrower’s 
revenue reduction. For a loan of 
$150,000 or less where the borrower 
does not provide documentation of 
revenue reduction with its application, 
the lender shall perform this review 
when the borrower provides such 
documentation. If the lender identifies 
errors in the borrower’s calculation or 
material lack of substantiation in the 
borrower’s supporting documents, the 
lender should work with the borrower 
to remedy the issue. For loans of 
$150,000 or less where the lender elects 
to use the COVID Revenue Reduction 
Score (score) in the Paycheck Protection 
Platform (Platform) or where the lender 
has opted-in to the direct borrower 
forgiveness process and the borrower 
submits a loan forgiveness application 
to the lender through the Platform, the 
lender must review the borrower’s score 
to confirm that it meets or exceeds the 
value required to validate the required 
reduction in gross receipts, otherwise 
the lender must review the borrower’s 
supporting documentation in 
accordance with the foregoing 
requirements. 
* 
* 
* 
* 
* 
12th Revision: Part IV.(j) of the 
Second Draw IFR (86 FR 3712, 3722) is 
revised to read as follows: 
(j) Are Second Draw PPP Loans 
eligible for loan forgiveness? 
Second Draw PPP Loans are eligible 
for loan forgiveness on the same terms 
and conditions as First Draw PPP Loans, 
except that Second Draw PPP Loan 
borrowers with a principal amount of 
$150,000 or less are required to provide 
documentation of revenue reduction if 
such documentation was not provided 
at the time of the loan application as 
specified in subsections (g)(2)(iv) and 
(v) of this section. If a lender elects to 
use the COVID Revenue Reduction 
Score (score) in the Paycheck Protection 
Platform (Platform) or where the lender 
has opted-in to the direct borrower 
forgiveness process and the borrower 
submits a loan forgiveness application 
to the lender through the Platform, a 
score that meets or exceeds the value 
required to validate the required 
reduction in gross receipts will be 
considered adequate documentation of 
the borrower’s revenue reduction. 
V. Additional Information 
SBA may provide further guidance, if 
needed, through SBA notices that will 
be posted on SBA’s website at 
www.sba.gov. Questions on the 
Paycheck Protection Program may be 
directed to the Lender Relations 
Specialist in the local SBA Field Office. 
The local SBA Field Office may be 
found at https://www.sba.gov/tools/ 
local-assistance/districtoffices. 
Compliance With Executive Orders 
12866, 12988, 13132 and 13563, the 
Congressional Review Act, the 
Administrative Procedure Act, the 
Paperwork Reduction Act (44 U.S.C. 
Ch. 35), and the Regulatory Flexibility 
Act (5 U.S.C. 601–612). 
Executive Orders 12866 and 13563 
OMB’s Office of Information and 
Regulatory Affairs (OIRA) has 
determined that this interim final rule is 
economically significant for the 
purposes of Executive Orders 12866 and 
13563. SBA, however, is proceeding 
under the emergency provision at 
Executive Order 12866 section 6(a)(3)(D) 
based on the need to move 
expeditiously to mitigate the current 
economic conditions arising from the 
COVID–19 emergency. 
This rule is necessary to provide 
economic relief to small businesses and 
nonprofit organizations nationwide 
adversely impacted under the COVID– 
19 Emergency Declaration. We 
anticipate that this rule will result in 
substantial benefits to small businesses, 
nonprofit organizations, their 
employees, and the communities they 
serve. However, we lack data to estimate 
the effects of this rule. 
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40927 
Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 
Congressional Review Act and 
Administrative Procedure Act 
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 section 808(2), SBA for good 
cause finds that a 60-day delay to 
provide public notice is impracticable 
and contrary to the public interest. 
Likewise, for the same reasons, SBA for 
good cause finds that there are grounds 
to waive the 30-day effective date delay 
under the Administrative Procedure 
Act. 5 U.S.C. 553(d)(3). 
As discussed elsewhere in this 
interim final rule, given the urgent need 
to provide borrowers with timely relief 
and the short period of time before 
certain borrowers will be required to 
begin making principal and interest 
payments if they have not yet applied 
for forgiveness with their lenders, SBA 
has determined that it is impractical and 
not in the public interest to provide a 
delayed effective date. An immediate 
effective date will allow SBA to 
expedite loan forgiveness to small 
businesses and nonprofit organizations 
and remit forgiveness payments to 
lenders. 
Executive Order 12988 
SBA has drafted this rule, to the 
extent practicable, in accordance with 
the standards set forth in section 3(a) 
and 3(b)(2) of Executive Order 12988, to 
minimize litigation, eliminate 
ambiguity, and reduce burden. The rule 
has no preemptive or retroactive effect. 
Executive Order 13132 
SBA has determined that this rule 
will not have substantial direct effects 
on the States, on the relationship 
between the National Government and 
the States, or on the distribution of 
power and responsibilities among the 
various layers of government. Therefore, 
SBA has determined that this rule has 
no federalism implications warranting 
preparation of a federalism assessment. 
Paperwork Reduction Act, 44 U.S.C. 
Chapter 35 
SBA has determined that this rule 
will require revisions to existing 
recordkeeping or reporting requirements 
of the Paycheck Protection Program 
(PPP) information collection, OMB 
Control Number 3245–0407. The 
revisions will affect SBA Forms 3508S 
and 3508D. SBA Form 3508S will be 
revised to incorporate the direct 
borrower forgiveness process and the 
COVID Revenue Reduction Score. SBA 
Form 3508D will be revised to 
incorporate the direct borrower 
forgiveness process. 
SBA has requested Office of 
Management and Budget (OMB) 
emergency approval of the revisions to 
the information collections to give small 
businesses and nonprofits affected by 
this interim final rule the maximum 
amount of time to apply for loan 
forgiveness under the new procedures. 
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); and 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. 
Isabella Casillas Guzman, 
Administrator. 
[FR Doc. 2021–16358 Filed 7–28–21; 4:15 pm] 
BILLING CODE 8026–03–P 
DEPARTMENT OF TRANSPORTATION 
Federal Aviation Administration 
14 CFR Part 39 
[Docket No. FAA–2020–0333; Product 
Identifier 2020–NM–015–AD; Amendment 
39–21623; AD 2021–13–18] 
RIN 2120–AA64 
Airworthiness Directives; The Boeing 
Company Airplanes 
AGENCY: Federal Aviation 
Administration (FAA), DOT. 
ACTION: Final rule. 
SUMMARY: The FAA is adopting a new 
airworthiness directive (AD) for all The 
Boeing Company Model 737 airplanes 
powered by LEAP–1B engines. This AD 
was prompted by reports of inadvertent 
release of the spring energy of the spring 
door opening system (SDOS) actuator 
with a certain part number, causing 
injury and the potential for injury to 
maintenance personnel. This AD 
requires replacing each affected SDOS 
actuator with a new SDOS actuator, and 
verifying that new safety markers are 
installed in the proper locations. The 
FAA is issuing this AD to address the 
unsafe condition on these products. 
DATES: This AD is effective September 3, 
2021. 
The Director of the Federal Register 
approved the incorporation by reference 
of a certain publication listed in this AD 
as of September 3, 2021. 
ADDRESSES: For service information 
identified in this final rule, contact 
Boeing Commercial Airplanes, 
Attention: Contractual & Data Services 
(C&DS), 2600 Westminster Blvd., MC 
110–SK57, Seal Beach, CA 90740–5600; 
telephone 562–797–1717; internet 
https://www.myboeingfleet.com. You 
may view this service information at the 
FAA, Airworthiness Products Section, 
Operational Safety Branch, 2200 South 
216th St., Des Moines, WA. For 
information on the availability of this 
material at the FAA, call 206–231–3195. 
It is also available on the internet at 
https://www.regulations.gov by 
searching for and locating Docket No. 
FAA–2020–0333. 
Examining the AD Docket 
You may examine the AD docket on 
the internet at https://
www.regulations.gov by searching for 
and locating Docket No. FAA–2020– 
0333; or in person at Docket Operations 
between 9 a.m. and 5 p.m., Monday 
through Friday, except Federal holidays. 
The AD docket contains this final rule, 
any comments received, and other 
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