Business Loan Program Temporary Changes; Paycheck Protection Program-COVID Revenue Reduction Score, Direct Borrower Forgiveness Process, and Appeals Deferment

Summary

A Small Business Administration interim final rule, "Paycheck Protection Program-COVID Revenue Reduction Score, Direct Borrower Forgiveness Process, and Appeals Deferment", published in the Federal Register, Vol. 86, No. 144, on Friday, July 30, 2021, under 13 CFR Part 120, RIN 3245–AH79, docket number SBA–2021–0015. It implements changes related to the forgiveness of loans made under the Paycheck Protection Program. It recalls that the Economic Aid Act (Pub. L. 116–260) reauthorized lending under the PPP.

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Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 40921

SMALL BUSINESS ADMINISTRATION Comment date: Comments must be provided additional funding and
received on or before August 30, 2021. authority for the PPP Program.
13 CFR Part 120 ADDRESSES: You may submit comments, On June 5, the Paycheck Protection
[Docket Number SBA–2021–0015] identified by docket number SBA– Program Flexibility Act of 2020 (PPP
2021–0015 through the Federal Flexibility Act) (Pub. L. 116–142) was
RIN 3245–AH79 eRulemaking Portal: http:// enacted, which changed provisions of
www.regulations.gov. Follow the the PPP relating to the maturity of PPP
Business Loan Program Temporary loans, the deferral of PPP loan
instructions for submitting comments.
Changes; Paycheck Protection SBA will post all comments on payments, and the forgiveness of PPP
Program—COVID Revenue Reduction www.regulations.gov. If you wish to loans. On July 4, 2020, Public Law 116–
Score, Direct Borrower Forgiveness submit confidential business 147 extended the authority to guarantee
Process, and Appeals Deferment information (CBI) as defined in the User PPP loans to August 8, 2020.
AGENCY: U.S. Small Business Notice at www.regulations.gov, please On December 27, 2020, the Economic
Administration. send an email to ppp-ifr@sba.gov. All Aid to Hard-Hit Small Businesses,
other comments must be submitted Nonprofits and Venues Act (Economic
ACTION: Interim final rule.
through the Federal eRulemaking Portal Aid Act) (Pub. L. 116–260) was enacted.
SUMMARY: This interim final rule described above. Highlight the The Economic Aid Act reauthorized
implements changes related to the information that you consider to be CBI lending under the PPP through March
forgiveness of loans made under the and explain why you believe SBA 31, 2021. The Economic Aid Act added
Paycheck Protection Program (PPP), should hold this information as a new temporary section 7(a)(37) to the
which was originally established under confidential. SBA will review the Small Business Act, which authorizes
the Coronavirus Aid, Relief, and information and make the final SBA to guarantee additional PPP loans
Economic Security Act (CARES Act) to determination whether it will publish (Second Draw PPP Loans) to certain
provide economic relief to small the information. eligible borrowers that previously
businesses nationwide adversely FOR FURTHER INFORMATION CONTACT: A received a First Draw PPP Loan under
impacted by the Coronavirus Disease Call Center Representative at 833–572– generally the same terms and conditions
2019 (COVID–19), as amended. SBA has 0502 or the local SBA Field Office; the available under section 7(a)(36) of the
issued a number of interim final rules list of offices can be found at https:// Small Business Act. Among other
implementing the PPP Program. This www.sba.gov/tools/local-assistance/ things, to be eligible for a Second Draw
interim final rule further streamlines the districtoffices. If you use a PPP Loan, the borrower must have
forgiveness process for PPP loans of telecommunications device for the deaf experienced a revenue reduction of not
$150,000 or less by allowing lenders to (TDD) or a text telephone (TTY), call the less than 25% in at least one quarter of
use a COVID Revenue Reduction Score Federal Relay Service (FRS), toll free, at 2020 compared to the same quarter in
at the time of forgiveness to document 1–800–877–8339. Individuals with 2019. The Economic Aid Act also
the required revenue reduction for disabilities can obtain this document in redesignated section 1106 of the CARES
Second Draw PPP Loans, and an accessible format that may be Act as section 7A of the Small Business
establishing a direct borrower provided in Rich Text Format (RTF) or Act, to appear after section 7 of the
forgiveness process for lenders that text format (txt), a thumb drive, an mp3 Small Business Act. Additionally, the
choose to opt-in as an alternative file, Braille, large print, audiotape, or Economic Aid Act provided for a
method of processing loan forgiveness compact disc, or other accessible simplified forgiveness application
applications. This interim final rule also formats. process for PPP loans of $150,000 or
extends the loan deferment period for less.
SUPPLEMENTARY INFORMATION: On March 11, 2021, the American
those PPP loans where the borrower
timely files an appeal of a final SBA I. Background Information Rescue Plan Act (ARPA) (Pub. L. 117–
loan review decision with the SBA On March 27, 2020, the Coronavirus 2) was enacted, and among other things,
Office of Hearings and Appeals. Aid, Relief, and Economic Security Act expanded eligibility for First Draw PPP
(CARES Act) (Pub. L. 116–136) was Loans and Second Draw PPP Loans and
DATES:
Effective date: The provisions of this enacted to provide emergency assistance revised exclusions from payroll costs for
interim final rule are effective July 28, and health care response for purposes of forgiveness. On March 30,
2021. individuals, families, and businesses 2021, the PPP Extension Act of 2021
Applicability date: The COVID affected by the Coronavirus Disease (Pub. L. 117–6) was enacted, extending
Revenue Reduction Score portion of this 2019 (COVID–19) pandemic. Section SBA’s PPP program authority through
interim final rule applies to all Second 1102 of the CARES Act temporarily June 30, 2021.
From April 3, 2020, through August 8,
Draw PPP Loans for which the lender permitted the Small Business
2020, when the 2020 round of PPP
has not yet issued a loan forgiveness Administration (SBA) to guarantee 100
expired, SBA guaranteed over 5.2
decision to SBA as of the effective date percent of 7(a) loans under a new
million PPP loans made by over 5,000
of this rule. The direct borrower program titled the ‘‘Paycheck Protection
PPP lenders under delegated authority.
forgiveness process portion of this rule Program,’’ pursuant to section 7(a)(36)
From January 11, 2021, when the PPP
applies to all PPP loans for which a loan of the Small Business Act (15 U.S.C.
reopened, through June 30, 2021, when
forgiveness application has not been 636(a)(36)) (First Draw PPP Loans).
the PPP program authority expired, SBA
submitted by the borrower to the lender Section 1106 of the CARES Act
guaranteed over 6.6 million additional
as of the effective date of this rule. The provided for forgiveness of up to the full

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PPP loans. Thus, the total number of
deferment portion of the rule applies to principal amount of qualifying loans
PPP loans guaranteed by SBA exceeds
PPP appeals filed after the effective date guaranteed under the Paycheck
11.8 million.1 The total dollar amount of
of this rule and to those PPP appeals Protection Program (PPP). On April 24,
filed before the effective date of this rule 2020, the Paycheck Protection Program 1 By way of contrast, in a normal fiscal year, for
for which a Notice and Order has not and Health Care Enhancement Act (Pub. example FY 2019, SBA guaranteed 51,907 7(a)
been issued. L. 116–139) was enacted, which Continued

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40922 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations

the PPP loans guaranteed by SBA process for the smallest of borrowers, PPP (86 FR 13149). On March 22, 2021,
exceeds $806 billion. SBA and the Department of the Treasury SBA published an interim final rule
SBA posted the first interim final rule (Treasury) jointly issued an interim final implementing the PPP provisions of
implementing the PPP on SBA’s website rule revising the loan forgiveness and ARPA (86 FR 15083).
on April 2, 2020, and published the rule loan review procedures to simplify the As described below, this interim final
in the Federal Register on April 15, forgiveness process for PPP loans of rule further streamlines the forgiveness
2020 (85 FR 20811). SBA subsequently $50,000 or less. Among other things, the process for PPP loans of $150,000 or less
issued numerous additional interim rule exempted borrowers with loans of by (a) allowing lenders to use a COVID
final rules. On June 1, 2020, SBA $50,000 or less from the full-time Revenue Reduction Score at the time of
published an interim final rule on loan equivalent employee (FTE) and salary/ loan forgiveness to document the
forgiveness requirements (85 FR 33004) wage reduction penalties included in required revenue reduction for Second
and an interim final rule on loan review section 1106 of the CARES Act, under Draw PPP loans of $150,000 or less, and
procedures (85 FR 33010). Prior to the the joint SBA/Treasury statutory (b) establishing a direct borrower
publication of the loan forgiveness and authority to make de minimis forgiveness process for lenders that
loan review interim final rules, on May exemptions to those penalties. In choose to opt-in as an alternative
15, 2020, SBA issued SBA Form 3508, conjunction with the rule, SBA issued a method of processing loan forgiveness
which was a loan forgiveness third loan forgiveness application, SBA applications for PPP Loans of $150,000
application to be used by all PPP Form 3508S, which was a further or less. This interim final rule also
borrowers. streamlined loan forgiveness application extends the loan deferment period for
On June 26, 2020, SBA published an available for use by borrowers with those PPP loans where the borrower
interim final rule revising the loan loans of $50,000 or less. timely files an appeal of a final SBA
forgiveness and loan review procedures On January 14, 2021, SBA published loan review decision with the SBA
to conform to the key forgiveness interim final rules implementing the Office of Hearings and Appeals.
changes made by the PPP Flexibility Act Economic Aid Act amendments to the
(85 FR 38304). In conjunction with the II. Comments and Immediate Effective
PPP. The first interim final rule
rule, SBA issued a second loan Date
implemented Economic Aid Act
forgiveness application form, SBA Form changes to, among other things, PPP This interim final rule is being issued
3508EZ, which is a streamlined form eligibility, and consolidated numerous without advance notice and public
that incorporates the forgiveness safe prior interim final rules on PPP (86 FR comment because section 1114 of the
harbors established under the PPP 3692) (Consolidated Eligibility IFR). The CARES Act and section 303 of the
Flexibility Act. second interim final rule implemented Economic Aid Act authorize SBA to
SBA’s 2020 PPP program authority the Second Draw PPP Loan program issue regulations to implement the
expired on August 8, 2020. On August authorized by the Economic Aid Act Paycheck Protection Program without
10, 2020, SBA began accepting PPP under section 7(a)(37) of the Small regard to notice requirements. Even
lender decisions on PPP borrower loan Business Act (86 FR 3712) (Second otherwise, SBA finds good cause for
forgiveness applications through SBA’s Draw IFR). On February 5, 2021, SBA setting aside the advance notice-and-
Paycheck Protection Platform (Platform) published a third interim final rule public-comment procedure because that
(forgiveness.sba.gov). PPP borrowers implementing Economic Aid Act procedure would be impracticable and
were required to submit their loan changes related to the forgiveness and contrary to the public interest. The
forgiveness applications to their PPP review of PPP loans (86 FR 8283) intent of the CARES Act and the
lenders, and as required by section 1106 (Consolidated Forgiveness and Loan Economic Aid Act is to afford SBA the
of the CARES Act (now section 7A of Review IFR). Among other things, the flexibility to provide relief to America’s
the Small Business Act), lenders were Consolidated Forgiveness and Loan small businesses and nonprofit
required to issue a decision to SBA on Review IFR implemented the simplified organizations expeditiously. Given the
the borrower’s loan forgiveness forgiveness application process for loans urgent need to provide borrowers with
application within 60 days of receipt of of $150,000 or less required by the timely relief, the purpose of the rule is
the application. On August 27, 2020, Economic Aid Act. In conjunction with to minimize the burdens of the current
SBA issued an interim final rule on this rule, on January 19, 2021, SBA loan forgiveness process that, without
Appeals of SBA Loan Review Decisions issued a revised SBA Form 3508S, modification, could result in borrowers
under the Paycheck Protection Program which increased the loan amount for unnecessarily having to make principal
(85 FR 52883). On October 2, 2020, SBA which the form could be used from and interest payments on loans that
began remitting forgiveness payments to $50,000 to $150,000.3 The new SBA should be forgiven. If SBA were to
PPP lenders that submitted forgiveness Form 3508S was also shortened to one follow the advance notice-and-public-
decisions to SBA through the Platform. page, as required by the Economic Aid comment process, that would delay
SBA continues to remit forgiveness Act, and no longer requires the issuance of the rule by at least three
payments to PPP lenders, and as of July submission of supporting forgiveness months. SBA understands—based on its
12, 2021, SBA has remitted over 4.3 documentation, as mandated by the expertise and consistent portfolio
million forgiveness payments to Economic Aid Act. analysis—that a significant number of
lenders.2 Following the publication of the borrowers will have to apply for loan
On October 19, 2020, in response to interim final rules implementing the forgiveness in the next three months.
borrower and lender concerns about the Economic Aid Act, SBA published Therefore, if the proposed rule is still
complexity of the loan forgiveness another interim final rule on March 8, undergoing notice and comment during
2021, revising certain loan amount that time, these borrowers will be

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loans. The astronomical increase in SBA’s 7(a) calculation and eligibility provisions for applying under the current process,
portfolio, of which the PPP is a part, has strained which (as noted above) would mean
SBA’s resources and will continue to strain SBA’s 3 Although borrowers with loans of $150,000 or
these borrowers could unnecessarily
resources going forward. less may now use SBA Form 3508S, only those
2 As of July 12, 2021, SBA has received over 4.5 borrowers with loans of $50,000 or less may use the
have to make principal and interest
million forgiveness decisions from PPP lenders de minimis exemption from the FTE and salary/ payments on loans that should be
through the Platform. wage reduction penalty. forgiven and would not be positively

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Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 40923

impacted by a later rule change. second new streamlined loan SBA is making available a direct
Providing for notice and comment forgiveness application (SBA Form borrower forgiveness process for lenders
would render the rule effectively moot 3508S) implementing those changes. that choose to opt-in as an alternative
and useless for millions of intended Borrowers and lenders continued to method for processing borrower loan
beneficiaries. express concerns about the complexity forgiveness applications for all PPP
For these same reasons, SBA has of the loan forgiveness process, and in loans of $150,000 or less.
determined that it is impractical and not December 2020, Congress enacted the
in the public interest to provide a 30- 1. COVID Revenue Reduction Score
Economic Aid Act, which provides for
day delayed effective date. An a simplified loan forgiveness Among other things, to be eligible for
immediate effective date will allow SBA application process for borrowers with a Second Draw PPP Loan, a PPP
to expedite loan forgiveness to small loans of $150,000 or less. SBA borrower is required to have
businesses and nonprofit organizations implemented this requirement by experienced a revenue reduction of not
and remit forgiveness payments to revising the second streamlined loan less than 25% during one quarter of
lenders. forgiveness application (SBA Form 2020 compared to the same quarter in
This good cause justification also 3508S) to allow all borrowers with loans 2019. Under section 7(a)(37)(I) of the
supports waiver of the 60-day delayed of $150,000 or less to use the form. Small Business Act, when a borrower
effective date for major rules under Loans of $150,000 or less represent 93 applies for a Second Draw PPP Loan of
Subtitle E of the Small Business percent of the outstanding PPP loans. $150,000 or less, the borrower can
Regulatory Enforcement Fairness Act of Despite the implementation of the submit a certification that the borrower
1996 (also known as the Congressional streamlined loan forgiveness application meets the revenue reduction standard,
Review Act) at 5 U.S.C. 808(2). for borrowers with loans of $150,000 or provided that on or before the date on
Although this interim final rule is less, many smaller PPP lenders continue which the borrower submits an
effective immediately, comments are to express concerns to SBA that they do application for loan forgiveness, the
solicited from interested members of the not have the technology or human borrower produces adequate
public on all aspects of the interim final resources to develop efficient electronic documentation that the borrower has
rule. loan forgiveness platforms to process met the revenue reduction standard. All
These comments must be submitted the new streamlined loan forgiveness Second Draw PPP Loan borrowers were
on or before August 30, 2021. SBA will application.4 SBA has also become required to certify on their loan
consider these comments and the need aware that because lenders are applications (SBA Forms 2483–SD and
for making any revisions as a result of overwhelmed by the volume of PPP 2483–SD–C) that they realized a
these comments. loans and are mindful of the statutory reduction in gross receipts in excess of
III. Paycheck Protection Program— 60-day requirement for lenders to issue 25% relative to the relevant comparison
COVID Revenue Reduction Score, a forgiveness decision to SBA from time period.
Direct Borrower Forgiveness Process, receipt of the borrower’s loan The Second Draw PPP Loan IFR and
and Appeals Deferment forgiveness application, lenders are the Loan Forgiveness and Loan Review
limiting when loan forgiveness IFR implementing the Economic Aid
Overview applications are accepted from Act provide that if a borrower with a
A. Further Streamlining Forgiveness for borrowers, creating uncertainty among Second Draw PPP Loan of $150,000 or
PPP Loans of $150,000 or Less borrowers that they are going to have to less did not produce documentation of
start making payments on their PPP revenue reduction at the time of
A key feature of the PPP is that a loans while they are waiting for their application, the borrower must, on or
borrower may obtain forgiveness of up lenders to accept and process their loan before the date the borrower applies for
to the full amount of its PPP loan forgiveness applications. loan forgiveness, submit to the lender
provided that the borrower complied Additionally, SBA has heard concerns documentation adequate to establish
with PPP requirements. Since SBA from PPP lenders of all sizes that the that the borrower experienced a revenue
issued the first loan forgiveness requirement for borrowers to submit and reduction of 25% or greater in 2020
application form (SBA Form 3508) in lenders to review at the time of relative to 2019, and such
May 2020 and published the first loan forgiveness the revenue reduction documentation may include relevant tax
forgiveness and loan review rules in documentation for Second Draw PPP forms, including annual tax forms, or if
June 2020, SBA has received comments Loans of $150,000 or less is delaying the relevant tax forms are not available,
from borrowers and lenders that the forgiveness process for these borrowers. quarterly financial statements or bank
loan forgiveness process is To further simplify and streamline the statements. The rules also provide that
overwhelming and difficult to manage forgiveness process for loans $150,000 where a borrower with a Second Draw
and requesting simplification of the or less, SBA is making two changes PPP Loan of $150,000 or less does not
process. In response to borrower and under this interim final rule. First, for provide documentation of revenue
lender requests for simplification of the Second Draw PPP Loans of $150,000 or
reduction with its loan application, the
loan forgiveness process, Congress less, where the borrower is required to
lender must perform a good faith review
enacted the PPP Flexibility Act in June provide revenue reduction
of the documents provided by the
2020, which created safe harbors from documentation at the time of loan
borrower at or before forgiveness,
the FTE and salary/wage reduction forgiveness, SBA is allowing lenders to
including the borrower’s calculations
penalties of section 1106 of the CARES use a COVID Revenue Reduction Score
and supporting documents.5
Act, and in response, SBA issued a new developed by SBA’s contractor as an
streamlined loan forgiveness application optional method to document the

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5 As set forth in the Consolidated Eligibility IFR,
(SBA Form 3508EZ) implementing those borrower’s revenue reduction. Second, Lenders must comply with the applicable lender
changes. obligations set forth in the interim final rule, but
In October 2020, SBA and Treasury 4 Borrowers may submit and lenders may accept will be held harmless for borrowers’ failure to
paper versions of loan forgiveness applications, but comply with program criteria and will not be
exempted borrowers with loans of given the volume of PPP loans made by lenders, subject to any enforcement action or penalty
$50,000 or less from the FTE and salary/ electronic processing of loan forgiveness is more relating to loan origination or forgiveness of the PPP
wage reduction penalties and issued a efficient. Continued

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40924 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations

To streamline forgiveness of Second lenders and borrowers to use the COVID to submit a duplicate loan forgiveness
Draw PPP Loans of $150,000 or less Revenue Reduction Score, including application through the Platform.
where the borrower did not submit when a score meets or exceeds the value After the launch of the direct
documentation of revenue reduction at required for validation of the required borrower forgiveness process, borrowers
the time of the loan application, SBA reductions in gross receipts and thus is will continue to submit loan forgiveness
has determined that an alternative form considered adequate documentation of applications to their lenders, rather than
of revenue reduction confirmation is the borrower’s revenue reduction. through the Platform, under the
warranted to document the borrower’s following circumstances:
revenue reduction. An independent 2. Direct Borrower Forgiveness Process • The PPP lender does not opt-in to
third-party SBA contractor has In response to PPP lender and use the direct borrower forgiveness
developed a COVID Revenue Reduction borrower concerns, SBA is process;
Score (score) based on a variety of implementing a direct borrower • The borrower’s PPP loan amount is
inputs including industry, geography, forgiveness process. The direct borrower greater than $150,000;
and business size. The score uses forgiveness process is an optional • The borrower does not agree with
current data on economic recovery and technology solution that SBA is the data as provided by the SBA system
return of businesses to operational providing to PPP lenders that will of record, or cannot validate their
status.6 Each Second Draw PPP Loan of leverage SBA’s existing and proven identity in the Platform (for example, if
$150,000 or less will be assigned a Platform and align with and seamlessly there is an unreported change of
score, which will be maintained in the integrate the streamlined forgiveness ownership); or
Platform and will be visible to lenders application for loans of $150,000 or less • For any other reason where the
to use on an optional basis as an mandated by the Economic Aid Act. Platform rejects the borrower’s
alternative to document revenue submission.
When a PPP lender opts-in to the In such circumstances, borrowers
reduction. Additionally, the score will direct borrower forgiveness process, the
be visible to those borrowers that submit must follow instructions from their
Platform will provide a single secure lender regarding how the lender expects
their loan forgiveness applications location for all of its borrowers with
through the Platform using the direct the borrower to submit a forgiveness
loans of $150,000 or less to apply for application for its PPP loan.
borrower forgiveness process. loan forgiveness through the Platform
When the score meets or exceeds the using the electronic equivalent of SBA B. Deferment Extension for OHA
value required for validation of the Form 3508S. Upon receipt of notice that Appeals
borrower’s revenue reduction, use of the a borrower has applied for forgiveness Currently, the rule for appeals of final
score will satisfy the requirement for the through the Platform, lenders will SBA loan review decisions on PPP loans
borrower to document revenue review the loan forgiveness application provides that because a PPP borrower
reduction. When the score does not in the Platform and issue a forgiveness must begin making payments of
meet the value required for validation of decision to SBA inside the Platform. principal and interest on the remaining
the borrower’s revenue reduction, and if SBA believes that lenders that opt-in to balance of its PPP loan when SBA
the borrower has not already provided using the direct borrower forgiveness remits the loan forgiveness amount to
documentation to the lender that process will benefit with reduced costs, the PPP lender (or notifies the lender
validates the borrower’s revenue increased efficiency, and more timely that no loan forgiveness is allowed), an
reduction, the borrower must provide remittance of forgiveness payments from appeal by a PPP borrower of any final
documentation either directly to the SBA, while borrowers will benefit from SBA loan review decision does not
lender (for those lenders that do not opt- the ability to submit loan forgiveness extend the deferment period of the PPP
in to the direct borrower forgiveness applications directly through the loan. SBA is amending the appeals rule
process) or provide documentation to Platform and reduce the wait time and to, among other things, provide that a
the lender by uploading it to the uncertainty associated with submission borrower’s timely appeal of a final SBA
Platform. through their lender. loan review decision will extend the
Shortly after issuance of this rule, Shortly after issuance of this rule, deferment period for the PPP loan until
SBA will be providing additional SBA will be issuing more detailed SBA’s Office of Hearings and Appeals
guidance regarding the procedures for procedural guidance regarding (1) the (OHA) issues a final decision on the
process for lenders to opt-in to the appeal. The revised OHA rule will
loan if the lender acts in good faith relating to the
origination or forgiveness of the PPP loan and direct borrower forgiveness process, (2) provide that the borrower should notify
satisfies all other applicable Federal, State, local, the process for borrowers with loans of the lender of the appeal so that the
and other statutory or regulatory requirements (as $150,000 or less to access the Platform lender can extend the deferment period.
provided in section 7A(h) of the Small Business and submit their loan forgiveness
Act, as amended) (86 FR 3692, 3695).
Under the revised OHA rule, an appeal
6 The independent third-party contractor will use applications directly through the petition must be filed with OHA within
a Consumer Demand Recovery Index that combines Platform, and (3) the process for lenders 30 calendar days after the appellant’s
multiple data sources of the consumption of to access the forgiveness applications in receipt of the final SBA loan review
products and/or services (foot traffic, third party the Platform to perform reviews of their decision.
data, credit card spending, etc.) provided by
businesses. Further, using the Business Operations
borrowers’ applications, issue SBA has determined that, in order to
Response Index, the score will measure the forgiveness decisions to SBA, and avoid the potential administrative
businesses’ return to operational status, which request forgiveness payments from SBA. burden of having to reverse
includes employment and unemployment data, During the transition period after the implementation of the final SBA loan
business to business payment transactions, mobility
launch of the direct borrower review decision, including the refund of

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and foot traffic on workplace and visitor frequency
at physical locations. The resulting score will forgiveness process, lenders that opt-in borrower payments by the lender and
reflect declines in revenue. The contractor has will be expected to complete the the processing of forgiveness payments
advised SBA that this methodology will result in a processing of any loan forgiveness by SBA, a timely appeal by a PPP
score that will adequately document that the
borrower met the revenue reduction standard as
applications that have already been borrower of a final SBA loan review
required by section 7(a)(37)(I)(i)(II) of the Small submitted by borrowers to the lender decision should extend the deferment
Business Act. and should inform such borrowers not period of the PPP loan. SBA believes

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Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 40925

that allowing for continued deferment is required to validate the borrower’s 2. The Loan Forgiveness Process for
in the best interest of the borrower. For revenue reduction, no additional Lenders
these reasons, SBA is conforming the documentation is required to be a. What should a lender review?
applicable PPP rules to provide that a submitted by the borrower. * * * * *
timely appeal by a PPP borrower of a * * * * * When a borrower submits SBA Form
final SBA loan review decision extends 4th Revision: The first sentence of 3508S or lender’s equivalent form, the
the deferment period of the PPP loan Part IV.6.b. of the Consolidated lender shall:
until OHA’s decision becomes final Forgiveness and Loan Review IFR (86 i. Confirm receipt of the borrower
under 13 CFR 134.1211. FR 8283, 8293) is revised to read as certifications contained in the SBA
follows: Form 3508S or lender’s equivalent form.
IV. Revisions to Prior PPP Rules ii. In the case of a Second Draw PPP
b. What documentation are borrowers
Therefore, the following changes are who are individuals with self- Loan of $150,000 or less for which the
made to PPP rules: employment income who file a Form borrower did not provide
1st Revision: The first sentence of Part 1040, Schedule C or F required to documentation of revenue reduction
IV.2.a. of the Consolidated Forgiveness submit to their lender with their request with its application and the lender did
and Loan Review IFR (86 FR 8283, for loan forgiveness? not conduct a review of the
8287) is revised to read as follows: For borrowers that received loans of documentation at the time of
2. Loan Forgiveness Process $150,000 or less that use the SBA Form application:
a. What is the general process to 3508S, the borrower must submit the If the borrower submits its loan
obtain loan forgiveness? certification and information required forgiveness application to the lender,
To receive loan forgiveness on either by section 7A(l)(1)(A) of the Small the lender may review the borrower’s
a First Draw PPP Loan or a Second Draw Business Act and, for a Second Draw COVID Revenue Reduction Score (score)
PPP Loan, a borrower must complete PPP Loan, revenue reduction in the Platform to confirm that it meets
and submit the Loan Forgiveness documentation (which could be the or exceeds the value required to validate
Application 27 to its lender (or to the COVID Revenue Reduction Score, if the required reduction in gross receipts.
lender servicing its loan), or for loans of applicable) if such documentation was If the borrower’s score does not meet or
$150,000 or less if directed by its lender, not provided at the time of exceed the required value, the lender
through the Paycheck Protection application.68 * * * must confirm the dollar amount and
Platform (forgiveness.sba.gov). * * * * * * * * percentage of the borrower’s revenue
* * * * * 5th Revision: Part IV.6.c. of the reduction by performing a good faith
2nd Revision: Part IV.2.b. of the Consolidated Forgiveness and Loan review, in a reasonable time, of the
Consolidated Forgiveness and Loan Review IFR (86 FR 8283, 8293) is borrower’s calculations and supporting
Review IFR (86 FR 8283, 8288) is revised by adding a sentence to the end documents concerning the borrower’s
revised by adding a sentence to the end of the third paragraph to read as follows: revenue reduction.85
of the paragraph to read as follows: c. What additional documentation If the borrower submits its loan
b. When must a borrower apply for must a borrower submit when the forgiveness application through the
loan forgiveness or start making President of the United States, Vice Paycheck Protection Platform
payments on a loan? 31 President of the United States, the head (Platform), the lender must review the
* * * Notwithstanding the foregoing, of an Executive department, or a borrower’s score in the Platform to
a borrower’s timely appeal of a final Member of Congress, or the spouse of confirm that it meets or exceeds the
SBA loan review decision extends the any of the preceding, directly or value required to validate the required
deferment period on the PPP loan until indirectly holds a controlling interest in reduction in gross receipts. If the
SBA’s Office of Hearings and Appeals the borrower? borrower’s score does not meet or
issues a final decision on the appeal * * * * * exceed the required value, the lender
under 13 CFR 134.1211. * * * If a borrower with a First Draw must review the revenue reduction
3rd Revision: Part IV.6.a. of the PPP Loan of $150,000 or less submits its documentation uploaded by the
Consolidated Forgiveness and Loan loan forgiveness application through the borrower into the Platform and confirm
Review IFR (86 FR 8283, 8293) is Paycheck Protection Platform the dollar amount and percentage of the
revised by adding a sentence to the end (Platform), the borrower must submit borrower’s revenue reduction by
of the first paragraph to read as follows: any required SBA Form 3508D through performing a good faith review, in a
6. Documentation Requirements the Platform not later than 30 days after reasonable time, of the borrower’s
a. What must borrowers submit for submitting its application through the calculations and supporting documents
forgiveness of their PPP loans? Platform. concerning the borrower’s revenue
* * * If a Second Draw PPP Loan * * * * * reduction.
borrower’s COVID Revenue Reduction 6th Revision: Footnote 82 in Part For those borrowers that are required
Score in the Paycheck Protection V.1.f. of the Consolidated Forgiveness to submit documentation regarding
Platform meets or exceeds the value and Loan Review IFR (86 FR 8283, revenue reduction (other than a COVID
8295) is revised to read as follows: Revenue Reduction Score), if the lender
27 SBA Form 3508, 3508EZ, 3508S, as applicable,
See 85 FR 52833 (Aug. 27, 2020), as identifies errors in the borrower’s
or lender equivalent. Loan Forgiveness Application
forms were amended to conform to the Economic
amended. calculation or material lack of
Aid Act, including section 307, which requires a 7th Revision: The SBA Form 3508S substantiation in the borrower’s
simplified forgiveness application for loans of not subsection of Part V.2.a. of the supporting documents regarding
more than $150,000. The Simplified Forgiveness

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Consolidated Forgiveness and Loan revenue reduction, the lender should
Application is SBA Form 3508S (as amended).
31 This subsection was originally published at 85
Review IFR (86 FR 8283, 8296) is work with the borrower to remedy the
FR 38304, section III.1.e. (June 26, 2020), was revised to read as follows: issue. Providing an accurate calculation
modified to conform to sections 306 and 307 of the
Economic Aid Act by 86 FR 8283, 8288 (February 68 See subsection (g)(2)(v) of the interim final rule 85 See subsection (h)(2)(i)(D) of the interim final

5, 2021), and is being further modified to on Second Draw PPP Loans. 86 FR 3712, 3721 (Jan. rule on Second Draw PPP Loans. 86 FR 3712, 3721
incorporate deferments due to appeals. 14, 2021). (Jan. 14, 2021).

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40926 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations

of the loan forgiveness amount is the a reduction in revenue as provided in Second Draw PPP Loans are eligible
responsibility of the borrower, and the subsection (c)(1)(i) of this section at the for loan forgiveness on the same terms
borrower attests to the accuracy of its time of application, on or before the and conditions as First Draw PPP Loans,
reported information and calculations date the borrower submits an except that Second Draw PPP Loan
on the Loan Forgiveness Application. application for loan forgiveness, or, if borrowers with a principal amount of
The borrower shall not receive the borrower does not apply for loan $150,000 or less are required to provide
forgiveness without submitting all forgiveness, at SBA’s request. Such documentation of revenue reduction if
required documentation to the lender. documentation may include relevant tax such documentation was not provided
As the First Interim Final Rule 86 and forms, including annual tax forms, or, if at the time of the loan application as
section IV.7 above indicate, lenders may relevant tax forms are not available, a specified in subsections (g)(2)(iv) and
rely on borrower representations. As copy of the applicant’s quarterly income (v) of this section. If a lender elects to
stated in paragraph III.3.c of the First statements or bank statements. A COVID use the COVID Revenue Reduction
Interim Final Rule, the lender does not Revenue Reduction Score that meets or Score (score) in the Paycheck Protection
need to independently verify the exceeds the value required to validate Platform (Platform) or where the lender
borrower’s reported information if the the required reduction in gross receipts has opted-in to the direct borrower
borrower submits documentation will be considered adequate forgiveness process and the borrower
supporting its request for loan documentation of the borrower’s submits a loan forgiveness application
forgiveness (if required) and attests that revenue reduction. to the lender through the Platform, a
it accurately verified the payments for 11th Revision: Part IV.(h)(2)(D) of the score that meets or exceeds the value
eligible costs. Second Draw IFR (86 FR 3712, 3721) is required to validate the required
8th Revision: The first sentence of the revised to read as follows: reduction in gross receipts will be
first paragraph of Part V.2.b. of the (h) What do lenders need to know and considered adequate documentation of
Consolidated Forgiveness and Loan do? the borrower’s revenue reduction.
Review IFR (86 FR 8283, 8296) is (2) * * *
revised to read as follows: V. Additional Information
(D) For a Second Draw PPP Loan
b. What is the timeline for the lender’s greater than $150,000 or a loan of SBA may provide further guidance, if
decision on a loan forgiveness $150,000 or less where the borrower needed, through SBA notices that will
application? provides documentation of revenue be posted on SBA’s website at
The lender must issue a decision to reduction, confirm the dollar amount www.sba.gov. Questions on the
SBA on a loan forgiveness application and percentage of the borrower’s Paycheck Protection Program may be
not later than 60 days after receipt of a revenue reduction by performing a good directed to the Lender Relations
complete loan forgiveness application faith review, in a reasonable time, of the Specialist in the local SBA Field Office.
from the borrower or, if applicable, borrower’s calculations and supporting The local SBA Field Office may be
notification by the Paycheck Protection documents concerning the borrower’s found at https://www.sba.gov/tools/
Platform (Platform) that the borrower revenue reduction. For a loan of local-assistance/districtoffices.
has submitted a loan forgiveness $150,000 or less where the borrower
application into the Platform. * * * does not provide documentation of Compliance With Executive Orders
* * * * * revenue reduction with its application, 12866, 12988, 13132 and 13563, the
9th Revision: Part III.B.9. of the the lender shall perform this review Congressional Review Act, the
Consolidated Eligibility IFR (86 FR when the borrower provides such Administrative Procedure Act, the
3692, 3703) is revised to add a fourth documentation. If the lender identifies Paperwork Reduction Act (44 U.S.C.
paragraph at the end that reads as errors in the borrower’s calculation or Ch. 35), and the Regulatory Flexibility
follows: material lack of substantiation in the Act (5 U.S.C. 601–612).
9. When will I have to begin paying borrower’s supporting documents, the Executive Orders 12866 and 13563
principal and interest on my PPP loan? lender should work with the borrower
* * * * * to remedy the issue. For loans of OMB’s Office of Information and
Notwithstanding the foregoing, a $150,000 or less where the lender elects Regulatory Affairs (OIRA) has
borrower’s timely appeal of a final SBA to use the COVID Revenue Reduction determined that this interim final rule is
loan review decision extends the Score (score) in the Paycheck Protection economically significant for the
deferment period on the PPP loan until Platform (Platform) or where the lender purposes of Executive Orders 12866 and
SBA’s Office of Hearings and Appeals has opted-in to the direct borrower 13563. SBA, however, is proceeding
issues a final decision on the appeal forgiveness process and the borrower under the emergency provision at
under 13 CFR 134.1211. submits a loan forgiveness application Executive Order 12866 section 6(a)(3)(D)
10th Revision: Part IV.(g)(2)(v) of the to the lender through the Platform, the based on the need to move
Second Draw IFR (86 FR 3712, 3721) is lender must review the borrower’s score expeditiously to mitigate the current
revised to read as follows: to confirm that it meets or exceeds the economic conditions arising from the
(g) How do I submit an application for value required to validate the required COVID–19 emergency.
a Second Draw PPP Loan and what reduction in gross receipts, otherwise This rule is necessary to provide
documentation must I provide to the lender must review the borrower’s economic relief to small businesses and
demonstrate eligibility? supporting documentation in nonprofit organizations nationwide
* * * * * accordance with the foregoing adversely impacted under the COVID–
(2) * * * requirements. 19 Emergency Declaration. We

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(v) For loans with a principal amount * * * * * anticipate that this rule will result in
of $150,000 or less, the applicant must 12th Revision: Part IV.(j) of the substantial benefits to small businesses,
submit documentation sufficient to Second Draw IFR (86 FR 3712, 3722) is nonprofit organizations, their
establish that the applicant experienced revised to read as follows: employees, and the communities they
(j) Are Second Draw PPP Loans serve. However, we lack data to estimate
86 85 FR 20811, 20815–20816 (Apr. 15, 2020). eligible for loan forgiveness? the effects of this rule.

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Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 40927

Congressional Review Act and Paperwork Reduction Act, 44 U.S.C. DEPARTMENT OF TRANSPORTATION
Administrative Procedure Act Chapter 35
Federal Aviation Administration
OIRA has determined that this is a SBA has determined that this rule
major rule for purposes of Subtitle E of will require revisions to existing 14 CFR Part 39
the Small Business Regulatory recordkeeping or reporting requirements
Enforcement and Fairness Act of 1996 [Docket No. FAA–2020–0333; Product
of the Paycheck Protection Program Identifier 2020–NM–015–AD; Amendment
(also known as the Congressional (PPP) information collection, OMB 39–21623; AD 2021–13–18]
Review Act or CRA) (5 U.S.C. 804(2) et Control Number 3245–0407. The
seq.). Under the CRA, a major rule takes revisions will affect SBA Forms 3508S RIN 2120–AA64
effect 60 days after the rule is published and 3508D. SBA Form 3508S will be
in the Federal Register. 5 U.S.C. Airworthiness Directives; The Boeing
revised to incorporate the direct Company Airplanes
801(a)(3).
borrower forgiveness process and the
Notwithstanding this requirement, the COVID Revenue Reduction Score. SBA AGENCY: Federal Aviation
CRA allows agencies to dispense with Form 3508D will be revised to Administration (FAA), DOT.
the requirements of section 801 when incorporate the direct borrower ACTION: Final rule.
the agency for good cause finds that
forgiveness process.
such procedure would be impracticable, SUMMARY: The FAA is adopting a new
unnecessary, or contrary to the public SBA has requested Office of airworthiness directive (AD) for all The
interest and the rule shall take effect at Management and Budget (OMB) Boeing Company Model 737 airplanes
such time as the agency promulgating emergency approval of the revisions to powered by LEAP–1B engines. This AD
the rule determines. 5 U.S.C. 808(2). the information collections to give small was prompted by reports of inadvertent
Pursuant to section 808(2), SBA for good businesses and nonprofits affected by release of the spring energy of the spring
cause finds that a 60-day delay to this interim final rule the maximum door opening system (SDOS) actuator
provide public notice is impracticable amount of time to apply for loan with a certain part number, causing
and contrary to the public interest. forgiveness under the new procedures. injury and the potential for injury to
Likewise, for the same reasons, SBA for maintenance personnel. This AD
good cause finds that there are grounds Regulatory Flexibility Act (RFA) requires replacing each affected SDOS
to waive the 30-day effective date delay The Regulatory Flexibility Act (RFA) actuator with a new SDOS actuator, and
under the Administrative Procedure generally requires that when an agency verifying that new safety markers are
Act. 5 U.S.C. 553(d)(3). installed in the proper locations. The
issues a proposed rule, or a final rule
As discussed elsewhere in this pursuant to section 553(b) of the FAA is issuing this AD to address the
interim final rule, given the urgent need Administrative Procedure Act or unsafe condition on these products.
to provide borrowers with timely relief another law, the agency must prepare a DATES: This AD is effective September 3,
and the short period of time before regulatory flexibility analysis that meets 2021.
certain borrowers will be required to The Director of the Federal Register
the requirements of the RFA and
begin making principal and interest approved the incorporation by reference
publish such analysis in the Federal
payments if they have not yet applied of a certain publication listed in this AD
for forgiveness with their lenders, SBA Register. 5 U.S.C. 603, 604.
as of September 3, 2021.
has determined that it is impractical and Rules that are exempt from notice and ADDRESSES: For service information
not in the public interest to provide a comment are also exempt from the RFA identified in this final rule, contact
delayed effective date. An immediate requirements, including conducting a Boeing Commercial Airplanes,
effective date will allow SBA to regulatory flexibility analysis, when Attention: Contractual & Data Services
expedite loan forgiveness to small among other things the agency for good (C&DS), 2600 Westminster Blvd., MC
businesses and nonprofit organizations cause finds that notice and public 110–SK57, Seal Beach, CA 90740–5600;
and remit forgiveness payments to procedure are impracticable, telephone 562–797–1717; internet
lenders. unnecessary, or contrary to the public https://www.myboeingfleet.com. You
Executive Order 12988 interest. SBA Office of Advocacy guide: may view this service information at the
How to Comply with the Regulatory FAA, Airworthiness Products Section,
SBA has drafted this rule, to the Flexibility Act, Ch.1. p.9. Since this rule Operational Safety Branch, 2200 South
extent practicable, in accordance with is exempt from notice and comment, 216th St., Des Moines, WA. For
the standards set forth in section 3(a) SBA is not required to conduct a information on the availability of this
and 3(b)(2) of Executive Order 12988, to regulatory flexibility analysis. material at the FAA, call 206–231–3195.
minimize litigation, eliminate It is also available on the internet at
ambiguity, and reduce burden. The rule Authority: 15 U.S.C. 636(a)(36); 15 U.S.C.
636(a)(37); and 15 U.S.C. 636m; Coronavirus
https://www.regulations.gov by
has no preemptive or retroactive effect. searching for and locating Docket No.
Aid, Relief, and Economic Security Act, Pub.
Executive Order 13132 L. 116–136, section 1114, and Economic Aid
FAA–2020–0333.
to Hard-Hit Small Businesses, Nonprofits, Examining the AD Docket
SBA has determined that this rule
and Venues Act, Pub. L. 116–260, section
will not have substantial direct effects 303.
You may examine the AD docket on
on the States, on the relationship the internet at https://
between the National Government and Isabella Casillas Guzman, www.regulations.gov by searching for

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the States, or on the distribution of Administrator. and locating Docket No. FAA–2020–
power and responsibilities among the [FR Doc. 2021–16358 Filed 7–28–21; 4:15 pm] 0333; or in person at Docket Operations
various layers of government. Therefore, between 9 a.m. and 5 p.m., Monday
BILLING CODE 8026–03–P
SBA has determined that this rule has through Friday, except Federal holidays.
no federalism implications warranting The AD docket contains this final rule,
preparation of a federalism assessment. any comments received, and other

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