Business Loan Program Temporary Changes; Paycheck Protection Program-Requirements-Corporate Groups and Non-Bank and Non-Insured Depository Institution Lenders

Summary

A Small Business Administration interim final rule, "Paycheck Protection Program—Requirements—Corporate Groups and Non-Bank and Non-Insured Depository Institution Lenders", published in the Federal Register, Vol. 85, No. 86, on Monday, May 4, 2020, under 13 CFR Part 120, RIN 3245–AH39, docket number SBA–2020–0023. It supplements earlier PPP regulations by limiting the amount of PPP loans that any single corporate group may receive, and provides additional guidance on lenders eligible to make PPP loans. The same pages carry part of a Federal Aviation Administration rule.

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26324 Federal Register / Vol. 85, No. 86 / Monday, May 4, 2020 / Rules and Regulations

regulatory flexibility analysis, when through June 30, 2020, or until funds existing loan programs and establish a
among other things the agency for good made available for this purpose are new loan program to assist small
cause finds that notice and public exhausted. businesses nationwide adversely
procedure are impracticable, Comment date: Comments must be impacted by the COVID–19 emergency.
unnecessary, or contrary to the public received on or before June 3, 2020. Section 1102 of the CARES Act
interest. SBA Office of Advocacy guide: ADDRESSES: You may submit comments, temporarily permits SBA to guarantee
How to Comply with the Regulatory identified by number SBA–2020–0023 100 percent of 7(a) loans under a new
Flexibility Act, Ch.1. p.9. Accordingly, through the Federal eRulemaking Portal: program titled the ‘‘Paycheck Protection
SBA is not required to conduct a http://www.regulations.gov. Follow the Program.’’ Section 1106 of the CARES
regulatory flexibility analysis. instructions for submitting comments. Act provides for forgiveness of up to the
SBA will post all comments on full principal amount of qualifying
Jovita Carranza,
www.regulations.gov. If you wish to loans guaranteed under the Paycheck
Administrator. Protection Program. On April 24, 2020,
submit confidential business
[FR Doc. 2020–09398 Filed 5–1–20; 8:45 am] the President signed the Paycheck
information (CBI) as defined in the User
BILLING CODE P
Notice at www.regulations.gov, please Protection Program and Health Care
send an email to ppp-ifr@sba.gov. Enhancement Act (Pub. L. 116–139),
Highlight the information that you which provided additional funding and
SMALL BUSINESS ADMINISTRATION authority for the Paycheck Protection
consider to be CBI and explain why you
believe SBA should hold this Program.
13 CFR Part 120 As described below, to preserve the
information as confidential. SBA will
[Docket Number SBA–2020–0023] review the information and make the limited resources available to the PPP
final determination whether it will program, this interim final rule limits
RIN 3245–AH39
publish the information. the aggregate amount of PPP loans that
Business Loan Program Temporary any single corporate group may receive.
FOR FURTHER INFORMATION CONTACT: A
Changes; Paycheck Protection This interim final rule also provides
Call Center Representative at 833–572–
Program—Requirements—Corporate additional guidance regarding lenders
0502, or the local SBA Field Office; the
Groups and Non-Bank and Non- eligible to make PPP loans.
list of offices can be found at https://
Insured Depository Institution Lenders www.sba.gov/tools/local-assistance/ II. Comments and Immediate Effective
AGENCY: U. S. Small Business districtoffices. Date
Administration. SUPPLEMENTARY INFORMATION: The intent of the CARES Act is that
ACTION: Interim final rule. SBA provide relief to America’s small
I. Background Information
businesses expeditiously. This intent,
SUMMARY: On April 2, 2020, the U.S. On March 13, 2020, President Trump along with the dramatic decrease in
Small Business Administration (SBA) declared the ongoing Coronavirus economic activity nationwide, provides
posted an interim final rule announcing Disease 2019 (COVID–19) pandemic of good cause for SBA to dispense with the
the implementation of the Coronavirus sufficient severity and magnitude to 30-day delayed effective date provided
Aid, Relief, and Economic Security Act warrant an emergency declaration for all in the Administrative Procedure Act.
(CARES Act). The CARES Act States, territories, and the District of Specifically, it is critical to meet
temporarily adds a new program, titled Columbia. With the COVID–19 lenders’ and borrowers’ need for clarity
the ‘‘Paycheck Protection Program,’’ to emergency, many small businesses concerning program requirements as
the SBA’s 7(a) Loan Program. The nationwide are experiencing economic rapidly as possible because the last day
CARES Act also provides for forgiveness hardship as a direct result of the eligible borrowers can apply for and
of up to the full principal amount of Federal, State, tribal, and local public receive a loan is June 30, 2020.
qualifying loans guaranteed under the health measures that are being taken to This interim final rule supplements
Paycheck Protection Program (PPP). The minimize the public’s exposure to the previous regulations and guidance on
PPP is intended to provide economic virus. These measures, some of which certain important, discrete issues. The
relief to small businesses nationwide are government-mandated, are being immediate effective date of this interim
adversely impacted by the Coronavirus implemented nationwide and include final rule will benefit lenders so that
Disease 2019 (COVID–19). SBA posted the closures of restaurants, bars, and they can swiftly close and disburse
additional interim final rules on April 3, gyms. In addition, based on the advice loans to small businesses. This interim
2020, April 14, 2020, April 24, 2020, of public health officials, other final rule is effective without advance
and April 28, 2020, and the Department measures, such as keeping a safe notice and public comment because
of the Treasury posted an additional distance from others or even stay-at- section 1114 of the CARES Act
interim final rule on April 28, 2020. home orders, are being implemented, authorizes SBA to issue regulations to
This interim final rule supplements the resulting in a dramatic decrease in implement Title I of the CARES Act
previously posted interim final rules by economic activity as the public avoids without regard to notice requirements.
limiting the amount of PPP loans that malls, retail stores, and other This rule is being issued to allow for
any single corporate group may receive businesses. immediate implementation of this
and provides additional guidance on the On March 27, 2020, the President program. Although this interim final
criteria for non-bank lender signed the Coronavirus Aid, Relief, and rule is effective immediately, comments
participation in the PPP, and requests Economic Security Act (the CARES Act) are solicited from interested members of
public comment. (Pub. L. 116–136) to provide emergency the public on all aspects of this interim

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DATES: assistance and health care response for final rule, including section III below.
Effective date: This rule is effective individuals, families, and businesses These comments must be submitted on
May 4, 2020. affected by the coronavirus pandemic. or before June 3, 2020. SBA will
Applicability date: This interim final The Small Business Administration consider these comments and the need
rule applies to applications submitted (SBA) received funding and authority for making any revisions as a result of
under the Paycheck Protection Program through the CARES Act to modify these comments.

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Federal Register / Vol. 85, No. 86 / Monday, May 4, 2020 / Rules and Regulations 26325

III. Paycheck Protection Program It is the responsibility of an applicant addition to satisfying certain other
Requirements for Corporate Groups for a PPP loan to notify the lender if the requirements. To ensure broad and
and Non-Bank and Non-Insured applicant has applied for or received diverse lender participation, SBA and
Depository Institution Lenders PPP loans in excess of the amount the Department of the Treasury have
permitted by this interim final rule and also determined that such lenders may
Overview be approved to make PPP loans if the
withdraw or request cancellation of any
The CARES Act was enacted to pending PPP loan application or lender has performed the required
provide immediate assistance to approved PPP loan not in compliance volume of any one of these three
individuals, families, and organizations with the limitation set forth in this rule. functions (originating, maintaining, or
affected by the COVID–19 emergency. Failure by the applicant to do so will be servicing).
Among the provisions contained in the regarded as a use of PPP funds for b. Can a non-bank lender that does
CARES Act are provisions authorizing unauthorized purposes, and the loan not meet the $50 million threshold in
SBA to temporarily guarantee loans will not be eligible for forgiveness. A the First Interim Final Rule for
under the Paycheck Protection Program lender may rely on an applicant’s originating, maintaining, and servicing
(PPP). Loans under the PPP will be 100 representation concerning the loans or receivables apply to be a lender
percent guaranteed by SBA, and the full applicant’s compliance with this in the PPP?
limitation. Yes. As described in the First Interim
principal amount of the loans and any
The Administrator, in consultation Final Rule, a non-bank lender may be
accrued interest may qualify for loan
with the Secretary, determined that eligible to be a lender in the PPP if the
forgiveness. Additional information
limiting the amount of PPP loans that a lender has originated, maintained, and
about the PPP is available in SBA’s first
single corporate group may receive will serviced more than $50 million in
PPP interim final rule (85 FR 20811)
promote the availability of PPP loans to business loans or other commercial
(the First Interim Final Rule), second financial receivables during a 12-month
interim final rule (85 FR 20817), third the largest possible number of
borrowers, consistent with the CARES period in the past 36 months, in
interim final rule (85 FR 21747), and addition to satisfying certain other
fourth interim final rule (85 FR 23450), Act. The Administrator has concluded
that a limitation of $20,000,000 strikes requirements. In addition, SBA and the
in an interim final rule issued by the Department of the Treasury have
Department of the Treasury, which was an appropriate balance between broad
availability of PPP loans and program determined that a non-bank lender
posted on April 28, 2020, and in SBA’s meets the criteria to be a PPP lender and
fifth interim final rule, which was resource constraints.
SBA’s affiliation rules, which relate to may be approved to make PPP loans if
posted on April 28, 2020. it has originated, maintained, or
an applicant’s eligibility for PPP loans,
1. Can a single corporate group receive and any waiver of those rules under the serviced more than $10 million in
unlimited PPP loans? CARES Act, continue to apply business loans or other commercial
independent of this limitation. financial receivables during a 12-month
No. To preserve the limited resources period in the past 36 months, if the non-
Businesses are subject to this limitation
available to the PPP program, and in bank lender is (1) a community
even if the businesses are eligible for the
light of the previous lapse of PPP development financial institution (other
waiver-of-affiliation provision under the
appropriations and the high demand for than a federally insured bank or
CARES Act or are otherwise not
PPP loans, businesses that are part of a federally insured credit union) or (2) a
considered to be affiliates under SBA’s
single corporate group shall in no event majority minority-, women-, or veteran/
affiliation rules.3
receive more than $20,000,000 of PPP military-owned lender. Consistent with
This rule has no effect on lender
loans in the aggregate.1 For purposes of the First Interim Final Rule, a lender is
obligations required to obtain an SBA
this limit, businesses are part of a single ineligible if it currently is designated in
guarantee for PPP loans.
corporate group if they are majority Troubled Condition by its primary
owned, directly or indirectly, by a 2. Non-Bank and Non-Insured federal regulator or is subject to a formal
common parent. This limitation shall be Depository Institution Lenders enforcement action with its primary
immediately effective with respect to a. Can a non-bank lender or non- federal regulator that addresses unsafe
any loan that has not yet been fully insured depository institution be or unsound lending practices. An
disbursed as of April 30, 2020.2 approved to be a lender in the PPP if it applicant that meets this $10 million
has originated, maintained, or threshold but does not meet the $50
1 The Administrator has authority to issue ‘‘such
serviced—but not performed all three of million threshold that is otherwise
rules and regulations as [the Administrator] deems
these functions for—more than $50 applicable should leave blank the
necessary to carry out the authority vested in him attestation on CARES Act Section 1102
by or pursuant to’’ 15 U.S.C. Chapter 14A, million in business loans or other
including authorities established under section commercial financial receivables during Lender Agreement—Non-Bank and Non-
1102 of the CARES Act. Section 1102 provides that a 12-month period in the past 36 Insured Depository Institution Lenders
the Administrator ‘‘may’’ guarantee loans under the
months? (SBA Form 3507) related to the $50
terms and conditions set forth in section 7(a) of the million threshold and instead include
Small Business Act, and those conditions specify a Yes. The First Interim Final Rule
‘‘maximum’’—but not a minimum—loan amount. provides that a non-bank lender or non- with its application an attestation
See 15 U.S.C. 636(a)(36)(B), (E); see also CARES Act insured depository institution may be stating: ‘‘Lender attests that it has
section 1106(k) (authorizing SBA to issue
eligible to be a lender in the PPP if the originated, maintained, or serviced more
regulations to govern loan forgiveness). To preserve than $10 million in business loans or
finite appropriations for PPP loans and ensure lender has originated, maintained, and
broad access for eligible borrowers, the serviced more than $50 million in other commercial financial receivables
Administrator, in consultation with the Secretary, business loans or other commercial during a consecutive 12 month period

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has determined that an aggregate limitation on
financial receivables during a 12-month in the past 36 months.’’
loans to a single corporate group is necessary and
appropriate. period in the past 36 months, in 3. Additional Information
2 For loans that have been partially disbursed,

this limitation applies to any additional 3 See Section 7(a)(36)(D)(iv) of the Small Business SBA may provide further guidance, if
disbursement that would cause the total PPP loans Act (15 U.S.C. 636(a)(36)(D)(iv), as added by the needed, through SBA notices that will
to a single corporate group to exceed $20 million. CARES Act; 13 CFR 121.103(b). be posted on SBA’s website at

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26326 Federal Register / Vol. 85, No. 86 / Monday, May 4, 2020 / Rules and Regulations

www.sba.gov. Questions on the describe the impact of a rulemaking on DEPARTMENT OF TRANSPORTATION
Paycheck Protection Program may be small entities by providing a regulatory
directed to the Lender Relations impact analysis. Such analysis must Federal Aviation Administration
Specialist in the local SBA Field Office. address the consideration of regulatory
The local SBA Field Office may be options that would lessen the economic 14 CFR Parts 21, 61, 63, 65, 91, 107,
found at https://www.sba.gov/tools/ effect of the rule on small entities. The 125, and 141
local-assistance/districtoffices. RFA defines a ‘‘small entity’’ as (1) a [Docket No.: FAA–2020–0446; Amdt. No(s).
Compliance With Executive Orders proprietary firm meeting the size Amendment numbers 21–102, 61–145, 63–
12866, 12988, 13132, 13563, and 13771, standards of the Small Business 43, 65–60, 91–357, 107–3, 125–69, and 141–
the Paperwork Reduction Act (44 Administration (SBA); (2) a nonprofit 21]
U.S.C. Ch. 35), and the Regulatory organization that is not dominant in its RIN 2120–AL63
Flexibility Act (5 U.S.C. 601–612) field; or (3) a small government
jurisdiction with a population of less Relief for Certain Persons and
Executive Orders 12866, 13563, and Operations During the Coronavirus
13771 than 50,000. 5 U.S.C. 601(3)–(6). Except
for such small government jurisdictions, Disease 2019 (COVID–19) Outbreak
This interim final rule is neither State nor local governments are
economically significant for the AGENCY: Federal Aviation
‘‘small entities.’’ Similarly, for purposes Administration (FAA), Department of
purposes of Executive Orders 12866 and
of the RFA, individual persons are not Transportation (DOT).
13563, and is considered a major rule
under the Congressional Review Act. small entities. The requirement to ACTION: Final rule.
SBA, however, is proceeding under the conduct a regulatory impact analysis
does not apply if the head of the agency SUMMARY: This Special Federal Aviation
emergency provision at Executive Order
12866 Section 6(a)(3)(D) based on the ‘‘certifies that the rule will not, if Regulation (SFAR) provides regulatory
need to move expeditiously to mitigate promulgated, have a significant relief to persons who have been unable
the current economic conditions arising economic impact on a substantial to comply with certain training, recent
from the COVID–19 emergency. This number of small entities.’’ 5 U.S.C. experience, testing, and checking
rule’s designation under Executive 605(b). The agency must, however, requirements due to the Coronavirus
Order 13771 will be informed by public publish the certification in the Federal Disease 2019 (COVID–19) outbreak. This
comment. Register at the time of publication of the relief allows operators to continue to
rule, ‘‘along with a statement providing use pilots and other crewmembers in
Executive Order 12988 support of essential operations during
the factual basis for such certification.’’
SBA has drafted this rule, to the this period. Additionally, this SFAR
If the agency head has not waived the
extent practicable, in accordance with provides regulatory relief to certain
requirements for a regulatory flexibility persons and pilot schools unable to
the standards set forth in section 3(a)
analysis in accordance with the RFA’s meet duration and renewal
and 3(b)(2) of Executive Order 12988, to
waiver provision, and no other RFA requirements due to the outbreak. This
minimize litigation, eliminate
ambiguity, and reduce burden. The rule exception applies, the agency must rule also allows certain air carriers and
has no preemptive or retroactive effect. prepare the regulatory flexibility operators to fly temporary overflow
analysis and publish it in the Federal aircraft, a need resulting from the
Executive Order 13132 Register at the time of promulgation or, outbreak, to a point of storage pursuant
SBA has determined that this rule if the rule is promulgated in response to to a special flight permit with a
will not have substantial direct effects an emergency that makes timely continuing authorization.
on the States, on the relationship compliance impracticable, within 180 DATES: Effective April 30, 2020 through
between the National Government and days of publication of the final rule. 5 March 31, 2021.
the States, or on the distribution of U.S.C. 604(a), 608(b). Rules that are ADDRESSES: For information on where to
power and responsibilities among the exempt from notice and comment are obtain copies of rulemaking documents
various layers of government. Therefore, also exempt from the RFA requirements, and other information related to this
SBA has determined that this rule has including conducting a regulatory final rule, see ‘‘How to Obtain
no federalism implications warranting flexibility analysis, when among other Additional Information’’ in the
preparation of a federalism assessment. things the agency for good cause finds SUPPLEMENTARY INFORMATION section of
Paperwork Reduction Act, 44 U.S.C. that notice and public procedure are this document.
Chapter 35 impracticable, unnecessary, or contrary FOR FURTHER INFORMATION CONTACT: For
SBA has determined that this rule to the public interest. SBA Office of technical questions concerning this
will not impose new or modify existing Advocacy guide: How to Comply with action for pilots, contact Craig Holmes,
recordkeeping or reporting requirements the Regulatory Flexibility Act, Ch.1. p.9. General Aviation and Commercial
under the Paperwork Reduction Act. Accordingly, SBA is not required to Division; Federal Aviation
conduct a regulatory flexibility analysis. Administration, 800 Independence
Regulatory Flexibility Act (RFA) Avenue SW, Washington, DC 20591;
Jovita Carranza,
The Regulatory Flexibility Act (RFA) telephone (202) 267–1100; email 9-AVS-
generally requires that when an agency Administrator. AFS800-COVID19-Correspondence@
issues a proposed rule, or a final rule [FR Doc. 2020–09576 Filed 5–1–20; 8:45 am] faa.gov. For technical questions
pursuant to section 553(b) of the APA or BILLING CODE P concerning this action for mechanics

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another law, the agency must prepare a and special flight permits, contact Kevin
regulatory flexibility analysis that meets Morgan, Aircraft Maintenance Division;
the requirements of the RFA and Federal Aviation Administration, 800
publish such analysis in the Federal Independence Avenue SW, Washington,
Register. 5 U.S.C. 603, 604. Specifically, DC 20591; telephone (202) 267–1675;
the RFA normally requires agencies to email Kevin.Morgan@faa.gov. For

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