Paycheck Protection Program—Corporate Groups and Non-Bank and Non-Insured Depository Institution Lenders, RIN 3245-AH39 — Federal Register Vol. 85, No. 86, May 4, 2020

Summary

This Small Business Administration interim final rule, published in the Federal Register on May 4, 2020, limits the aggregate amount of Paycheck Protection Program loans that any single corporate group may receive: businesses in a single corporate group shall in no event receive more than $20,000,000 of PPP loans in the aggregate. Businesses are part of a single corporate group if they are majority owned, directly or indirectly, by a common parent. It also gives guidance on non-bank and non-insured depository institution lenders, including that a non-bank lender may be eligible if it has originated, maintained, and serviced more than $50 million in business loans or other commercial financial receivables during a 12-month period in the past 36 months. Comments must be received on or before June 3, 2020.

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26324 Federal Register/Vol. 85, No. 86/Monday, May 4, 2020/Rules and Regulations
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. Accordingly,
SBA is not required to conduct a
regulatory flexibility analysis.
Jovita Carranza,
Administrator.
[FR Doc. 2020–09398 Filed 5–1–20; 8:45 am]
BILLING CODE P
SMALL BUSINESS ADMINISTRATION
13 CFR Part 120
[Docket Number SBA–2020–0023]
RIN 3245–AH39
Business Loan Program Temporary
Changes; Paycheck Protection
Program—Requirements—Corporate
Groups and Non-Bank and Non-
Insured Depository Institution Lenders
AGENCY: U. S. Small Business
Administration.
ACTION: Interim final rule.
SUMMARY: On April 2, 2020, the U.S.
Small Business Administration (SBA)
posted an interim final rule announcing
the implementation of the Coronavirus
Aid, Relief, and Economic Security Act
(CARES Act). The CARES Act
temporarily adds a new program, titled
the ‘‘Paycheck Protection Program,’’ to
the SBA’s 7(a) Loan Program. The
CARES Act also provides for forgiveness
of up to the full principal amount of
qualifying loans guaranteed under the
Paycheck Protection Program (PPP). The
PPP is intended to provide economic
relief to small businesses nationwide
adversely impacted by the Coronavirus
Disease 2019 (COVID–19). SBA posted
additional interim final rules on April 3,
2020, April 14, 2020, April 24, 2020,
and April 28, 2020, and the Department
of the Treasury posted an additional
interim final rule on April 28, 2020.
This interim final rule supplements the
previously posted interim final rules by
limiting the amount of PPP loans that
any single corporate group may receive
and provides additional guidance on the
criteria for non-bank lender
participation in the PPP, and requests
public comment.
DATES:
Effective date: This rule is effective
May 4, 2020.
Applicability date: This interim final
rule applies to applications submitted
under the Paycheck Protection Program
through June 30, 2020, or until funds
made available for this purpose are
exhausted.
Comment date: Comments must be
received on or before June 3, 2020.
ADDRESSES: You may submit comments,
identified by number SBA–2020–0023
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.
Highlight the information that you
consider to be CBI and explain why you
believe SBA should hold this
information as confidential. SBA will
review the information and make the
final determination whether it will
publish the information.
FOR FURTHER INFORMATION CONTACT: A
Call Center Representative at 833–572–
0502, or the local SBA Field Office; the
list of offices can be found at https://
www.sba.gov/tools/local-assistance/
districtoffices.
SUPPLEMENTARY INFORMATION:
I. Background Information
On March 13, 2020, President Trump
declared the ongoing Coronavirus
Disease 2019 (COVID–19) pandemic of
sufficient severity and magnitude to
warrant an emergency declaration for all
States, territories, and the District of
Columbia. With the COVID–19
emergency, many small businesses
nationwide are experiencing economic
hardship as a direct result of the
Federal, State, tribal, and local public
health measures that are being taken to
minimize the public’s exposure to the
virus. These measures, some of which
are government-mandated, are being
implemented nationwide and include
the closures of restaurants, bars, and
gyms. In addition, based on the advice
of public health officials, other
measures, such as keeping a safe
distance from others or even stay-at-
home orders, are being implemented,
resulting in a dramatic decrease in
economic activity as the public avoids
malls, retail stores, and other
businesses.
On March 27, 2020, the President
signed the Coronavirus Aid, Relief, and
Economic Security Act (the CARES Act)
(Pub. L. 116–136) to provide emergency
assistance and health care response for
individuals, families, and businesses
affected by the coronavirus pandemic.
The Small Business Administration
(SBA) received funding and authority
through the CARES Act to modify
existing loan programs and establish a
new loan program to assist small
businesses nationwide adversely
impacted by the COVID–19 emergency.
Section 1102 of the CARES Act
temporarily permits SBA to guarantee
100 percent of 7(a) loans under a new
program titled the ‘‘Paycheck Protection
Program.’’ Section 1106 of the CARES
Act provides for forgiveness of up to the
full principal amount of qualifying
loans guaranteed under the Paycheck
Protection Program. On April 24, 2020,
the President signed the Paycheck
Protection Program and Health Care
Enhancement Act (Pub. L. 116–139),
which provided additional funding and
authority for the Paycheck Protection
Program.
As described below, to preserve the
limited resources available to the PPP
program, this interim final rule limits
the aggregate amount of PPP loans that
any single corporate group may receive.
This interim final rule also provides
additional guidance regarding lenders
eligible to make PPP loans.
II. Comments and Immediate Effective
Date
The intent of the CARES Act is that
SBA provide relief to America’s small
businesses expeditiously. This intent,
along with the dramatic decrease in
economic activity nationwide, provides
good cause for SBA to dispense with the
30-day delayed effective date provided
in the Administrative Procedure Act.
Specifically, it is critical to meet
lenders’ and borrowers’ need for clarity
concerning program requirements as
rapidly as possible because the last day
eligible borrowers can apply for and
receive a loan is June 30, 2020.
This interim final rule supplements
previous regulations and guidance on
certain important, discrete issues. The
immediate effective date of this interim
final rule will benefit lenders so that
they can swiftly close and disburse
loans to small businesses. This interim
final rule is effective without advance
notice and public comment because
section 1114 of the CARES Act
authorizes SBA to issue regulations to
implement Title I of the CARES Act
without regard to notice requirements.
This rule is being issued to allow for
immediate implementation of this
program. Although this interim final
rule is effective immediately, comments
are solicited from interested members of
the public on all aspects of this interim
final rule, including section III below.
These comments must be submitted on
or before June 3, 2020. SBA will
consider these comments and the need
for making any revisions as a result of
these comments.
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1 The Administrator has authority to issue ‘‘such
rules and regulations as [the Administrator] deems
necessary to carry out the authority vested in him
by or pursuant to’’ 15 U.S.C. Chapter 14A,
including authorities established under section
1102 of the CARES Act. Section 1102 provides that
the Administrator ‘‘may’’ guarantee loans under the
terms and conditions set forth in section 7(a) of the
Small Business Act, and those conditions specify a
‘‘maximum’’—but not a minimum—loan amount.
See 15 U.S.C. 636(a)(36)(B), (E); see also CARES Act
section 1106(k) (authorizing SBA to issue
regulations to govern loan forgiveness). To preserve
finite appropriations for PPP loans and ensure
broad access for eligible borrowers, the
Administrator, in consultation with the Secretary,
has determined that an aggregate limitation on
loans to a single corporate group is necessary and
appropriate.
2 For loans that have been partially disbursed,
this limitation applies to any additional
disbursement that would cause the total PPP loans
to a single corporate group to exceed $20 million.
3 See Section 7(a)(36)(D)(iv) of the Small Business
Act (15 U.S.C. 636(a)(36)(D)(iv), as added by the
CARES Act; 13 CFR 121.103(b).
III. Paycheck Protection Program
Requirements for Corporate Groups
and Non-Bank and Non-Insured
Depository Institution Lenders
Overview
The CARES Act was enacted to
provide immediate assistance to
individuals, families, and organizations
affected by the COVID–19 emergency.
Among the provisions contained in the
CARES Act are provisions authorizing
SBA to temporarily guarantee loans
under the Paycheck Protection Program
(PPP). Loans under the PPP will be 100
percent guaranteed by SBA, and the full
principal amount of the loans and any
accrued interest may qualify for loan
forgiveness. Additional information
about the PPP is available in SBA’s first
PPP interim final rule (85 FR 20811)
(the First Interim Final Rule), second
interim final rule (85 FR 20817), third
interim final rule (85 FR 21747), and
fourth interim final rule (85 FR 23450),
in an interim final rule issued by the
Department of the Treasury, which was
posted on April 28, 2020, and in SBA’s
fifth interim final rule, which was
posted on April 28, 2020.
1. Can a single corporate group receive
unlimited PPP loans?
No. To preserve the limited resources
available to the PPP program, and in
light of the previous lapse of PPP
appropriations and the high demand for
PPP loans, businesses that are part of a
single corporate group shall in no event
receive more than $20,000,000 of PPP
loans in the aggregate.1 For purposes of
this limit, businesses are part of a single
corporate group if they are majority
owned, directly or indirectly, by a
common parent. This limitation shall be
immediately effective with respect to
any loan that has not yet been fully
disbursed as of April 30, 2020.2
It is the responsibility of an applicant
for a PPP loan to notify the lender if the
applicant has applied for or received
PPP loans in excess of the amount
permitted by this interim final rule and
withdraw or request cancellation of any
pending PPP loan application or
approved PPP loan not in compliance
with the limitation set forth in this rule.
Failure by the applicant to do so will be
regarded as a use of PPP funds for
unauthorized purposes, and the loan
will not be eligible for forgiveness. A
lender may rely on an applicant’s
representation concerning the
applicant’s compliance with this
limitation.
The Administrator, in consultation
with the Secretary, determined that
limiting the amount of PPP loans that a
single corporate group may receive will
promote the availability of PPP loans to
the largest possible number of
borrowers, consistent with the CARES
Act. The Administrator has concluded
that a limitation of $20,000,000 strikes
an appropriate balance between broad
availability of PPP loans and program
resource constraints.
SBA’s affiliation rules, which relate to
an applicant’s eligibility for PPP loans,
and any waiver of those rules under the
CARES Act, continue to apply
independent of this limitation.
Businesses are subject to this limitation
even if the businesses are eligible for the
waiver-of-affiliation provision under the
CARES Act or are otherwise not
considered to be affiliates under SBA’s
affiliation rules.3
This rule has no effect on lender
obligations required to obtain an SBA
guarantee for PPP loans.
2. Non-Bank and Non-Insured
Depository Institution Lenders
a. Can a non-bank lender or non-
insured depository institution be
approved to be a lender in the PPP if it
has originated, maintained, or
serviced—but not performed all three of
these functions for—more than $50
million in business loans or other
commercial financial receivables during
a 12-month period in the past 36
months?
Yes. The First Interim Final Rule
provides that a non-bank lender or non-
insured depository institution may be
eligible to be a lender in the PPP if the
lender has originated, maintained, and
serviced more than $50 million in
business loans or other commercial
financial receivables during a 12-month
period in the past 36 months, in
addition to satisfying certain other
requirements. To ensure broad and
diverse lender participation, SBA and
the Department of the Treasury have
also determined that such lenders may
be approved to make PPP loans if the
lender has performed the required
volume of any one of these three
functions (originating, maintaining, or
servicing).
b. Can a non-bank lender that does
not meet the $50 million threshold in
the First Interim Final Rule for
originating, maintaining, and servicing
loans or receivables apply to be a lender
in the PPP?
Yes. As described in the First Interim
Final Rule, a non-bank lender may be
eligible to be a lender in the PPP if the
lender has originated, maintained, and
serviced more than $50 million in
business loans or other commercial
financial receivables during a 12-month
period in the past 36 months, in
addition to satisfying certain other
requirements. In addition, SBA and the
Department of the Treasury have
determined that a non-bank lender
meets the criteria to be a PPP lender and
may be approved to make PPP loans if
it has originated, maintained, or
serviced more than $10 million in
business loans or other commercial
financial receivables during a 12-month
period in the past 36 months, if the non-
bank lender is (1) a community
development financial institution (other
than a federally insured bank or
federally insured credit union) or (2) a
majority minority-, women-, or veteran/
military-owned lender. Consistent with
the First Interim Final Rule, a lender is
ineligible if it currently is designated in
Troubled Condition by its primary
federal regulator or is subject to a formal
enforcement action with its primary
federal regulator that addresses unsafe
or unsound lending practices. An
applicant that meets this $10 million
threshold but does not meet the $50
million threshold that is otherwise
applicable should leave blank the
attestation on CARES Act Section 1102
Lender Agreement—Non-Bank and Non-
Insured Depository Institution Lenders
(SBA Form 3507) related to the $50
million threshold and instead include
with its application an attestation
stating: ‘‘Lender attests that it has
originated, maintained, or serviced more
than $10 million in business loans or
other commercial financial receivables
during a consecutive 12 month period
in the past 36 months.’’
3. Additional Information
SBA may provide further guidance, if
needed, through SBA notices that will
be posted on SBA’s website at
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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, 13563, and 13771,
the Paperwork Reduction Act (44
U.S.C. Ch. 35), and the Regulatory
Flexibility Act (5 U.S.C. 601–612)
Executive Orders 12866, 13563, and
13771
This interim final rule is
economically significant for the
purposes of Executive Orders 12866 and
13563, and is considered a major rule
under the Congressional Review Act.
SBA, however, is proceeding under the
emergency provision at Executive Order
12866 Section 6(a)(3)(D) based on the
need to move expeditiously to mitigate
the current economic conditions arising
from the COVID–19 emergency. This
rule’s designation under Executive
Order 13771 will be informed by public
comment.
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 not impose new or modify existing
recordkeeping or reporting requirements
under the Paperwork Reduction Act.
Regulatory Flexibility Act (RFA)
The Regulatory Flexibility Act (RFA)
generally requires that when an agency
issues a proposed rule, or a final rule
pursuant to section 553(b) of the APA or
another law, the agency must prepare a
regulatory flexibility analysis that meets
the requirements of the RFA and
publish such analysis in the Federal
Register. 5 U.S.C. 603, 604. Specifically,
the RFA normally requires agencies to
describe the impact of a rulemaking on
small entities by providing a regulatory
impact analysis. Such analysis must
address the consideration of regulatory
options that would lessen the economic
effect of the rule on small entities. The
RFA defines a ‘‘small entity’’ as (1) a
proprietary firm meeting the size
standards of the Small Business
Administration (SBA); (2) a nonprofit
organization that is not dominant in its
field; or (3) a small government
jurisdiction with a population of less
than 50,000. 5 U.S.C. 601(3)–(6). Except
for such small government jurisdictions,
neither State nor local governments are
‘‘small entities.’’ Similarly, for purposes
of the RFA, individual persons are not
small entities. The requirement to
conduct a regulatory impact analysis
does not apply if the head of the agency
‘‘certifies that the rule will not, if
promulgated, have a significant
economic impact on a substantial
number of small entities.’’ 5 U.S.C.
605(b). The agency must, however,
publish the certification in the Federal
Register at the time of publication of the
rule, ‘‘along with a statement providing
the factual basis for such certification.’’
If the agency head has not waived the
requirements for a regulatory flexibility
analysis in accordance with the RFA’s
waiver provision, and no other RFA
exception applies, the agency must
prepare the regulatory flexibility
analysis and publish it in the Federal
Register at the time of promulgation or,
if the rule is promulgated in response to
an emergency that makes timely
compliance impracticable, within 180
days of publication of the final rule. 5
U.S.C. 604(a), 608(b). Rules that are
exempt from notice and comment are
also exempt from the RFA requirements,
including conducting a regulatory
flexibility analysis, when among other
things the agency for good cause finds
that notice and public procedure are
impracticable, unnecessary, or contrary
to the public interest. SBA Office of
Advocacy guide: How to Comply with
the Regulatory Flexibility Act, Ch.1. p.9.
Accordingly, SBA is not required to
conduct a regulatory flexibility analysis.
Jovita Carranza,
Administrator.
[FR Doc. 2020–09576 Filed 5–1–20; 8:45 am]
BILLING CODE P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Parts 21, 61, 63, 65, 91, 107,
125, and 141
[Docket No.: FAA–2020–0446; Amdt. No(s).
Amendment numbers 21–102, 61–145, 63–
43, 65–60, 91–357, 107–3, 125–69, and 141–
21]
RIN 2120–AL63
Relief for Certain Persons and
Operations During the Coronavirus
Disease 2019 (COVID–19) Outbreak
AGENCY: Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION: Final rule.
SUMMARY: This Special Federal Aviation
Regulation (SFAR) provides regulatory
relief to persons who have been unable
to comply with certain training, recent
experience, testing, and checking
requirements due to the Coronavirus
Disease 2019 (COVID–19) outbreak. This
relief allows operators to continue to
use pilots and other crewmembers in
support of essential operations during
this period. Additionally, this SFAR
provides regulatory relief to certain
persons and pilot schools unable to
meet duration and renewal
requirements due to the outbreak. This
rule also allows certain air carriers and
operators to fly temporary overflow
aircraft, a need resulting from the
outbreak, to a point of storage pursuant
to a special flight permit with a
continuing authorization.
DATES: Effective April 30, 2020 through
March 31, 2021.
ADDRESSES: For information on where to
obtain copies of rulemaking documents
and other information related to this
final rule, see ‘‘How to Obtain
Additional Information’’ in the
SUPPLEMENTARY INFORMATION section of
this document.
FOR FURTHER INFORMATION CONTACT: For
technical questions concerning this
action for pilots, contact Craig Holmes,
General Aviation and Commercial
Division; Federal Aviation
Administration, 800 Independence
Avenue SW, Washington, DC 20591;
telephone (202) 267–1100; email 9-AVS-
AFS800-COVID19-Correspondence@
faa.gov. For technical questions
concerning this action for mechanics
and special flight permits, contact Kevin
Morgan, Aircraft Maintenance Division;
Federal Aviation Administration, 800
Independence Avenue SW, Washington,
DC 20591; telephone (202) 267–1675;
email Kevin.Morgan@faa.gov. For
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