Paycheck Protection Program—Treatment of Entities With Foreign Affiliates, RIN 3245-AH44 — Federal Register Vol. 85, No. 99, May 21, 2020

Summary

This Small Business Administration interim final rule, titled Paycheck Protection Program—Treatment of Entities With Foreign Affiliates, appears in the Federal Register of May 21, 2020 and is effective May 21, 2020. It states that, to calculate the number of employees for determining eligibility for the PPP, an entity must include all employees of its domestic and foreign affiliates, except in limited circumstances where the affiliation rules expressly do not apply. An entity that, together with its domestic and foreign affiliates, does not meet the 500-employee or other applicable PPP size standard is therefore ineligible for a PPP loan. Comments must be received on or before June 22, 2020.

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30835 Federal Register/Vol. 85, No. 99/Thursday, May 21, 2020/Rules and Regulations
restriction on receipt of funds under
CFAP but only as to beneficiaries who,
as a condition of the waiver, agree to
apply the CFAP payments to reduce the
amount of the judgment lien.
(g) In addition to any other Federal
laws that apply to CFAP, the following
laws apply: 15 U.S.C. 714; 18 U.S.C.
286, 287, 371, 1001; and 31 U.S.C. 1001.
(h) This part applies to applications
submitted under CFAP through August
28, 2020, or until funds made available
for CFAP are exhausted.
§9.8 Perjury.
In either applying for or participating
in CFAP, or both, the producer is
subject to laws against perjury and any
penalties and prosecution resulting
therefrom, with such laws including but
not limited to 18 U.S.C. 1621. If the
producer willfully makes and represents
as true any verbal or written declaration,
certification, statement, or verification
that the producer knows or believes not
to be true, in the course of either
applying for or participating in CFAP, or
both, then the producer is guilty of
perjury and, except as otherwise
provided by law, may be fined,
imprisoned for not more than 5 years, or
both, regardless of whether the producer
makes such verbal or written
declaration, certification, statement, or
verification within or without the
United States.
Stephen L. Censky,
Vice Chairman, Commodity Credit
Corporation, and Deputy Secretary, U.S.
Department of Agriculture.
[FR Doc. 2020–11025 Filed 5–20–20; 8:45 am]
BILLING CODE 3410–05–P
DEPARTMENT OF AGRICULTURE
Rural Housing Service
7 CFR Part 1951
[Docket No. RHS–20–CF–0011]
Notification of Direct Loan Payment
Deferrals for the Community Facilities
Direct Loan Program
Correction
In rule document 2020–08429
beginning on page 22009 in the issue of
Tuesday, April 21, 2020, make the
following correction:
On page 22009, in the DATES section,
‘‘May 12, 2020’’ should read ‘‘April 21,
2020’’.
[FR Doc. C1–2020–08429 Filed 5–20–20; 8:45 am]
BILLING CODE 1301–00–D
SMALL BUSINESS ADMINISTRATION
13 CFR Parts 120 and 121
[Docket Number SBA–2020–0030]
RIN 3245–AH44
Business Loan Program Temporary
Changes; Paycheck Protection
Program—Treatment of Entities With
Foreign Affiliates
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,
April 28, 2020, April 30, 2020, May 5,
2020, May 8, 2020, May 13, 2020, and
May 14, 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
providing guidance on additional
eligibility requirements related to
entities with foreign affiliates, and
requests public comment.
DATES:
Effective date: This rule is effective
May 21, 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 22, 2020.
ADDRESSES: You may submit comments,
identified by number SBA–2020–0030
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 (PPP). On April 24,
2020, the President signed the Paycheck
Protection Program and Health Care
Enhancement Act (Pub. L. 116–139),
VerDate Sep<11>2014 16:00 May 20, 2020 Jkt 250001 PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 E:\FR\FM\21MYR1.SGM 21MYR130836 Federal Register/Vol. 85, No. 99/Thursday, May 21, 2020/Rules and Regulations
1 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, waives SBA’s affiliation rules for (1) any
business concern with not more than 500
employees that, as of the date on which the loan
which provided additional funding and
authority for the PPP.
Under the CARES Act, an entity is
eligible for a PPP loan if it is (1) a small
business concern, or (2) a business
concern, nonprofit organization
described in section 501(c)(3) of the
Internal Revenue Code, veterans
organization described in section
501(c)(19) of the Internal Revenue Code,
or Tribal business concern described in
section 31(b)(2)(C) of the Small Business
Act that employs not more than the
greater of 500 employees, or, if
applicable, SBA’s employee-based size
standard for the industry in which the
entity operates. Under existing SBA
regulations, an entity is generally
considered together with its affiliates for
purposes of determining the entity’s
eligibility for SBA loans. See 13 CFR
121.301. SBA issued an interim final
rule on affiliation (posted April 4, 2020)
stating that PPP applicants are subject to
the affiliation rules set forth in 13 CFR
121.301. See 85 FR 20817 (April 15,
2020). Those rules deem entities to be
affiliates based on factors including
stock ownership, overlapping
management, and identity of interest. Of
relevance here, SBA’s affiliation rules
provide that in determining an entity’s
number of employees, employees of the
entity ‘‘and all of its domestic and
foreign affiliates’’ are included. As a
result, in most cases, a borrower is
considered together with its U.S. and
foreign affiliates for purposes of
determining eligibility for the PPP.
Based on that methodology, the
borrower application form (SBA Form
2483), which all applicants must
complete and submit, includes a
certification that the applicant ‘‘employs
no more than the greater of 500 or
employees or, if applicable, the size
standard in number of employees
established by the SBA in 13 CFR
121.201 for the Applicant’s industry.’’
To provide further clarification of this
methodology, SBA issued guidance on
May 5, 2020 (FAQ 44) stating that an
applicant must count all of its
employees and the employees of its U.S.
and foreign affiliates, absent a waiver of
or an exception to the affiliation rules.
Some market participants have
indicated that there may be uncertainty
regarding whether PPP applicants must
include employees of foreign affiliates
in their employee counts, because SBA
has previously issued guidance stating
that an entity is eligible for a PPP loan
if it has 500 or fewer employees whose
principal place of residence is in the
United States. See 85 FR 20811, 20812
(April 15, 2020). As described above,
the generally applicable 500-employee
size standard is subject to the
application of SBA’s affiliation rules, as
well as numerous other eligibility
requirements. See, e.g., 13 CFR 120.110
(listing 18 types of ineligible
businesses); SBA Form 2483 (including
mandatory applicant representations
regarding defaults on previous
government loans or guarantees, Federal
suspension or debarment, and criminal
backgrounds). The reference in SBA
guidance to employees whose principal
place of residence is in the United
States is relevant to a PPP applicant’s
calculation of payroll for purposes of
determining the PPP loan amount and to
the calculation of loan forgiveness. The
fact that an applicant might be eligible
for a PPP loan if it has 500 or fewer U.S.
employees does not mean that the
applicant is not also subject to the other
requirements applicable to the PPP.
Instead, an applicant is eligible for a
PPP loan only if it meets all applicable
eligibility criteria. If an applicant,
together with its domestic and foreign
affiliates, does not meet the 500-
employee or other applicable PPP size
standard, it is not eligible for a PPP
loan.
II. Comments and Immediate Effective
Date
The intent of the 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 an
important, discrete issue. 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 Act authorizes SBA
to issue regulations to implement Title
I of the 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
the interim final rule, including section
III below. These comments must be
submitted on or before June 22, 2020.
SBA will consider these comments and
the need for making any revisions as a
result of these comments.
III. Paycheck Protection Program
Additional Eligibility Criteria
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 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 interim final rules published by SBA
and the Department of the Treasury in
the Federal Register (85 FR 20811, 85
FR 20817, 85 FR 21747, 85 FR 23450,
85 FR 23917, 85 FR 26321, 85 FR 26324,
and 85 FR 27287) and posted on May 8,
2020, May 13, 2020, and May 14, 2020
(85 FR 29845, 85 FR 29842, and 85 FR
29847) (collectively, the PPP Interim
Final Rules).
1. Treatment of Foreign Affiliates
Are employees of foreign affiliates
included for purposes of determining
whether a PPP borrower has more than
500 employees?
Yes. The CARES Act specifies that an
entity is eligible for a PPP loan only if
it is (1) a small business concern, or (2)
a business concern, nonprofit
organization described in section
501(c)(3) of the Internal Revenue Code,
veterans organization described in
section 501(c)(19) of the Internal
Revenue Code, or Tribal business
concern described in section 31(b)(2)(C)
of the Small Business Act that employs
not more than the greater of 500
employees, or, if applicable, SBA’s
employee-based size standard for the
industry in which the entity operates.
SBA’s affiliation regulations provide
that to determine a concern’s size,
employees of the concern ‘‘and all of its
domestic and foreign affiliates’’ are
included. 13 CFR 121.301(f). Therefore,
to calculate the number of employees of
an entity for purposes of determining
eligibility for the PPP, an entity must
include all employees of its domestic
and foreign affiliates, except in those
limited circumstances where the
affiliation rules expressly do not apply
to the entity.1 Any entity that, together
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is disbursed, is assigned a North American Industry
Classification System code beginning with 72; (2)
any business concern operating as a franchise that
is assigned a franchise identifier code by the
Administration; and (3) any business concern that
receives financial assistance from a company
licensed under section 301 of the Small Business
Investment Act of 1958 (15 U.S.C. 681). SBA also
applies affiliation exceptions to certain categories of
entities. 13 CFR 121.103(b).
2 For purposes of this safe harbor, a borrower
must include its affiliates to the extent required
under the interim final rule on affiliates, 85 FR
20817 (April 15, 2020). SBA’s affiliation exceptions
in 13 CFR 121.103(b) apply to the PPP.
with its domestic and foreign affiliates,
does not meet the 500-employee or
other applicable PPP size standard is
therefore ineligible for a PPP loan.
However, as an exercise of
enforcement discretion due to
reasonable borrower confusion based on
SBA guidance (which was later resolved
through a clarifying FAQ on May 5,
2020), SBA will not find any borrower
that applied for a PPP loan prior to May
5, 2020 to be ineligible based on the
borrower’s exclusion of non-U.S
employees from the borrower’s
calculation of its employee headcount if
the borrower (together with its
affiliates)2 had no more than 500
employees whose principal place of
residence is in the United States. Such
borrowers shall not be deemed to have
made an inaccurate certification of
eligibility solely on that basis. Under no
circumstances may PPP funds be used
to support non-U.S. workers or
operations.
2. Additional Information
SBA may provide further guidance, if
needed, through SBA notices that will
be posted on SBA’s website at
www.sba.gov. Questions on the
Paycheck Protection Program may be
directed to the Lender Relations
Specialist in the local SBA Field Office.
The local SBA Field Office may be
found at https://www.sba.gov/tools/
local-assistance/districtoffices.
Compliance With Executive Orders
12866, 12988, 13132, 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. 2020–10967 Filed 5–19–20; 11:15 am]
BILLING CODE P
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2019–0204; Project
Identifier 2018–CE–042–AD; Amendment
39–21129; AD 2020–11–04]
RIN 2120–AA64
Airworthiness Directives; Learjet Inc.
Airplanes
AGENCY: Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule.
SUMMARY: The FAA is adopting a new
airworthiness directive (AD) for certain
Learjet Inc. Model 60 airplanes. This AD
was prompted by a report of a reverse
thrust command accelerating the
airplane instead of decelerating the
airplane. The acceleration with reverse
thrust commanded occurred when the
thrust reverser doors were in the stowed
position instead of the deployed
position. This AD requires installing a
thrust reverser (T/R) Voice Command
Warning System (VCWS) to alert the
crew of a T/R malfunction. The FAA is
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