Business Loan Program Temporary Changes; Paycheck Protection Program-Additional Revisions to First Interim Final Rule
| Citation | 85 FR 36717 |
| Record Number | 2020-13130 |
| Published date | 18 June 2020 |
| Section | Rules and Regulations |
| Court | Small Business Administration |
Federal Register, Volume 85 Issue 118 (Thursday, June 18, 2020)
[Federal Register Volume 85, Number 118 (Thursday, June 18, 2020)]
[Rules and Regulations]
[Pages 36717-36719]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13130]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 120
[Docket No. SBA-2020-0036]
RIN 3245-AH50
Business Loan Program Temporary Changes; Paycheck Protection
Program--Additional Revisions to First Interim Final Rule
AGENCY: U.S. Small Business Administration.
ACTION: Interim final rule.
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SUMMARY: On April 2, 2020, the U.S. Small Business Administration (SBA)
posted on its website an interim final rule relating to the
implementation of sections 1102 and 1106 of the Coronavirus Aid,
Relief, and Economic Security Act (CARES Act or the Act) (published in
the Federal Register on April 15, 2020). Section 1102 of the Act
temporarily adds a new product, titled the ``Paycheck Protection
Program,'' to the U.S. Small Business Administration's (SBA's) 7(a)
Loan Program. Subsequently, SBA issued a number of interim final rules
implementing the Paycheck Protection Program. This interim final rule
revises SBA's interim final rule published in the Federal Register on
April 15, 2020 by changing the eligibility requirement related to
felony convictions of applicants or owners of the applicant.
DATES:
Effective date: The provisions in this interim final rule are
effective June 16, 2020.
Comment date: Comments must be received on or before July 20, 2020.
ADDRESSES: You may submit comments, identified by number SBA-2020-0036,
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 [email protected].
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, 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, have been 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, have been 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 or the 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 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 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 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 PPP. On June 5, 2020,
the President signed the Paycheck Protection Program Flexibility Act of
2020 (Flexibility Act) (Pub. L. 116-142).
II. Comments and Immediate Effective Date
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 Act without regard to
notice requirements. In addition, SBA has determined that there is good
cause for dispensing with advance public notice and comment on the
grounds that that it would be contrary to the public interest.
Specifically, advance public notice and comment would defeat the
purpose of this interim final rule given that SBA's authority to
guarantee PPP loans expires on June 30, 2020. These same reasons
provide good cause for SBA to dispense with the 30-day delayed
effective date provided in the Administrative Procedure Act. Although
this interim final rule is effective on or before date of filing,
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 July 20. 2020. The SBA will
consider these comments, comments received on the interim final rule
posted on SBA's website April 2, 2020 (the First Interim Final Rule)
and published in the Federal Register on April 15, 2020, and the need
for making any revisions as a result of these comments.
III. Paycheck Protection Program--Additional Revisions to First Interim
Final Rule (85 FR 20811)
Overview
The CARES Act was enacted to provide immediate assistance to
individuals, families, and businesses affected by the COVID-19
emergency. Among the provisions contained in the CARES Act are
provisions authorizing SBA to temporarily guarantee loans under a new
7(a) loan program titled the ``Paycheck Protection Program.'' Loans
guaranteed under the Paycheck Protection Program (PPP) will be 100
percent guaranteed by SBA, and the full principal amount of the loans
may qualify for loan forgiveness. The purpose of this interim final
rule is to make changes to the First Interim Final Rule, posted on
SBA's website on April 2, 2020, and published in the Federal Register
on April 15, 2020 (85 FR 20811). The First Interim Final Rule, as
amended, should be interpreted
[[Page 36718]]
consistent with the frequently asked questions (FAQs) regarding the PPP
that are posted on SBA's website \1\ and the other interim final rules
issued regarding the PPP.\2\
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\1\ See https://www.sba.gov/document/support--faq-lenders-
borrowers.
\2\ See https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.
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1. Changes to the First Interim Final Rule
Eligibility Requirements
The First Interim Final Rule provided, among other things, that a
PPP loan will not be approved if an owner of 20 percent or more of the
equity of the applicant has been convicted of a felony within the last
five years. After further consideration, the Administrator, in
consultation with the Secretary of the Treasury (the Secretary), has
determined that a shorter timeframe for felonies that do not involve
fraud, bribery, embezzlement, or a false statement in a loan
application or an application for federal financial assistance is more
consistent with Congressional intent to provide relief to small
businesses and also promotes the important policies underlying the
First Step Act of 2018 (Pub. L. 115-391). Therefore, Part III.2.b.iii.
of the First Interim Final Rule (85 FR 20811, 20812) is revised to read
as follows:
b. Could I be ineligible even if I meet the eligibility
requirements in (a) above?
You are ineligible for a PPP loan if, for example:
* * * * *
iii. An owner of 20 percent or more of the equity of the applicant
is incarcerated, on probation, on parole; presently subject to an
indictment, criminal information, arraignment, or other means by which
formal criminal charges are brought in any jurisdiction; or has been
convicted of a felony involving fraud, bribery, embezzlement, or a
false statement in a loan application or an application for federal
financial assistance within the last five years or any other felony
within the last year; or
* * * * *
2. Additional Information
SBA may provide further guidance, if needed, through SBA notices
which 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.
This rule is necessary to implement Sections 1102 and 1106 of the
CARES Act and the Flexibility Act in order to provide economic relief
to small businesses nationwide adversely impacted under the COVID-19
Emergency Declaration. We anticipate that this rule will result in
substantial benefits to small businesses, their employees, and the
communities they serve. However, we lack data to estimate the effects
of this rule.
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 effect but does have a limited
retroactive effect consistent with section 3(d) of the Flexibility Act.
Executive Order 13132
SBA has determined that this rule will not have substantial direct
effects on the States, on the relationship between the National
Government and the States, or on the distribution of power and
responsibilities among the various layers of government. Therefore, SBA
has determined that this rule has no federalism implications warranting
preparation of a federalism assessment.
Paperwork Reduction Act, 44 U.S.C. Chapter 35
SBA has determined that this rule will require modification to the
existing PPP information collection that is approved under OMB Control
Number 3245-0407 as an emergency request until October 31, 2020. As
discussed above, this rule amends the PPP eligibility requirements
regarding certain felony charges. As a result of these amendments,
conforming changes will be made to Question 6 of Form 2483, Borrower
Application Form, and Section H of Form 2484, Lender Application Form.
SBA will submit the revisions to these forms to the Office of
Management and Budget for approval.
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
[[Page 36719]]
procedure are impracticable, unnecessary, or contrary to the public
interest. Small Business Administration's 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.
Authority: 15 U.S.C. 636(a)(36); Coronavirus Aid, Relief, and
Economic Security Act, Pub. L. 116-136, Section 1114.
Jovita Carranza,
Administrator.
[FR Doc. 2020-13130 Filed 6-16-20; 2:00 pm]
BILLING CODE 8026-03-P
