[Federal Register Volume 85, Number 86 (Monday, May 4, 2020)]
[Rules and Regulations]
[Pages 26321-26324]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09398]
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SMALL BUSINESS ADMINISTRATION
13 CFR Part 120
[Docket Number SBA-2020-0022]
RIN 3245-AH38
Business Loan Program Temporary Changes; Paycheck Protection
Program--Requirements--Disbursements
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 an interim final rule (the First PPP Interim Final Rule)
announcing the implementation of the Coronavirus Aid, Relief, and
Economic Security Act (CARES Act or the Act). The Act
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temporarily adds a new program, titled the ``Paycheck Protection
Program,'' to the SBA's 7(a) Loan Program. The 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,
and April 24, 2020. This interim final rule supplements the previously
posted interim final rules with additional guidance. This interim final
rule supplements SBA's implementation of the Act 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-2020-0022,
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, 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 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 Paycheck Protection Program.
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 several 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 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 3, 2020. SBA will consider
these comments and the need for making any revisions as a result of
these comments.
III. Paycheck Protection Program Requirements for Disbursements
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 the First PPP Interim Final
Rule (85 FR 20811), a second interim final rule (85 FR 20817) (the
Second PPP Interim Final Rule), a third interim final rule (85 FR
21747) (the Third PPP Interim Final Rule), a fourth interim final rule
(85 FR 23450) (the Fourth PPP Interim Final Rule), and in an interim
final rule issued by the Department of the Treasury, which was posted
for public inspection at the Federal Register on April 28, 2020 (FR
Doc. 2020-09239) (collectively, the PPP Interim Final Rules).
1. Disbursements
a. Can a borrower take multiple draws from a PPP loan and thereby
delay the start of the eight-week covered period?
No. The lender must make a one-time, full disbursement of the PPP
loan within ten calendar days of loan approval; for the purposes of
this rule, a loan is considered approved when the loan is assigned a
loan number by SBA.\1\ For loans that received an SBA loan number prior
to the posting of this interim final rule but have not yet been fully
disbursed, the following transition rules apply:
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\1\ If the tenth calendar day is a Saturday, Sunday, or legal
holiday, the period continues to run until the end of the next
business day.
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The ten calendar-day period described above begins on
April 28, 2020.
The eight-week covered period began on the date of first
disbursement.
Notwithstanding this limitation, lenders are not responsible for
delays in disbursement attributable to a borrower's failure to timely
provide required loan documentation, including a signed promissory
note. Loans for which funds have not been disbursed because a borrower
has not submitted required loan documentation within 20 calendar days
of loan approval shall be cancelled by the lender, subject to the
transition rules above. When disbursing loans, lenders must send any
amount of loan proceeds designated for the refinance of an EIDL loan
directly to SBA and not to the borrower.
The Administrator, in consultation with the Secretary, determined
that requiring a single loan disbursement will best serve the interests
of both borrowers and lenders and promote the purposes of the CARES
Act. A single loan disbursement will eliminate the risk of delays in
processing loan disbursement installments, advance the goal of payroll
continuity for employees, and provide borrowers with faster access to
the full loan amount so that they can immediately cover payroll costs.
b. By when must a lender electronically submit an SBA Form 1502
indicating that PPP loan funds have been disbursed?
SBA will make available a specific SBA Form 1502 reporting process
through which PPP lenders will report on PPP loans and collect the
processing fee on fully disbursed loans to which they are entitled.
Lenders must electronically upload SBA Form 1502 information within 20
calendar days after a PPP loan is approved or, for loans approved
before availability of the updated SBA Form 1502 reporting process, by
May 18, 2020. The lender must report on SBA Form 1502 whether it has
fully disbursed PPP loan proceeds. A lender will not receive a
processing fee: (1) Prior to full disbursement of the PPP loan; (2) if
the PPP loan is cancelled before disbursement; or (3) if the PPP loan
is cancelled or voluntarily terminated and repaid after disbursement
(including if a borrower repays the PPP loan proceeds to conform to the
borrower's certification regarding the necessity of the PPP loan
request). In addition to providing ACH credit information to direct
payment of the requested processing fee, lenders will be required to
confirm that all PPP loans for which the lender is requesting a
processing fee have been fully disbursed on the disbursement dates and
in the loan amounts reported. A lender must report through either Etran
Servicing or the SBA Form 1502 report any PPP loans that have been
cancelled before disbursement or that have been cancelled or
voluntarily terminated and repaid after disbursement.
The Administrator, in consultation with the Secretary, determined
that requiring lenders to report on disbursement within 20 calendar
days of loan approval ensures that disbursement of funds to eligible
borrowers will occur more rapidly. This requirement also will enhance
SBA's ability to track program data.
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
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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]
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