[Federal Register Volume 85, Number 84 (Thursday, April 30, 2020)]
[Rules and Regulations]
[Pages 23917-23919]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09239]
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DEPARTMENT OF THE TREASURY
13 CFR Part 120
[Docket Number TREAS-DO-2020-0009]
RIN 1505-AC67
Small Business Administration Business Loan Program Temporary
Changes; Paycheck Protection Program--Additional Criterion for Seasonal
Employers
AGENCY: U.S. Department of the Treasury.
ACTION: Interim final rule.
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SUMMARY: The Coronavirus Aid, Relief, and Economic Security Act (the
CARES Act or the Act) authorizes the U.S. Department of the Treasury
(Treasury) to issue regulations for the Paycheck Protection Program
(PPP) administered by the Small Business Administration (SBA),
including regulations that allow additional lenders to originate loans
and establish terms and conditions. In this interim final rule,
Treasury authorizes all lenders eligible to originate loans under the
PPP to use an alternative criterion for calculating the maximum loan
amount for PPP loans issued to seasonal employers.
DATES:
Effective Date: This rule is effective April 30, 2020.
Comment Date: Comments must be received on or before June 1, 2020.
ADDRESSES: You may submit comments, identified by number TREAS-DO-2020-
0009 through the Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.
Treasury 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 highlight the information that
you consider to be CBI and explain why you believe Treasury should hold
this information as confidential. Treasury will review the information
and make the final determination whether it will publish the
information.
FOR FURTHER INFORMATION CONTACT: Jonathan Greenstein, Office of
Domestic Finance, 202-622-1408; [email protected].
SUPPLEMENTARY INFORMATION:
I. Background Information
On March 27, 2020, the President signed the CARES Act, Public Law
116-136, to provide emergency assistance and health care response for
individuals, families, and businesses affected by the coronavirus
pandemic. Section 1102 of the Act establishes the PPP as a temporary
addition to the SBA's 7(a) loan program. The PPP is designed to assist
small businesses nationwide adversely impacted by the coronavirus
pandemic. SBA has published information about the PPP in interim final
rules available at 85 FR 20811 (April 15, 2020); 85 FR 20817 (April 15,
2020); 85 FR 21747 (April 20, 2020); and 85 FR 23450 (April 28, 2020).
Section 1109(b) of the Act authorizes Treasury to establish
criteria for insured depository institutions, insured credit unions,
institutions of the Farm Credit System chartered under the Farm Credit
Act of 1971 (12 U.S.C. 2001 et seq.), and other lenders to participate
in the PPP. The SBA is required to administer the program that Treasury
establishes under section 1109 of the Act, with guidance from Treasury.
The Act authorizes Treasury to issue regulations and guidance to
implement section 1109, including regulations that establish ``terms
and conditions'' for PPP loans. See Section 1109(d)(2). The terms and
conditions established by Treasury under section 1109 are not required
to be identical to those set forth in section 1102. However, the Act
requires that terms and conditions that
[[Page 23918]]
Treasury establishes under section 1109 pertaining to certain
criteria--the maximum interest rate, maximum loan amount, and other
specified terms--must be ``consistent,'' to ``the maximum extent
practicable,'' with those set forth in section 1102. See Section
1109(d)(2).
In this rulemaking, Treasury is addressing the needs of certain
potential borrowers that are seasonal employers by allowing seasonal
employers to use an alternative base period for purposes of calculating
the loan amount for which they are eligible under the PPP. Section 1102
of the Act permits seasonal employers to calculate their maximum loan
amount by using their monthly average payments for payroll during ``the
12-week period beginning February 15, 2019, or at the election of the
eligible [borrower], March 1, 2019, and ending June 30, 2019.'' Some
seasonal employers, however, have seasons that occur later in the year.
Without the ability to use an alternative base period, many summer
seasonal businesses would be unable to obtain funding on terms
commensurate with those available to winter and spring seasonal
businesses. This interim final rule addresses that disparity and
ensures consistency in program administration by providing a seasonal
employer the option of using any consecutive 12-week period between May
1, 2019 and September 15, 2019 for determining its maximum loan amount.
As required by section 1109(d)(2)(B), Treasury has determined that
this alternative period for seasonal employers is, to the ``maximum
extent practicable,'' consistent with the terms applicable to the PPP
in general. In section 1102, Congress gave seasonal employers the
option to calculate their maximum loan amount using alternative base
periods. By permitting seasonal employers to calculate the maximum loan
amount using any consecutive 12 weeks within a specified 4.5-month
period, this interim final rule ensures that seasonal employers
affected by the pandemic are treated even-handedly.
Other than this adjustment, the terms and requirements applicable
to PPP loans under this rule are identical to the terms and
requirements that section 1102 and SBA regulations impose on other PPP
loans. As a result, a seasonal borrower that elects to use the
alternative timing criterion under this interim final rule may follow
the same processes and procedures applicable to other PPP loans.
II. Comments and Immediate Effective Date
Congress intended that the PPP provide relief to America's small
businesses expeditiously. Given this intent and the dramatic decrease
in economic activity nationwide, there is good cause for Treasury to
dispense with the 30-day delayed effective date provided in the
Administrative Procedure Act. This interim final rule provides an
alternative criterion for calculating the maximum loan amount for PPP
loans issued to seasonal employers. Seasonal employers need timely
additional guidance concerning the maximum loan available under the
interim final rule because the last day to apply for and receive a loan
is June 30, 2020. The immediate effective date of this interim final
rule will benefit seasonal employers by providing a full understanding
of loan terms and conditions. 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
1, 2020. Treasury will consider these comments and the need for any
revisions as a result of these comments.
III. Paycheck Protection Program--Alternative Criterion for Seasonal
Employers
Overview
The SBA administers the PPP to provide immediate assistance to
small businesses affected by the coronavirus pandemic. Under section
1109 of the CARES Act, Treasury is authorized to issue regulations that
allow lenders to originate PPP loans under terms and conditions
established by the Secretary. Through this interim final rule, Treasury
is exercising its section 1109 authority to address the needs of
certain potential borrowers that are seasonal employers. The SBA will
administer this rule as part of the PPP, with guidance from Treasury,
until the date on which the national emergency declared by the
President under the National Emergencies Act (50 U.S.C. 1601 et seq.)
with respect to the Coronavirus Disease 2019 (COVID-19) expires. Except
as modified in this interim final rule, PPP regulations, guidance,
forms, and processes apply fully to PPP loans for seasonal employers
utilizing the base period calculation option set forth in this rule.
1. General
This interim final rule supplements the SBA's rules for the PPP by
establishing an alternative criterion for calculating the maximum loan
amount for seasonal employers.
2. What does this interim final rule apply to?
This rule applies to PPP loans issued to seasonal employers.
3. How does this rule affect the calculation of the maximum loan amount
for seasonal employers?
Under section 1102 of the CARES Act, a seasonal employer may
determine its maximum loan amount for purposes of the PPP by reference
to the employer' average total monthly payments for payroll ``the 12-
week period beginning February 15, 2019, or at the election of the
eligible [borrower], March 1, 2019, and ending June 30, 2019.'' Under
this interim final rule issued pursuant to section 1109 of the Act, a
seasonal employer may alternatively elect to determine its maximum loan
amount as the average total monthly payments for payroll during any
consecutive 12-week period between May 1, 2019 and September 15, 2019.
4. If a seasonal business was dormant or not fully operating as of
February 15, 2020, is it still eligible?
Yes, in evaluating eligibility, a seasonal business will be
considered to have been in operation as of February 15, 2020, if the
business was in operation for any 8-week period between May 1, 2019 and
September 15, 2019. This approach aligns with guidance previously
provided by the Small Business Administration concerning other seasonal
businesses under section 1102. See Treasury, Paycheck Protection
Program Loans: Frequently Asked Questions (FAQs), FAQ 9 (posted April
6, 2020) (https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses).
6. Are any other SBA rules or guidance for the PPP affected by
Treasury's interim final rule?
No. This interim final rule only provides certain employers with an
alternative means of calculating the maximum loan amount. All other
terms and conditions in the PPP remain unchanged. All PPP applicants,
borrowers, and lenders should continue to use existing SBA forms and
follow all requirements set forth in the CARES Act and SBA regulations,
except for the alternative approach described above for calculating the
maximum loan amount.
7. What lenders are authorized to offer terms in Treasury's interim
final rule to seasonal employers?
All lenders authorized to originate PPP loans may offer the terms
under this interim final rule to eligible applicants and borrowers. PPP
loans
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under this interim final rule are eligible for an SBA guarantee to the
same extent as PPP loans based on existing PPP rules.
Compliance With Executive Orders 12866, 12988, 13132, 13563, and 13771,
the Paperwork Reduction Act (44 U.S.C. Ch. 35), and the Administrative
Procedure Act (5 U.S.C. 553)
Executive Orders 12866, 13563, and 13771
The Office of Management and Budget has determined that 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. Treasury, 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
Treasury 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
Treasury 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,
Treasury has determined that this rule has no federalism implications
warranting preparation of a federalism assessment.
Paperwork Reduction Act, 44 U.S.C. Chapter 35
Treasury has determined that this rule will not impose new or
modify existing recordkeeping or reporting requirements under the
Paperwork Reduction Act.
Inapplicability of Notice and Delayed Effective Date
The Administrative Procedure Act (APA) requirements in 5 U.S.C. 553
govern agency rulemaking procedures. Section 553(b) of the APA
generally requires notice and public comment before issuance of a final
rule. In addition, section 553(d) of the APA requires that a final rule
have a 30-day delayed effective date. The APA, however, provides
exceptions from the prior notice and public comment requirement and the
delayed effective date requirements, when an agency for good cause
finds that such procedures are impracticable, unnecessary, or contrary
to the public interest. 5 U.S.C. 553(b)(B), (d)(3). Treasury finds that
prior notice and comment are impracticable and contrary to the public
interest and that good cause exists to issue this interim final rule
immediately.
The ongoing unprecedented situation related to COVID-19 is having a
nationwide impact, as demonstrated by the declaration of a national
emergency by the President. See Proclamation 9994 of March 13, 2020, 85
FR 15337 (Mar. 18, 2020). The interim final rule supports seasonal
employers affected by COVID-19 in obtaining PPP loans to maintain their
businesses and keep people employed. To protect our public interests
during the ongoing national emergency, Treasury concludes, pursuant to
5 U.S.C. 553(b)(B), that there is good cause to dispense with prior
public notice and the opportunity to comment on this rule before
issuing this interim final rule. For the same reasons, Treasury has
determined, consistent with section 553(d)(3) of the APA, that there is
good cause to make this temporary final rule effective immediately.
Michael Faulkender,
Assistant Secretary for Economic Policy.
[FR Doc. 2020-09239 Filed 4-28-20; 4:15 pm]
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