Quiero saber acerca de...

Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations waivers to Second Draw PPP Loans, adds a waiver for certain eligible news organizations, and makes adjustments to reflect the reduced size requirement for Second Draw PPP Loans. Specifically, business concerns with a NAICS code beginning with 72 qualify for the affiliation waiver for Second Draw PPP
Loans if they employ 300 or fewer employees. Eligible news organizations with a NAICS code beginning with 511110 or 5151 or majority-owned or controlled by a business concern with those NAICS codes may qualify for the affiliation waiver for Second Draw PPP
Loans only if they employ 300 or fewer employees per physical location.18
Subsection d2 implements these revised affiliation waivers. SBA also adopted a religious exemption to the affiliation rules by regulation,19 which applies to Second Draw PPP loans.
C. Excluded Entities An entity that is ineligible to receive a First Draw PPP Loan under the CARES
Act or Consolidated First Draw PPP IFR
is also ineligible for a Second Draw PPP
Loan.20 Subsection e1 of the IFR
implements this restriction. Subsection e1 ensures that a borrower that received a First Draw PPP Loan despite being ineligible to receive the loan is not eligible to receive a Second Draw PPP
Loan.
The Economic Aid Act also prohibits several additional categories of borrowers from receiving a Second Draw PPP Loan under section 7a37 of the Small Business Act. These categories of prohibited borrowers are listed in subsection e of the IFR:
A business concern or entity primarily engaged in political activities or lobbying activities, including any entity that is organized for research or for engaging in advocacy in areas such as public policy or political strategy or that describes itself as a think tank in any public documents; 21
certain entities organized under the laws of the Peoples Republic of China or the Special Administrative Region of Hong Kong, or with other specified ties to the Peoples Republic of China or the 18 Paragraph
7a37E of the Small Business Act.
section B3c of the Consolidated First Draw PPP IFR.
20 Paragraph 7a37O of the Small Business Act provides that a Second Draw PPP Loan may be made only to a borrower that received a First Draw PPP Loan under paragraph 7a36. In addition, section 7a37B provides that the Administrator may guarantee covered loans to eligible entities under the same terms, conditions, and processes as First Draw PPP Loans.
21 Paragraph 7a37AivIIIbb of the Small Business Act.

khammond on DSKJM1Z7X2PROD with RULES6

19 See
VerDate Sep<11>2014

00:10 Jan 14, 2021

Jkt 253001

Special Administrative Region of Hong Kong; 22
any person required to submit a registration statement under section 2 of the Foreign Agents Registration Act of 1938 22 U.S.C. 612; 23
a person or entity that receives a grant for shuttered venue operators under section 324 of the Economic Aid Act; 24
entities in which the President, the Vice President, the head of an Executive department, or a Member of Congress, or the spouse of such person owns, controls, or holds at least 20 percent of any class of equity; 25 or a publicly traded company, defined as an issuer, the securities of which are listed on an exchange registered as a national securities exchange under section 6 of the Securities Exchange Act of 1934 15 U.S.C. 78f.26
In addition, subsection e9 of this IFR
provides that an entity that has previously received a Second Draw PPP
Loan may not receive another Second Draw PPP Loan, as required by the Economic Aid Act.27 Subsection e9
also prohibits an entity that has permanently closed from receiving a Second Draw PPP Loan because paragraph 7a37Aiv of the Small Business Act is best understood to describe existing businesses. The Administrator, in consultation with the Secretary, has determined this provision is also necessary to maintain program integrity, prevent abuse, and preserve the availability of Second Draw PPP
Loan funds for businesses still in operation. Preserving funds for such businesses is necessary because only businesses that are still in operation will retain employees, which is a primary purpose of the PPP. A borrower that has temporarily closed or temporarily suspended its business remains eligible for a Second Draw PPP Loan.
D. Payroll Cost Calculation In general, section 307 of the Economic Aid Act provides that the maximum loan amount for a Second Draw PPP Loan is equal to the lesser of two and half months of the borrowers average monthly payroll costs or $2
million. Relative to First Draw PPP
loans, the Economic Aid Act adjusted the methodology for calculating a borrowers payroll costs. Unlike First 22 Paragraph 7a37AivIIIcc of the Small Business Act.
23 Paragraph 7a37AivIIIdd of the Small Business Act.
24 Paragraph 7a37AivIIIee of the Small Business Act.
25 Section 322 of the Economic Aid Act.
26 Section 342 of the Economic Aid Act.
27 Paragraph 7a37F of the Small Business Act.

PO 00000

Frm 00025

Fmt 4701

Sfmt 4700

3715

Draw PPP Loans, the Economic Aid Act provides that the relevant time period for calculating a borrowers payroll costs for a Second Draw PPP Loan is either the twelve-month period prior to when the loan is made or calendar year 2019.
The Act also provided tailored methodologies for certain categories of borrowers. These calculations are reflected in subsection f of this IFR.
Subsection f of the IFR uses calendar year 2020 to refer to the twelve-month period prior to when the loan is made.
Calculating payroll costs based on calendar year 2020 rather than the twelve months preceding the date the loan is made will simplify the calculations and documentation requirements for borrowers because payroll records are more commonly created and retained on a calendar-year basis. Allowing borrowers to calculate payroll costs based on calendar year 2020 is also not expected to result in a significant difference in payroll costs compared to the twelve months preceding the date the loan is made because all Second Draw PPP Loans will be made in the first quarter of 2021.
However, the rule notes that Second Draw PPP Loan borrowers who are not self-employed including sole proprietorships and independent contractors are also permitted to use the precise 1-year period before the date on which the loan is made to calculate payroll costs if they choose not to use 2019 or 2020 to calculate payroll costs.
Consistent with the Economic Aid Act, subsections f3 and f4 of the IFR include tailored calculation methodologies for seasonal businesses, new entities that did not exist for the full twelve-month period preceding the Second Draw PPP Loan, and borrowers assigned a NAICS code beginning with 72 at the time of disbursement. For borrowers assigned a NAICS code beginning with 72 at the time of disbursement, the Economic Aid Act provides that the maximum loan amount is equal to three-and-a-half 3.5
months of payroll costs rather than twoand-a-half 2.5 months.28 These subsections also provide that, for a borrower with a NAICS code beginning with 72 that would fall into more than one category listed in subsection f for example, a business with a NAICS code beginning with 72 that is also a seasonal business or is also a new entity without 12 months of payroll costs, the borrower may calculate its average monthly payroll costs based on the methodology that applies to the entity but may use the 3.5 multiplier 28 Paragraph
Act.

E:FRFM14JAR6.SGM

14JAR6

7a37Civ of the Small Business