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Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Rules and Regulations
Economic Security Act the CARES Act Pub. L. 116136 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 COVID19 emergency.
Section 1102 of the CARES Act temporarily permitted SBA to guarantee 100 percent of 7a loans under a new program titled the Paycheck Protection Program, pursuant to section 7a36
of the Small Business Act 15 U.S.C.
636a36. Section 1106 of the CARES
Act provided 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. 116139, which provided additional funding and authority for the Paycheck Protection Program.
On June 5, 2020, the President signed the Paycheck Protection Program Flexibility Act of 2020 Flexibility Act Pub. L. 116142, which changed provisions of the PPP relating to the maturity of PPP loans, the deferral of PPP loan payments, and the forgiveness of PPP loans. On July 4, 2020, Public Law 116147 extended the authority for SBA to guarantee PPP loans to August 8, 2020.
On December 27, 2020, the President signed the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act Economic Aid Act Pub. L.
116260, which reauthorizes lending under the PPP through March 31, 2021, and among other things, modifies the PPP, including provisions relating to forgiveness of PPP loans. The Economic Aid Act added a new temporary section 7a37 to the Small Business Act, which authorizes SBA to guarantee additional PPP loans to eligible borrowers under generally the same terms and conditions available under section 7a36 of the Small Business Act through March 31, 2021. The Economic Aid Act also redesignates section 1106 of the CARES Act as section 7A and transfers that section to the Small Business Act, to appear after section 7 of the Small Business Act.1
As described below, this interim final rule 1 provides borrowers and lenders 1 Because section 1106 of the CARES Act is now codified as section 7A of the Small Business Act, any reference to section 1106 of the CARES Act in the rules that are being restated herein will refer to section 7A.

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with guidance on requirements governing forgiveness of PPP loans, and 2 informs borrowers and lenders of SBAs process for reviewing loan applications and loan forgiveness applications. SBA is incorporating and restating the prior interim final rules relating to loan forgiveness and loan reviews and making revisions to conform these prior interim final rules to the amendments made by the Economic Aid Act, including for PPP
loans made under section 7a37 of the Small Business Act. The prior interim final rules relating to loan forgiveness and loan reviews that are incorporated in this interim final rule are: The first interim final rule on loan forgiveness 85 FR 33004 June 1, 2020; the first interim final rule on SBA loan review procedures and related borrower and lender responsibilities 85 FR 33010
June 1, 2020; the interim final rule incorporating Flexibility Act Amendments 85 FR 38304 June 26, 2020; the interim final rule on Treatment of Owners and Forgiveness of Certain Nonpayroll Costs 85 FR 52881
August 27, 2020; and the interim final rule on Additional Revisions to Loan Forgiveness and Loan Review Procedures Interim Final Rules 85 FR
66214 October 19, 2020. The rule also incorporates the forgiveness portions of the interim final rules regarding individuals with self-employment income 85 FR 21747 April 20, 2020
and 85 FR 36997 June 19, 2020 and fishing boat owners 85 FR 39066 June 30, 2020.
This rule should be interpreted consistently with the sets of Frequently Asked Questions FAQs regarding the PPP that are posted on SBAs and the Department of the Treasurys Treasury websites, the consolidated interim final rule implementing updates to the Paycheck Protection Program 86 FR
3692 January 14, 2021 and the interim final rule on second draw PPP loans 86
FR 3712 January 14, 2021; however, the Economic Aid Act overrides any conflicting guidance in the FAQs, and SBA will be revising the FAQs to fully conform to the Economic Aid Act as quickly as feasible.
Most of this document restates existing regulatory provisions to provide PPP lenders and new and existing PPP
borrowers a single regulation to consult on loan forgiveness and loan review requirements and processes. To enhance the readability of this document, SBA
has not reproduced the policy and legal justifications for existing regulatory provisions restated here, except to the extent that those justifications may be helpful to the borrower or lender.
However, those justifications from the
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original interim final rules are adopted here.
Six provisions of this interim final rule are an exercise of rulemaking authority by Treasury either jointly with SBA or by Treasury alone: 1 The additional reference period option provided for seasonal employers, 2 the de minimis exemption provided with respect to certain offers of rehire, 3 the de minimis exemption from the fulltime equivalent employee reduction penalty when an employee is, for example, fired for cause, 4 the de minimis exemption from the full-time equivalent employee reduction penalty when the borrower eliminates reductions by December 31, 2020 or, for a PPP loan made after December 27, 2020, the last day of the loans covered period, 5 the de minimis exemption from the full-time equivalent FTE
employee reduction penalty for certain PPP loans of $50,000 or less, and 6 the de minimis exemption from the employee salary and wages reduction penalty for certain PPP loans of $50,000
or less. Otherwise, all provisions in this rule are an exercise of rulemaking authority by SBA alone.
II. Comments and Immediate Effective Date This interim final rule is being issued without advance notice and public comment because section 303 of the Economic Aid Act authorizes SBA to issue regulations to implement the Economic Aid Act without regard to notice requirements. In addition, this rule is being issued to allow for immediate implementation of this program. The intent of both the CARES
Act and the Economic Aid Act is that SBA provides relief to Americas small businesses expeditiously. The Economic Aid Act provided that several of the changes relating to loan forgiveness are effective as if included in the CARES
Act and apply to any loan made pursuant to section 7a36 of the Small Business Act before, on, or after December 27, 2020, including forgiveness of such a loan. Accordingly, loans that were made in 2020 but for which SBA has not yet remitted forgiveness to the lender will be forgiven based on changes made in the Economic Aid Act, as implemented in this interim final rule. Given the urgent need to provide borrowers that are eligible for loan forgiveness with timely relief, the Administrator in consultation with the Secretary has determined that it is impractical and not in the public interest to provide a 30-day delayed effective date. An immediate effective date will allow SBA to continue remitting forgiveness payments to
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