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Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Rules and Regulations lenders without disruption and in accordance with the amendments made by the Economic Aid Act. This good cause justification also supports waiver of the 60-day delayed effective date for major rules under the Congressional Review Act at 5 U.S.C. 8082. 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.
These comments must be submitted on or before March 8, 2021. SBA will consider these comments and the need for making any revisions as a result of these comments.

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III. Paycheck Protection Program Loan Forgiveness and Loan Review Procedures as Amended by Economic Aid Act Overview The CARES Act was enacted to provide immediate assistance to individuals, families, and organizations affected by the COVID19 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 may qualify for loan forgiveness.
Under the CARES Act, as amended by the Economic Aid Act, SBA is authorized to guarantee loans under the PPP, a new temporary 7a program, through March 31, 2021. PPP loans made under section 7a36 of the Small Business Act may be referred to as First Draw PPP Loans, and PPP loans made under section 7a37 of the Small Business Act may be referred to as Second Draw PPP Loans. Any reference to PPP loans or PPP loan herein refers to both First Draw PPP
Loans and Second Draw PPP Loans.
The intent of the CARES Act and the Economic Aid Act is that SBA provide relief to Americas small businesses expeditiously, which is expressed in the CARES Act by giving all lenders delegated authority and streamlining the requirements of the regular 7a loan program. This intent is also expressed in the Economic Aid Act through the statutory deadlines requiring that the Administrator issue certain guidance and regulations within 10 days of enactment.2
The Small Business Act authorizes the Administrator to conduct investigations to determine whether a recipient or participant in any assistance under a 7a program, 2 See, e.g., section 303 of the Economic Aid Act;
section 7a37M of the Small Business Act.

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including the PPP, is ineligible for a loan, or has violated section 7a, or any rule, regulation or order issued thereunder.3 Additionally, under section 7a, the Administrator is empowered to make loans in cooperation with lenders through agreements to participate on a deferred guaranteed basis.4 Further, the Administrator may make such rules and regulations as deemed necessary and take any and all actions determined to be necessary or desirable with respect to 7a loans.5 Pursuant to these provisions of the Small Business Act, SBA has issued regulations establishing the standards by which it will investigate whether a loan met program requirements and the circumstances under which SBA will be released from liability on a guarantee for such a loan.6
Additionally, section 7Al1E of the Small Business Act expressly provides that SBA may review and audit PPP
loans of $150,000 or less and access any records the borrower is required to retain.
In light of the structure of the PPP
program established by the CARES Act and the PPP Interim Final Rules, in which loans and loan forgiveness are provided based on the borrowers certifications and documentation provided by the borrower, the Administrator, in consultation with the Secretary of the Treasury Secretary, previously determined that it was appropriate to adopt additional procedures and criteria through which SBA will review whether an action by the borrower has resulted in its receipt of a PPP loan that did not meet program requirements.7 SBAs review of borrower certifications and representations regarding the borrowers eligibility for a PPP loan and loan forgiveness, and the borrowers use of PPP loan proceeds, is essential to ensure that PPP loans are directed to the entities Congress intended, and that PPP
loan proceeds are used for the purposes Congress required, including the CARES
Acts and the Economic Aid Acts central purposes of keeping workers paid and employed.
3 15

U.S.C. 634b11.
U.S.C. 636a.
5 15 U.S.C. 634b6 and b7.
6 13 CFR 120.524.
7 This interim final rule is an exercise of SBAs rulemaking authority under 15 U.S.C. 634b, 15
U.S.C. 633d, and 5 U.S.C. App., Reorg. Plan No.
4 of 1965, 11b, 13a abolishing Loan Policy Board and transferring functions to the Administrator; sections 1106k now section 7Ak of the Small Business Act and 1114 of the CARES
Act, and section 307 of the Economic Aid Act.
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Table of Contents IV. Paycheck Protection Program Loan Forgiveness Requirements 1. General a. What amounts are eligible for forgiveness?
b. For borrowers that are individuals with self-employment income who file a Form 1040, Schedule C or F, what amounts are eligible for forgiveness?
2. Loan Forgiveness Process a. What is the general process to obtain loan forgiveness?
b. When must a borrower apply for loan forgiveness or start making payments on a loan?
3. Payroll Costs Eligible for Loan Forgiveness a. When must payroll costs be incurred and/or paid to be eligible for forgiveness?
b. Are salary, wages, or commission payments to furloughed employees;
bonuses; or hazard pay during the covered period eligible for loan forgiveness?
c. Are there caps on the amount of loan forgiveness available for owneremployees and self-employed individuals own payroll compensation?
d. Are any individuals with an ownership stake in a PPP borrower exempt from application of the PPP owner-employee compensation rule when determining the amount of their compensation that is eligible for loan forgiveness?
e. May a fishing boat owner include as payroll costs in its application for loan forgiveness any compensation paid to a crewmember who received his or her own PPP loan and is seeking forgiveness for amounts of compensation the crewmember received for performing services described in Section 3121b20
of the Internal Revenue Code with respect to that owners fishing boat?
4. Nonpayroll Costs Eligible for Loan Forgiveness a. When must nonpayroll costs be incurred and/or paid to be eligible for forgiveness?
b. Are advance payments of interest on mortgage obligations eligible for loan forgiveness?
c. Are amounts attributable to the business operation of a tenant or sub-tenant of the PPP borrower or, in the context of homebased businesses, household expenses, eligible for forgiveness?
d. Are rent payments to a related party eligible for loan forgiveness?
5. Reductions to Loan Forgiveness Amount a. Will a borrowers loan forgiveness amount be reduced if the borrower reduced the hours of an employee, then offered to restore the reduction in hours, but the employee declined the offer?
b. What effect does a reduction in a borrowers number of full-time equivalent FTE employees have on the loan forgiveness amount?
c. What does full-time equivalent employee mean?
d. How should a borrower calculate its number of FTE employees?
e. What effect does a borrowers reduction in employees salary or wages have on the loan forgiveness amount?

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