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Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Rules and Regulations that together with its affiliates received First Draw PPP Loans totaling $2
million or more or Second Draw PPP
Loans totaling $2 million or more, is exempt from any reductions in the borrowers loan forgiveness amount based on reductions in FTE employees section 7Ad2 of the Small Business Act or reductions in employee salary or wages section 7Ad3 of the Small Business Act that would otherwise apply. As such, subsections IV.5.a.
through IV.5.h. above do not apply to qualifying borrowers with loans of $50,000 or less.
6. Documentation Requirements
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a. What must borrowers submit for forgiveness of their PPP loans? 65
The loan forgiveness application form details the documentation requirements;
specifically, documentation each borrower must submit with its Loan Forgiveness Application SBA Form 3508, 3508EZ, 3508S as applicable, or lender equivalent, documentation each borrower is required to maintain and make available upon request, and documentation each borrower may voluntarily submit with its loan forgiveness application. An eligible borrower that received a loan of $150,000 or less should use the SBA
Form 3508S and shall not, at the time of its application for loan forgiveness, be required to submit any application or documentation in addition to the certification and information required by section 7Al1A of the Small Business Act. However, an eligible borrower that received a Second Draw loan of $150,000 or less and is using the SBA Form 3508S must, before or at the time of its application for loan forgiveness, submit documentation sufficient to establish that the borrower experienced a reduction in revenue as provided in subsection g2v of the interim final rule on Second Draw PPP
Loans, unless the borrower already provided such documentation at the time of its application for the Second Draw PPP Loan.66 Such documentation limited to qualifying borrowers with loans of $50,000 or less. A borrower with a loan greater than $50,000 and up to $150,000 must comply with the requirements under the Paycheck Protection Program, including calculating any reduction in forgiveness amounts based on reductions in FTEs or employee salary or wages.
65 This subsection was originally published at 85
FR 33004, section III.6. June 1, 2020 and amended at 85 FR 38304, subsection III.1.g. June 26, 2020
and has been modified to conform to sections 304
and 307 of the Economic Aid Act and for readability.
66 See interim final rule on Second Draw PPP
Loans. 86 FR 3712, 3721 Jan. 14, 2021. Subsection g2v of the interim final rule on Second Draw PPP Loans implements section 7a37Jv of the Small Business Act.

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may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, a copy of the applicants quarterly income statements or bank statements.
For Second Draw PPP Loans, all borrowers must certify on their loan forgiveness application that the borrower used all First Draw PPP Loan amounts on eligible expense prior to disbursement of the Second Draw PPP
Loan. For Second Draw PPP Loans in excess of $150,000, the borrower must submit its loan forgiveness application for the First Draw PPP Loan before or simultaneously with the loan forgiveness application for the Second Draw PPP Loan, even if the calculated forgiveness amount for the First Draw PPP Loan is zero.
b. What documentation are borrowers who are individuals with selfemployment income who file a Form 1040, Schedule C or F required to submit to their lender with their request for loan forgiveness? 67
For borrowers that received loans of $150,000 or less that use the SBA Form 3508S, the borrower must submit the certification and information required by section 7Al1A of the Small Business Act and, for a Second Draw PPP Loan, revenue reduction documentation if such documentation was not provided at the time of application.68 All other borrowers must submit the certification required by section 7Ae3 of the Small Business Act, and if the borrower has employees Form 941 and state quarterly business and individual employee wage reporting and unemployment insurance tax forms or equivalent payroll processor records that best correspond to the covered period with evidence of any retirement and group health, life, disability, vision, and dental insurance contributions.
Whether or not the borrower has employees, the borrower must submit evidence of business rent, business mortgage interest payments on real or personal property, business utility payments, or payments for a covered operations expenditure, covered property damage cost, covered supplier cost, or covered worker protection expenditure during the covered period if the borrower used loan proceeds for those purposes. This documentation may include cancelled checks, payment 67 This
subsection was originally published at 85
FR 21747, subsection III.1.g. Apr. 20, 2020 and has been modified to conform to sections 304, 307, 308, and 313 of the Economic Aid Act and for readability.
68 See subsection g2v of the interim final rule on Second Draw PPP Loans. 86 FR 3712, 3721 Jan.
14, 2021.

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receipts, transcripts of accounts, purchase orders, orders, invoices, or other documents verifying payments on nonpayroll costs.
For all loans, the 2019 or 2020 Form 1040 Schedule C or F that the borrower provided at the time of the PPP loan application must be used to determine the amount of net profit allocated to the owner for the covered period.69
c. What additional documentation must a borrower submit when the President of the United States, Vice President of the United States, the head of an Executive department, or a Member of Congress, or the spouse of any of the preceding, directly or indirectly holds a controlling interest in the borrower? 70
For any First Draw PPP loan made before December 27, 2020, if the President of the United States, Vice President of the United States, the head of an Executive department, or a Member of Congress, or the spouse of any such person as determined under applicable common law, directly or indirectly held a controlling interest in the borrower on the date of the loan application, the borrower is required to make certain disclosures following submission of the borrowers application for loan forgiveness.
For purposes of this section, the term controlling interest means owning, controlling, or holding not less than 20
percent, by vote or value, of the outstanding amount of any class of equity interest in a borrower. For purposes of making this determination, the securities owned, controlled or held by the individual and spouse shall be aggregated. The term equity interest means 1 a share in a borrower, without regard to whether the share is transferable or classified as stock or anything similar, 2 a capital or profit interest in a limited liability company or partnership, or 3 a warrant or right, other than a right to convert, to purchase, sell, or subscribe to a share of interest described in 1 or 2, respectively. The term Executive department has the meaning given the term in section 101 of title 5, United States Code. The term Member of Congress means a Member of the Senate or House of Representatives, a Delegate to the House of 69 For self-employed borrowers that file Form 1040, Schedule F and have no employees, gross income may be used instead of net profit. For selfemployed borrowers that file Schedule F and have employees, the difference between gross income and employee payroll costs may be used instead of net profit.
70 This subsection has been added to conform to section 322 of the Economic Aid Act.

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