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Federal Register / Vol. 86, No. 23 / Friday, February 5, 2021 / Rules and Regulations independently to a lender to satisfy relevant Federal, State, local or other statutory or regulatory requirements or in connection with an SBA loan review.
Lenders must comply with applicable SBA requirements for records retention, which for Federally regulated lenders means compliance with the requirements of their federal financial institution regulator and for SBA
supervised lenders as defined in 13
CFR 120.10 and including PPP lenders with authority under SBA Form 3507
means compliance with 13 CFR
120.461.

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d. Will I have the opportunity to respond to SBAs questions in a review? 79
Yes. If loan documentation submitted to SBA by the lender or any other information indicates that the borrower may be ineligible for a PPP loan or may be ineligible to receive the loan amount or loan forgiveness amount claimed by the borrower, SBA will require the lender to contact the borrower in writing to request additional information. SBA may also request information directly from the borrower.
The lender will provide any additional information provided to it by the borrower to SBA. SBA will consider all information provided by the borrower in response to such an inquiry.
Failure to respond to SBAs inquiry may result in a determination that the borrower was ineligible for a PPP loan or ineligible to receive the loan amount or loan forgiveness amount claimed by the borrower.
e. If SBA determines that a borrower is ineligible for a PPP loan, can the loan be forgiven? 80
No. If SBA determines that a borrower is ineligible for the PPP loan, SBA will direct the lender to deny the loan forgiveness application. An SBA
determination that a borrower is ineligible for a First Draw PPP Loan may also result in an SBA determination that the borrower is ineligible for any Second Draw PPP Loan, and SBA may direct the lender to deny any loan forgiveness application submitted for the Second Draw PPP Loan. Further, if SBA determines that the borrower is ineligible for the loan amount or loan forgiveness amount claimed by the borrower, SBA will direct the lender to deny the loan forgiveness application in whole or in part, as appropriate. SBA
may also seek repayment of the 79 This subsection was originally published at 85
FR 33010, subsection III.1.d. June 1, 2020.
80 This subsection was originally published at 85
FR 33010, subsection III.1.e. June 1, 2020 and has been modified for readability.

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outstanding PPP loan balance or pursue other available remedies.
Section 7Ab of the Small Business Act provides for forgiveness of a PPP
loan only if the borrower is an eligible recipient. The Administrator has determined that to be an eligible recipient that is entitled to forgiveness under section 7Ab, the borrower must be an eligible recipient under section 7a36 and section 7a37 of the Small Business Act and rules and guidance available at the time of the borrowers loan application. This requirement promotes the public interest, aligns SBAs functions with other governmental policies, and appropriately carries out the PPP
provisions of the CARES Act and the Economic Aid Act, including by preventing evasion of the requirements for PPP loan eligibility and ensuring program integrity with respect to this emergency financial assistance program.
It is also consistent with the CARES
Acts nonrecourse provision, 15 U.S.C.
636a36Fv, which limits SBAs recourse against individual shareholders, members, or partners of a PPP borrower for nonpayment of a PPP
loan only if the borrower is an eligible recipient of the loan.
f. May a borrower appeal SBAs determination that the borrower is ineligible for a PPP loan or ineligible for the loan amount or the loan forgiveness amount claimed by the borrower? 81
Yes. SBA has issued a separate interim final rule addressing this process.82
2. The Loan Forgiveness Process for Lenders a. What should a lender review? 83
When a borrower submits SBA Form 3508 or lenders equivalent form, the lender shall:
i. Confirm receipt of the borrower certifications contained in the SBA
Form 3508 or lenders equivalent form.
ii. Confirm receipt of the documentation the borrower must submit to aid in verifying payroll and nonpayroll costs, as specified in the instructions to the SBA Form 3508 or lenders equivalent form.
81 This subsection was originally published at 85
FR 33010, subsection III.1.f. June 1, 2020 and has been modified to reflect the issuance of the interim final rule on appeals of SBA loan review decisions under the Paycheck Protection Program. 85 FR
52883 Aug. 27, 2020.
82 See 85 FR 52883 Aug. 27, 2020.
83 This subsection was originally published at 85
FR 33010, subsection III.2.a. June 1, 2020 and amended by 85 FR 38304, subsection III.2.b. June 26, 2020 and 85 FR 66214, subsection III.2.b. Oct.
19, 2020 and has been modified to conform to sections 307 and 311 of the Economic Aid Act.

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iii. Confirm the borrowers calculations on the borrowers SBA
Form 3508 or lenders equivalent form, including the dollar amount of the A
Cash Compensation, Non-Cash Compensation, and Compensation to Owners claimed on Lines 1, 4, 6, 7, 8, and 9 on PPP Schedule A and B
Business Mortgage Interest Payments, Business Rent or Lease Payments, Business Utility Payments, Covered Operations Expenditures, Covered Property Damage Costs, Covered Supplier Costs, and Covered Worker Protection Expenditures claimed on Lines 2 through 8 on the PPP Loan Forgiveness Calculation Form, by reviewing the documentation submitted with the SBA Form 3508 or lenders equivalent form.
iv. Confirm that the borrower made the calculation on Line 14 of the SBA
Form 3508 or lenders equivalent form correctly, by dividing the borrowers Eligible Payroll Costs claimed on Line 1
by 0.60.
When the borrower submits SBA
Form 3508EZ or lenders equivalent form, the lender shall:
i. Confirm receipt of the borrower certifications contained in the SBA
Form 3508EZ or lenders equivalent form.
ii. Confirm receipt of the documentation the borrower must submit to aid in verifying payroll and nonpayroll costs, as specified in the instructions to the SBA Form 3508EZ or lenders equivalent form.
iii. Confirm the borrowers calculations on the borrowers SBA
Form 3508EZ or lenders equivalent form, including the dollar amount of the Payroll Costs, Business Mortgage Interest Payments, Business Rent or Lease Payments, Business Utility Payments, Covered Operations Expenditures, Covered Property Damage Costs, Covered Supplier Costs, and Covered Worker Protection Expenditures claimed on Lines 1
through 8 of the SBA Form 3508EZ or lenders equivalent form, by reviewing the documentation submitted with the SBA Form 3508EZ or lenders equivalent form.
iv. Confirm that the borrower made the calculation on Line 11 of the SBA
Form 3508EZ or lenders equivalent form correctly, by dividing the borrowers Eligible Payroll Costs claimed on Line 1 by 0.60.
Providing an accurate calculation of the loan forgiveness amount is the responsibility of the borrower, and the borrower attests to the accuracy of its reported information and calculations on the Loan Forgiveness Application Form. Lenders are expected to perform
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