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Federal Register / Vol. 86, No. 53 / Monday, March 22, 2021 / Rules and Regulations be reduced by the amount of the First Draw or Second Draw PPP Loan. If a PPP borrower receives both a First Draw and a Second Draw PPP Loan after December 27, 2020, the amount of any subsequently-approved SVO grant will be reduced by the combined amount of both PPP loans. However, because sections 7a36U and 7a37AivIIIee of the Small Business Act were not amended by the American Rescue Plan Act, if a PPP
applicant is approved for an SVO grant before SBA issues a loan number for the PPP loan, the applicant is ineligible for the PPP loan and acceptance of any PPP
loan proceeds will be considered an unauthorized use.
In addition, SBA is making a clarifying change to the list of eligible entities for First Draw PPP Loans by adding businesses with a NAICS code beginning with 72 that employ no more than 500 employees per physical location. These entities are included in section 7a36Diii of the Small Business Act 15 U.S.C.
636a36Diii, as amended by the CARES Act, and are addressed in section B.3. of the consolidated interim final rule implementing updates to the PPP. Because the omission of these entities from the list of eligible entities could cause borrower confusion, SBA is revising subsection B.1.a. to add these entities.
Therefore, Part III.B.1.a. 86 FR 3692, 3695 of the consolidated interim final rule implementing updates to the PPP is revised to read as follows:

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1. What businesses, organizations, and individuals are eligible?
a. Am I eligible? 2 3
You are eligible for a PPP loan if:
i. You, together with any affiliates if applicable,4 are:
A small business concern under the applicable revenue-based size standard established by SBA in 13 CFR 121.201 for your industry or under the SBA alternative size standard; 5
2 See interim final rule on Second Draw PPP
Loans for eligibility criteria for Second Draw PPP
Loans, which was published separately. 86 FR 3712
January 14, 2021.
3 This subsection was originally published at 85
FR 20811, subsection III.2.a. April 15, 2020, as amended by 85 FR 36308 June 16, 2020, 85 FR
36717 June 18, 2020, and 85 FR 38301 June 26, 2020, and has been modified to reflect subsequent rules or guidance, the Economic Aid Act, and the American Rescue Plan Act.
4 See subsection B.3 of the consolidated interim final rule implementing updates to the PPP
regarding the applicability of affiliation rules at 13
CFR 121.103 and 121.301 to PPP loans.
5 Under SBAs alternative size standard, a business concern may qualify as a small business concern if it, together with any affiliates: 1 Has a maximum tangible net worth of not more than $15
million; and 2 the average net income after Federal income taxes excluding any carry-over
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an independent contractor, eligible selfemployed individual, or sole proprietor;
a business concern, a tax-exempt nonprofit organization described in section 501c3 of the Internal Revenue Code IRC, a tax-exempt veterans organization described in section 501c19 of the IRC, a Tribal business concern described in section 31b2C of the Small Business Act, and you employ no more than the greater of 500
employees or, if applicable, the size standard in number of employees established by SBA
in 13 CFR 121.201;
a housing cooperative that employs no more than 300 employees and meets the criteria described in subsection B.1.g.v. of the consolidated interim final rule implementing updates to the PPP, as amended by this interim final rule;
a business concern that is assigned a North American Industry Classification System NAICS code beginning with 72 that employs no more than 500 employees per physical location;
an eligible section 501c6 organization or an eligible destination marketing organization,6 that employs no more than 300
employees per physical location;
a news organization that is majority owned or controlled by a NAICS code 511110
or 5151 business or a nonprofit public broadcasting entity with a trade or business under NAICS 511110 or 5151, that employs no more than 500 employees or, if applicable, the size standard in number of employees established by SBA in 13 CFR
121.201 for your industry per location;
a tax-exempt non-profit organization described in section 501c3 of the Internal Revenue Code that employs not more than 500 employees per physical location of the organization;
a tax-exempt nonprofit organization described in any paragraph of section 501c of the Internal Revenue Code of 1986, other than paragraph 3, 4, 6, or 19 that employs not more than 300 employees per physical location and meets the criteria described in subsection B.1.g.iii. of the consolidated interim final rule implementing updates to the PPP, as amended by this interim final rule;
a business concern or other organization that is assigned a NAICS code of 519130, certifies in good faith as an internet-only news publisher or internet-only periodical publisher, and is engaged in the collection and distribution of local or regional and national news and information, that employs not more than 500 employees or the size standard in number of employees established by SBA in 13 CFR 121.201 for NAICS code 519130 per physical location, and meets the criteria described in subsection B.1.g.iv. of the consolidated interim final rule implementing updates to the PPP, as amended by this interim final rule; or losses for the two full fiscal years before the date of application is not more than $5 million.
6 See subsections B.1.g.vii. and B.1.g.viii for additional information on the eligibility of section 501c6 organizations, and destination marketing organizations. As amended by the American Rescue Plan Act, the applicable size standard for section 501c6 organizations and destination marketing organizations is not more than 300 employees per physical location.

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another type of entity specifically provided for by PPP rules as described below; and ii. you were in operation on February 15, 2020, and either had employees for whom you paid salaries and payroll taxes or paid independent contractors, as reported on a Form 1099MISC or you were an eligible self-employed individual, independent contractor, or sole proprietorship with no employees.
You must submit documentation sufficient to establish eligibility and to demonstrate the qualifying payroll amount, which may include, as applicable, payroll records, payroll tax filings, Form 1099MISC, Schedule C or F, income and expenses from a sole proprietorship, or bank records.

The American Rescue Plan Act expands eligibility for PPP loans to taxexempt organizations described in any paragraph of section 501c of the Internal Revenue Code of 1986, except for section 501c4. Thus, subsections III.B.1.g.iii. and iv. of the consolidated interim final rule implementing updates to the PPP, which describe the eligibility of electric cooperatives and telephone cooperatives that are exempt from Federal income taxation under section 501c12 of the Internal Revenue Code, are no longer necessary.
For PPP loans made after the effective date of this interim final rule, such organizations will be eligible as set forth in a new subsection for tax-exempt organizations under any paragraph of section 501c of the Internal Revenue Code other than paragraph 3, 4, 6, or 19 discussed immediately below.
With the new statutory change, the size eligibility requirements for electric and telephone cooperatives have changed as well. Previously, these entities were eligible if they had no more than 500
employees, met the employee-based SBA size standard for their industry if higher, or met SBAs alternative size standard. For PPP loans made after the effective date of this interim final rule, these entities are eligible if they have no more than 300 employees per physical location, and these entities are no longer permitted to use the employee-based SBA size standard for their industry or SBAs alternative size standard to determine size.
Therefore, Part III.B.1.g. of the consolidated interim final rule implementing updates to the PPP 86 FR
3692, 36963697 is revised by replacing subsections B.1.g.iii. and iv. of the industry-specific eligibility issues with two new subsections to read as follows:
g. Industry-Specific Eligibility Issues

iii. Are tax-exempt nonprofit organizations described in any paragraph of section 501c
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