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Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Rules and Regulations
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no more than 20 locations, that provision does not change the current eligibility of a business concern that meets the general 500-employee size standard. For example, a business with 25 locations and 15 employees per location would not be ineligible, because the total number of employees is 375.
This rule also does not change the applicable size standards. The size standard itself remains at 500
employees together with affiliates, as authorized by Section 1110a2 of the CARES Act, or the size standard established in 13 CFR 121.201. Instead, the rule changes how the agency defines the term business concern for purposes of COVID EIDL assistance. The Small Business Act provides SBA with broad authority to define a small business concern. 15 U.S.C. 632a2.
By regulation, SBA generally defines a concern to be a business entity, although there are exceptions. 13 CFR
121.105. SBA applies its size standards to determine whether a concern is a small business eligible for SBA
assistance, and, because of the general definition, the size standards generally apply at the entity level. In this interim final rule, based on how SBA applied the PPPs size standard at the perphysical location level for NAICS
sector-72 businesses and other industries, SBA is adopting a programspecific definition of business concern as covering each individual physical location for industries in certain hard-hit economic sectors. As such, SBA will apply the programs size standards at the physical-location level for the identified industries. This does not change the size standards that apply to the COVID EIDL loan program.
Instead, this program-specific provision changes the level at which the size standard appliesfor businesses in certain sectorsi.e., to each physical location, rather than to each entity in the aggregate.
4. COVID EIDL Uses of Proceeds Currently, the EIDL program only permits loan proceeds to be used for working capital necessary to carry the business until resumption of normal operations and for expenditures necessary to alleviate the specific economic injury and does not permit payments on Federal debt or prepayment of non-Federal existing debt even if the debt has a balloon payment due. Prior to the pandemic, businesses, in the ordinary course of their operations, managed debt payments through cash flows of the business. Due to mandatory COVID19 closures, some businesses did not have sufficient cash
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flow to service debt obligations. Despite several short-term emergency programs in the CARES Act and other statutes, many small businesses have not been able to return to normal operations, and now struggle with deferred debt, past due payments, and insufficient cash flow. With the expectation that the pandemic would not last for the duration that it has, many businesses took on short-term debt, often with unfavorable repayment terms, or negotiated deferments in debt payments in order to avoid default. In order to maximize relief from the debt burden businesses and nonprofit organizations have accrued, SBA is expanding COVID
EIDL eligible uses of proceeds to include payments on all forms of business debt, including loans owned by a Federal agency including SBA or a Small Business Investment Company SBIC licensed under the Small Business Investment Act. COVID EIDL
loan proceeds may be used to make debt payments including monthly payments, deferred interest, and pre-payment of business debt, except that pre-payments will not be permitted on any debt owned by a Federal agency including SBA or an SBIC. COVID EIDL loan proceeds may be used to pay debt incurred both before and after submitting the COVID EIDL loan application.
Therefore, SBA is revising the regulation at 13 CFR 123.303, How can my business spend my economic injury disaster loan?, to permit COVID EIDL
working capital loan proceeds to be used to pay any type of business debt, including loans owned by a Federal agency including SBA or an SBIC. SBA
also is revising the regulation to clarify that COVID EIDL loan proceeds may be used to make debt payments including monthly payments, payments of deferred interest, and pre-payments, except that pre-payments will not be permitted on debt that is owned by a Federal agency including SBA or an SBIC.
5. Limits of COVID EIDL Loans to a Single Corporate Group SBA is adding a new regulation to state that entities that are part of a single corporate group shall in no event receive more than $10,000,000 of COVID EIDL loans in the aggregate. For purposes of this limit, entities are part of a single corporate group if they are majority owned, directly or indirectly, by a common parent. Businesses are subject to this limitation even if the businesses are in certain hard-hit sectors and able to use the per-physical location application of the size standard as set forth in 13 CFR 123.300e5.

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Given the changes in the COVID EIDL
maximum loan amount, eligibility, and increased outreach to industries that have been particularly hard hit by the pandemic for example, restaurants, hotels, gyms, travel and tourism, SBA
expects an increase in the number of applications submitted and average loan size. The Administrator determined that limiting the amount of COVID EIDL
loans that a single corporate group may receive will promote the availability of COVID EIDL loans to the largest possible number of borrowers. The Administrator has concluded that a limitation of $10,000,000 strikes an appropriate balance between broad availability of COVID EIDL loans and program resource constraints. SBAs affiliation rules, which relate to an applicants eligibility for COVID EIDL
loans, continue to apply independent of this limitation.
6. Additional Information SBA may provide further information through guidance that will be posted on SBAs website at www.sba.gov, if needed. Questions may be directed to an SBA Disaster Customer Service Representative at 18006592955
individuals who are deaf or hard of hearing may call 18008778339, or a local SBA Field Office; the list of local SBA Field Offices may be found at https www.sba.gov/tools/localassistance/districtoffices.
Compliance With Executive Orders, the Congressional Review Act, Paperwork Reduction Act, and the Regulatory Flexibility Act Executive Orders 12866 and 13563
OMBs Office of Information and Regulatory Affairs OIRA has determined that this interim final rule is economically significant for the purposes of Executive Orders 12866 and 13563. SBA, however, is proceeding under the emergency provision at Executive Order 12866 section 6a3D, based on the need to move expeditiously to mitigate the current economic hardships and conditions arising from the COVID19 emergency.
This rule is necessary to provide economic relief to small businesses and private nonprofit organizations nationwide adversely impacted by COVID19. As evidence of unmet need, the Restaurant Revitalization Fund RRF received $28.6 billion in appropriations and in 21 days, received 278,304 RRF applications totaling more than $72 billion, which resulted in 177,300 businesses without assistance.
Further, with the end of the Paycheck Protection Program PPP, businesses
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