3712 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

the program would expire before the 

procedural steps, including the 

comment periods generally required by 

the Paperwork Reduction Act, could be 

completed. 

Regulatory Flexibility Act (RFA) 

The Regulatory Flexibility Act (RFA) 

generally requires that when an agency 

issues a proposed rule, or a final rule 

pursuant to section 553(b) of the APA or 

another law, the agency must prepare a 

regulatory flexibility analysis that meets 

the requirements of the RFA and 

publish such analysis in the Federal 

Register. 5 U.S.C. 603, 604. Specifically, 

the RFA normally requires agencies to 

describe the impact of a rulemaking on 

small entities by providing a regulatory 

impact analysis. Such analysis must 

address the consideration of regulatory 

options that would lessen the economic 

effect of the rule on small entities. The 

RFA defines a ‘‘small entity’’ as (1) a 

proprietary firm meeting the size 

standards of the Small Business 

Administration (SBA); (2) a nonprofit 

organization that is not dominant in its 

field; or (3) a small government 

jurisdiction with a population of less 

than 50,000. 5 U.S.C. 601(3)–(6). Except 

for small government jurisdictions with 

a population of less than 50,000, neither 

State nor local governments are ‘‘small 

entities.’’ 

The requirement to conduct a 

regulatory impact analysis does not 

apply if the head of the agency ‘‘certifies 

that the rule will not, if promulgated, 

have a significant economic impact on 

a substantial number of small entities.’’ 

5 U.S.C. 605(b). The agency must, 

however, publish the certification in the 

Federal Register at the time of 

publication of the rule, ‘‘along with a 

statement providing the factual basis for 

such certification.’’ If the agency head 

has not waived the requirements for a 

regulatory flexibility analysis in 

accordance with the RFA’s waiver 

provision, and no other RFA exception 

applies, the agency must prepare the 

regulatory flexibility analysis and 

publish it in the Federal Register at the 

time of promulgation or, if the rule is 

promulgated in response to an 

emergency that makes timely 

compliance impracticable, within 180 

days of publication of the final rule. 5 

U.S.C. 604(a), 608(b). 

Rules that are exempt from notice and 

comment are also exempt from the RFA 

requirements, including conducting a 

regulatory flexibility analysis, when 

among other things the agency for good 

cause finds that notice and public 

procedure are impracticable, 

unnecessary, or contrary to the public 

interest. Small Business 

Administration’s Office of Advocacy 

guide: How to Comply with the 

Regulatory Flexibility Ac. Ch.1. p.9. 

Since this rule is exempt from notice 

and comment, SBA is not required to 

conduct a regulatory flexibility analysis. 

Authority: 15 U.S.C. 636(a)(36); 

Coronavirus Aid, Relief, and Economic 

Security Act, Pub. L. 116–136, section 1114 

and Economic Aid to Hard-Hit Small 

Businesses, Nonprofits, and Venues Act (Pub. 

L. 116–260), section 303. 

Jovita Carranza, Michael Faulkender, 

Assistant Secretary for Economic Policy. 

[FR Doc. 2021–00451 Filed 1–12–21; 4:15 pm] 

BILLING CODE 8026–03–P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Parts 120 and 121 

[Docket No. SBA–2021–0002] 

RIN 3245–AH63 

Business Loan Program Temporary 

Changes; Paycheck Protection 

Program Second Draw Loans 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Interim final rule. 

SUMMARY: This interim final rule 

announces the implementation of 

section 311 of the Economic Aid to 

Hard-Hit Small Businesses, Nonprofits, 

and Venues Act (the Economic Aid Act). 

The Economic Aid Act authorizes the 

U.S. Small Business Administration to 

guarantee additional loans under the 

temporary Paycheck Protection 

Program, which was originally 

established under the Coronavirus Aid, 

Relief, and Economic Security Act to 

provide economic relief to small 

businesses nationwide adversely 

impacted under the Coronavirus Disease 

2019 (COVID–19) Emergency 

Declaration (COVID–19 Emergency 

Declaration) issued by President Trump 

on March 13, 2020. Section 311 of the 

Economic Aid Act adds a second 

temporary program to SBA’s 7(a) Loan 

Program titled, ‘‘Paycheck Protection 

Program Second Draw Loans.’’ This 

interim final rule implements the key 

provisions of section 311 of the 

Economic Aid Act and requests public 

comment. 

DATES: 

Effective Date: This interim final rule 

is effective January 12, 2021. 

Applicability Date: This interim final 

rule applies to loan applications and 

applications for loan forgiveness 

submitted for Paycheck Protection 

Program Second Draw Loans. 

Comment Date: Comments must be 

received on or before February 16, 2021. 

ADDRESSES: You may submit comments, 

identified by number SBA–2021–0002 

through the Federal eRulemaking Portal: 

http://www.regulations.gov. Follow the 

instructions for submitting comments. 

SBA will post all comments on 

www.regulations.gov. If you wish to 

submit confidential business 

information (CBI) as defined in the User 

Notice at www.regulations.gov, please 

send an email to ppp-ifr@sba.gov. All 

other comments must be submitted 

through the Federal eRulemaking Portal 

described above. Highlight the 

information that you consider to be CBI 

and explain why you believe SBA 

should hold this information as 

confidential. SBA will review the 

information and make the final 

determination whether it will publish 

the information. 

FOR FURTHER INFORMATION CONTACT: Call 

Center Representative at 833–572–0502, 

or the local SBA Field Office; the list of 

offices can be found at https://

www.sba.gov/tools/local-assistance/ 

districtoffices. 

SUPPLEMENTARY INFORMATION: 

I. Background Information 

On December 27, 2020, President 

Trump signed the Economic Aid to 

Hard-Hit Small Businesses, Nonprofits, 

and Venues Act (the Economic Aid Act) 

(Pub. L. 116–260) into law to provide 

continued assistance to individuals and 

businesses that have been financially 

impacted by the ongoing coronavirus 

pandemic. Section 311 of the Economic 

Aid Act added a new temporary section 

7(a)(37) to the Small Business Act (15 

U.S.C. 636(a)(37)). This new section 

authorizes the U.S. Small Business 

Administration (SBA or the 

Administration) to guarantee Paycheck 

Protection Program Second Draw Loans 

(PPP Second Draw Program), under 

generally the same terms and conditions 

available under the Paycheck Protection 

Program (PPP) established under section 

7(a)(36) of the Small Business Act (15 

U.S.C. 636(a)(36)). Under section 311, 

SBA may guarantee loans under the PPP 

Second Draw Program through March 

31, 2021 (‘‘Second Draw PPP Loans’’) to 

borrowers that previously received a 

PPP loan under section 7(a)(36) of the 

Small Business Act (‘‘First Draw PPP 

Loans’’) and have used or will use the 

full amount of the initial PPP loan for 

authorized purposes on or before the 

expected date of disbursement of the 

Second Draw PPP Loan. 

Like First Draw PPP Loans, Second 

Draw PPP Loans are intended to provide 

expeditious relief to America’s small 


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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3713 

1The Consolidated First Draw PPP IFR titled 

‘‘Business Loan Program Temporary Changes: 

Extension of and Changes to Paycheck Protection 

Program’’ restates existing regulatory provisions to 

provide lenders and new PPP borrowers a single 

regulation to consult on borrower eligibility, lender 

eligibility, and loan application and origination 

requirements issues for new First Draw PPP loans, 

as well as general rules relating to First Draw PPP 

Loan increases and loan forgiveness. 

2Section 339 of the Economic Aid Act added 

‘‘calculated on a non-compounding, non-adjustable 

basis’’ to the maximum interest rate for a PPP loan. 

3SBA will be revising the FAQs to conform to the 

Economic Aid Act as quickly as feasible. 

4See paragraph 7(a)(37)(A)(iv) of the Small 

Business Act. 

5See paragraph 7(a)(37)(O) of the Small Business 

Act. 

6Subsection (B)(11) of the Consolidated First 

Draw PPP IFR specifies that the proceeds of a PPP 

loan may be spent only on certain eligible expenses. 

7See paragraph 7(a)(37)(A)(iv) of the Small 

Business Act. 

businesses. Second Draw PPP Loans 

generally are guaranteed by SBA under 

the same terms, conditions, and 

processes as First Draw PPP Loans. SBA 

guarantees 100 percent of Second Draw 

PPP Loans and SBA may forgive up to 

the full principal loan amount. Second 

Draw PPP Loans are subject to SBA’s 

and the Department of the Treasury’s 

(Treasury’s) consolidated interim final 

rules implementing updates to the 

Paycheck Protection Program for First 

Draw PPP Loans (‘‘Consolidated First 

Draw PPP IFR’’) issued concurrently 

with this interim final rule (IFR) 1 and 

all PPP loan program requirements, 

except as specified in this IFR. The key 

differences between First Draw PPP 

Loans and Second Draw PPP Loans are 

described in this IFR, which explains 

the loan terms, eligibility requirements, 

and application process for Second 

Draw PPP Loans. 

II. Comments and Immediate Effective 

Date 

This interim final rule is being issued 

without advance notice and public 

comment because section 303 of the 

Economic Aid Act authorizes SBA to 

issue regulations to implement the 

Economic Aid Act without regard to 

notice requirements. In addition, this 

rule is being issued to allow for 

immediate implementation of this 

program. The intent of the Economic 

Aid Act is that SBA provide relief to 

America’s small businesses 

expeditiously. The last day to apply for 

and receive a PPP loan is March 31, 

2021. Given the short duration of this 

program, and the urgent need to issue 

loans quickly, the Administrator in 

consultation with the Secretary has 

determined that it is impractical and not 

in the public interest to provide a 30- 

day delayed effective date. An 

immediate effective date will give small 

businesses the maximum amount of 

time to apply for loans and lenders the 

maximum amount of time to process 

applications before the program ends. 

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. 

808(2). Although this IFR 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 February 16, 2021. SBA will 

consider these comments and the need 

for making any revisions as a result of 

these comments. 

III. Summary of Key Terms of PPP 

Second Draw Loans 

The rules applicable to Second Draw 

PPP Loans are published in section IV 

of this IFR. This summary provides 

additional information and explains the 

key terms in the IFR. All references to 

subsections refer to section IV. 

Second Draw PPP Loans are generally 

subject to the same terms, conditions 

and requirements as First Draw PPP 

Loans. These include, but are not 

limited to the following terms: 

• The guarantee percentage is 100 

percent. 

• No collateral will be required. 

• No personal guarantees will be 

required. 

• The interest rate will be 100 basis 

points or one percent, calculated on a 

non-compounding, non-adjustable 

basis.2

• The maturity is five years. 

• All loans will be processed by all 

lenders under delegated authority and 

lenders will be permitted to rely on 

certifications of the borrower to 

determine the borrower’s eligibility and 

use of loan proceeds. 

Subsection (b) of this IFR confirms 

that these terms apply to Second Draw 

PPP Loans. Subsection (b) also confirms 

that SBA’s Consolidated First Draw PPP 

IFR, Frequently Asked Questions 

(FAQs), and other guidance about PPP 

loans under section 7(a)(36) of the Small 

Business Act (15 U.S.C. 636(a)(36)) 

apply to Second Draw PPP Loans, 

except as specified in this IFR.3

The Economic Aid Act includes terms 

and conditions, including but not 

limited to terms relating to eligibility 

and a borrower’s maximum loan 

amount, that apply only to Second Draw 

PPP Loans and do not apply to First 

Draw PPP Loans, regardless of when the 

First Draw PPP Loan is made. These 

terms and conditions specific to Second 

Draw PPP Loans are summarized below. 

A. Eligibility Requirements 

1. General Eligibility Requirements 

In general, the Economic Aid Act 

made the eligibility requirements for 

Second Draw PPP Loans narrower than 

the eligibility requirements for First 

Draw PPP Loans. The Economic Aid Act 

generally provides that a borrower is 

eligible for a Second Draw PPP Loan 

only if it has 300 or fewer employees 

and experienced a revenue reduction in 

2020 relative to 2019 (described further 

below).4 In addition, the Economic Aid 

Act provides that a Second Draw PPP 

Loan may only be made to an eligible 

borrower that (i) has received a First 

Draw PPP Loan, and (ii) has used, or 

will use, the full amount of the First 

Draw PPP Loan on or before the 

expected date on which the Second 

Draw PPP Loan is disbursed to the 

borrower.5 Accordingly, subsections 

(c)(1)(i) through (c)(1)(iv) of this IFR 

implement these criteria. Subsection 

(c)(1)(ii) of the IFR clarifies that ‘‘the full 

amount’’ of the borrower’s First Draw 

PPP Loan includes the amount of any 

increase on such First Draw PPP Loan 

made pursuant to the Economic Aid 

Act. In addition, subsection (c)(1)(ii) of 

the IFR clarifies that the borrower must 

have spent the full amount of its First 

Draw PPP Loan on eligible expenses 

under the PPP rules to be eligible for a 

Second Draw PPP Loan. This 

clarification will help ensure program 

integrity by preventing a borrower from 

receiving a Second Draw PPP Loan if 

the borrower has not complied with PPP 

loan program requirements.6

2. Revenue Reduction Requirement 

The Economic Aid Act provides that, 

to be eligible for a Second Draw PPP 

Loan, the borrower must have 

experienced a revenue reduction of 25% 

or greater in 2020 relative to 2019.7 A 

borrower must calculate this revenue 

reduction by comparing the borrower’s 

quarterly gross receipts for one quarter 

in 2020 with the borrower’s gross 

receipts for the corresponding quarter of 

2019. For example, a borrower with 

gross receipts of $50,000 in the second 

quarter of 2019 and gross receipts of 

$30,000 in the second quarter of 2020 

has experienced a revenue reduction of 

40 percent between the quarters, and is 

therefore eligible for a Second Draw PPP 

loan (assuming all other eligibility 

criteria are met). Subsection (c)(1)(iv)(A) 

of the IFR reflects this methodology. 

Subsection (c)(1)(iv)(B) of the IFR 

provides that a borrower that was in 

operation in all four quarters of 2019 is 

deemed to have experienced the 

required revenue reduction if it 


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3714 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

8For an eligible nonprofit organization, a veterans 

organization, an eligible nonprofit news 

organization, eligible 501(c) organization, or eligible 

destination marketing organization, gross receipts 

has the meaning in section 6033 of the Internal 

Revenue Code of 1986. See paragraph 7(a)(37)(I)(ii) 

of the Small Business Act. Subsection (c)(2) of the 

IFR clarifies that this definition, which generally 

relates to eligible nonprofit organizations, applies 

only to eligible nonprofit news organizations rather 

than to all eligible news organizations. 

9Subsection (c)(2) of the IFR generally defines 

gross receipts to include all revenue in whatever 

form received or accrued (in accordance with the 

entity’s accounting method) from whatever source, 

including from the sales of products or services, 

interest, dividends, rents, royalties, fees, or 

commissions, reduced by returns and allowances. 

Generally, receipts are considered ‘‘total income’’ 

(or in the case of a sole proprietorship, independent 

contractor, or self-employed individual ‘‘gross 

income’’) plus ‘‘cost of goods sold,’’ and excludes 

net capital gains or losses as these terms are defined 

and reported on IRS tax return forms. Gross receipts 

do not include the following: Taxes collected for 

and remitted to a taxing authority if included in 

gross or total income (such as sales or other taxes 

collected from customers and excluding taxes 

levied on the concern or its employees); proceeds 

from transactions between a concern and its 

domestic or foreign affiliates; and amounts 

collected for another by a travel agent, real estate 

agent, advertising agent, conference management 

service provider, freight forwarder or customs 

broker. All other items, such as subcontractor costs, 

reimbursements for purchases a contractor makes at 

a customer’s request, investment income, and 

employee-based costs such as payroll taxes, may 

not be excluded from gross receipts. Subsection 

(c)(2) also adapts the methodology for calculating 

affiliate receipts from 13 CFR 121.104. 

10Section 1106 of the CARES Act (15 U.S.C. 

9005) was redesignated as section 7A, transferred to 

the Small Business Act (15 U.S.C. 631 et seq.), and 

inserted so as to appear after section 7 of the Small 

Business Act (15 U.S.C. 636) in section 304(b) of the 

Economic Aid Act. 

11Paragraph 7(a)(36)(D)(iii)(I) of the Small 

Business Act. 

12Paragraph 7(a)(36)(D)(iv) of the Small Business 

Act. 

13Paragraph 7(a)(37)(D) of the Small Business 

Act. 

14Paragraph 7(a)(36)(D)(iii)(II) of the Small 

Business Act. 

15See PPP FAQ #24 (posted April 13, 2020), 

available at https://www.sba.gov/sites/default/files/ 

2020-12/Final%20PPP%20FAQs%20%28December

%209%202020%29-508.pdf. 

16Paragraph 7(a)(36)(D)(iv) of the Small Business 

Act (15 U.S.C. 636(a)(36)(D)(iv), as added by the 

CARES Act and amended by the Economic Aid Act, 

waived the affiliation rules contained in § 121.103 

for (1) any business concern with not more than 500 

employees that, as of the date on which the loan 

is disbursed, is assigned a NAICS code beginning 

with 72; (2) any business concern operating as a 

franchise that is assigned a franchise identifier code 

by SBA; (3) any business concern that receives 

financial assistance from a company licensed under 

section 301 of the Small Business Investment Act 

of 1958 (15 U.S.C. 681); and (4)(a) any business 

concern (including any station which broadcasts 

pursuant to a license granted by the Federal 

Communications Commission under title III of the 

Communications Act of 1934 (47 U.S.C. 301 et seq.) 

without regard for whether such a station is a 

concern as defined in 13 CFR 121.105, or any 

successor thereto) that employs not more than 500 

employees, or the size standard established by the 

Administrator for the NAICS code applicable to the 

business concern, per physical location of such 

business concern and is majority owned or 

controlled by a business concern that is assigned a 

NAICS code beginning with 511110 or 5151; or (b) 

any nonprofit organization that is assigned a NAICS 

code beginning with 5151. 

17Paragraph 7(a)(36)(D)(iv) of the Small Business 

Act. 

experienced a reduction in annual 

receipts of 25 percent or greater in 2020 

compared to 2019 and the borrower 

submits copies of its annual tax forms 

substantiating the revenue decline. This 

provision will allow a borrower to 

provide annual tax return forms to 

substantiate its revenue reduction. The 

Administrator, in consultation with the 

Secretary of the Treasury (Secretary), 

has determined that this is necessary to 

improve administrability of Second 

Draw PPP Loans by providing borrowers 

an additional verifiable method for 

substantiating their revenue reduction. 

This method will be particularly 

important for small borrowers that may 

not have quarterly revenue information 

readily available. Moreover, this 

approach is appropriate because, if 

annual filings show a 25 percent 

revenue reduction, then at least one 

quarter in 2020 would have had at least 

a 25 percent revenue reduction. A 

borrower that did not experience a 25 

percent annual decline in revenues, or 

that was not in operation in all four 

quarters of 2019, may still meet the 

revenue reduction requirement under 

one of the quarterly measurements 

described above. 

The Economic Aid Act does not 

include a general definition of gross 

receipts for purposes of determining a 

borrower’s revenue reduction.8

Subsection (c)(2) of the IFR defines 

gross receipts consistent with the 

definition of receipts in 13 CFR 121.104 

of SBA’s size regulations because this 

definition appropriately captures the 

type of income that is typically included 

in a small business’s gross receipts.9

Moreover, this definition will enhance 

the administrability of Second Draw 

PPP Loans because it is a definition 

already used by the Administration and 

many small businesses. 

The IFR specifies that any forgiveness 

amount of a First Draw PPP Loan that 

a borrower received in calendar year 

2020 is excluded from a borrower’s 

gross receipts. Excluding the forgiveness 

amount from a borrower’s gross receipts 

is consistent with section 7A(i) of the 

Small Business Act, which expressly 

excludes PPP forgiveness amounts from 

being taxed as income.10 This 

clarification ensures the effectiveness of 

the second draw loan program by 

ensuring that a borrower is not 

disqualified from receiving a Second 

Draw PPP Loan because it received 

forgiveness on a First Draw PPP Loan. 

This furthers the purpose of the second 

draw loan provisions, which is to 

deliver additional aid to small 

businesses that previously received a 

First Draw PPP Loan. 

3. Business Concerns With More Than 

One Physical Location 

Under the CARES Act, any single 

business entity that is assigned a NAICS 

code beginning with 72 (including 

hotels and restaurants) and employs not 

more than 500 employees per physical 

location is eligible to receive a First 

Draw PPP Loan.11 In addition, as 

discussed below, under the 

Consolidated First Draw PPP IFR, SBA’s 

affiliation rules (13 CFR 121.301) do not 

apply to any business entity that is 

assigned a NAICS code beginning with 

72 and that employs not more than a 

total of 500 employees.12 As a result, if 

each hotel or restaurant location owned 

by a parent business is a separate legal 

business entity and employs not more 

than 500 employees, each hotel or 

restaurant location is permitted to apply 

for a separate PPP loan provided it uses 

its unique EIN. 

Section 317 of the Economic Aid Act 

modified this provision for Second 

Draw PPP Loans by reducing the limit 

on employees per physical location to 

300. Accordingly, a single business 

entity that is assigned a NAICS code 

beginning with 72 is eligible to receive 

a Second Draw PPP Loan if it employs 

no more than 300 employees per 

physical location and meets the revenue 

reduction requirements and otherwise 

satisfies the eligibility criteria described 

in this IFR.13 Under section 317 of the 

Economic Aid Act, the same standard 

applies to certain news organizations.14

Subsections (c)(3) and (c)(4) of the IFR 

implement these statutory provisions. 

Borrowers may consult PPP Frequently 

Asked Question (FAQ) 24 15 for 

guidance on these standards for 

business concerns with more than one 

physical location, except that, for 

Second Draw PPP Loans, the number of 

employees per physical location is 

limited to 300 rather than 500. 

B. Affiliation Rules 

The same affiliation rules that apply 

to First Draw PPP Loans apply to 

Second Draw PPP Loans, except as 

provided in this IFR. As with First Draw 

PPP Loans, in most cases, a borrower is 

considered together with its affiliates to 

determine eligibility for the PPP.16

However, the CARES Act waived the 

affiliation rules for certain categories of 

borrowers.17 Paragraph 7(a)(37)(E) of the 

Small Business Act, as amended by the 

Economic Aid Act, applies the same 


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18Paragraph 7(a)(37)(E) of the Small Business Act. 

19See section (B)(3)(c) of the Consolidated First 

Draw PPP IFR. 

20Paragraph 7(a)(37)(O) of the Small Business Act 

provides that a Second Draw PPP Loan may be 

made only to a borrower that received a First Draw 

PPP Loan under paragraph 7(a)(36). In addition, 

section 7(a)(37)(B) provides that the Administrator 

may guarantee covered loans to eligible entities 

under the same terms, conditions, and processes as 

First Draw PPP Loans. 

21Paragraph 7(a)(37)(A)(iv)(III)(bb) of the Small 

Business Act. 

22Paragraph 7(a)(37)(A)(iv)(III)(cc) of the Small 

Business Act. 

23Paragraph 7(a)(37)(A)(iv)(III)(dd) of the Small 

Business Act. 

24Paragraph 7(a)(37)(A)(iv)(III)(ee) of the Small 

Business Act. 

25Section 322 of the Economic Aid Act. 

26Section 342 of the Economic Aid Act. 

27Paragraph 7(a)(37)(F) of the Small Business Act. 

28Paragraph 7(a)(37)(C)(iv) of the Small Business 

Act. 

waivers to Second Draw PPP Loans, 

adds a waiver for certain eligible news 

organizations, and makes adjustments to 

reflect the reduced size requirement for 

Second Draw PPP Loans. Specifically, 

business concerns with a NAICS code 

beginning with 72 qualify for the 

affiliation waiver for Second Draw PPP 

Loans if they employ 300 or fewer 

employees. Eligible news organizations 

with a NAICS code beginning with 

511110 or 5151 (or majority-owned or 

controlled by a business concern with 

those NAICS codes) may qualify for the 

affiliation waiver for Second Draw PPP 

Loans only if they employ 300 or fewer 

employees per physical location.18

Subsection (d)(2) implements these 

revised affiliation waivers. SBA also 

adopted a religious exemption to the 

affiliation rules by regulation,19 which 

applies to Second Draw PPP loans. 

C. Excluded Entities 

An entity that is ineligible to receive 

a First Draw PPP Loan under the CARES 

Act or Consolidated First Draw PPP IFR 

is also ineligible for a Second Draw PPP 

Loan.20 Subsection (e)(1) of the IFR 

implements this restriction. Subsection 

(e)(1) ensures that a borrower that 

received a First Draw PPP Loan despite 

being ineligible to receive the loan is not 

eligible to receive a Second Draw PPP 

Loan. 

The Economic Aid Act also prohibits 

several additional categories of 

borrowers from receiving a Second 

Draw PPP Loan under section 7(a)(37) of 

the Small Business Act. These 

categories of prohibited borrowers are 

listed in subsection (e) of the IFR: 

• A business concern or entity 

primarily engaged in political activities 

or lobbying activities, including any 

entity that is organized for research or 

for engaging in advocacy in areas such 

as public policy or political strategy or 

that describes itself as a think tank in 

any public documents; 21

• certain entities organized under the 

laws of the People’s Republic of China 

or the Special Administrative Region of 

Hong Kong, or with other specified ties 

to the People’s Republic of China or the 

Special Administrative Region of Hong 

Kong; 22

• any person required to submit a 

registration statement under section 2 of 

the Foreign Agents Registration Act of 

1938 (22 U.S.C. 612); 23

• a person or entity that receives a 

grant for shuttered venue operators 

under section 324 of the Economic Aid 

Act; 24

• entities in which the President, the 

Vice President, the head of an Executive 

department, or a Member of Congress, or 

the spouse of such person owns, 

controls, or holds at least 20 percent of 

any class of equity; 25 or 

• a publicly traded company, defined 

as an issuer, the securities of which are 

listed on an exchange registered as a 

national securities exchange under 

section 6 of the Securities Exchange Act 

of 1934 (15 U.S.C. 78f).26

In addition, subsection (e)(9) of this IFR 

provides that an entity that has 

previously received a Second Draw PPP 

Loan may not receive another Second 

Draw PPP Loan, as required by the 

Economic Aid Act.27 Subsection (e)(9) 

also prohibits an entity that has 

permanently closed from receiving a 

Second Draw PPP Loan because 

paragraph 7(a)(37)(A)(iv) of the Small 

Business Act is best understood to 

describe existing businesses. The 

Administrator, in consultation with the 

Secretary, has determined this provision 

is also necessary to maintain program 

integrity, prevent abuse, and preserve 

the availability of Second Draw PPP 

Loan funds for businesses still in 

operation. Preserving funds for such 

businesses is necessary because only 

businesses that are still in operation will 

retain employees, which is a primary 

purpose of the PPP. A borrower that has 

temporarily closed or temporarily 

suspended its business remains eligible 

for a Second Draw PPP Loan. 

D. Payroll Cost Calculation 

In general, section 307 of the 

Economic Aid Act provides that the 

maximum loan amount for a Second 

Draw PPP Loan is equal to the lesser of 

two and half months of the borrower’s 

average monthly payroll costs or $2 

million. Relative to First Draw PPP 

loans, the Economic Aid Act adjusted 

the methodology for calculating a 

borrower’s payroll costs. Unlike First 

Draw PPP Loans, the Economic Aid Act 

provides that the relevant time period 

for calculating a borrower’s payroll costs 

for a Second Draw PPP Loan is either 

the twelve-month period prior to when 

the loan is made or calendar year 2019. 

The Act also provided tailored 

methodologies for certain categories of 

borrowers. These calculations are 

reflected in subsection (f) of this IFR. 

Subsection (f) of the IFR uses ‘‘calendar 

year 2020’’ to refer to ‘‘the twelve-month 

period prior to when the loan is made.’’ 

Calculating payroll costs based on 

calendar year 2020 rather than the 

twelve months preceding the date the 

loan is made will simplify the 

calculations and documentation 

requirements for borrowers because 

payroll records are more commonly 

created and retained on a calendar-year 

basis. Allowing borrowers to calculate 

payroll costs based on calendar year 

2020 is also not expected to result in a 

significant difference in payroll costs 

compared to the twelve months 

preceding the date the loan is made 

because all Second Draw PPP Loans will 

be made in the first quarter of 2021. 

However, the rule notes that Second 

Draw PPP Loan borrowers who are not 

self-employed (including sole 

proprietorships and independent 

contractors) are also permitted to use 

the precise 1-year period before the date 

on which the loan is made to calculate 

payroll costs if they choose not to use 

2019 or 2020 to calculate payroll costs. 

Consistent with the Economic Aid 

Act, subsections (f)(3) and (f)(4) of the 

IFR include tailored calculation 

methodologies for seasonal businesses, 

new entities that did not exist for the 

full twelve-month period preceding the 

Second Draw PPP Loan, and borrowers 

assigned a NAICS code beginning with 

72 at the time of disbursement. For 

borrowers assigned a NAICS code 

beginning with 72 at the time of 

disbursement, the Economic Aid Act 

provides that the maximum loan 

amount is equal to three-and-a-half (3.5) 

months of payroll costs rather than twoand-a-half (2.5) months.28 These 

subsections also provide that, for a 

borrower with a NAICS code beginning 

with 72 that would fall into more than 

one category listed in subsection (f) (for 

example, a business with a NAICS code 

beginning with 72 that is also a seasonal 

business or is also a new entity without 

12 months of payroll costs), the 

borrower may calculate its average 

monthly payroll costs based on the 

methodology that applies to the entity 

but may use the 3.5 multiplier 


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3716 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

29See subsections (B)(4)(b) and (B)(4)(e) of the 

Consolidated First Draw PPP IFR. 

30See paragraph 7(a)(37)(I)(i) of the Small 

Business Act. 

31Paragraph 7(a)(37)(N) of the Small Business 

Act. 

32 85 FR 33010, 33012. 

applicable to businesses with a NAICS 

code beginning with 72. The 

Administrator, in consultation with the 

Secretary, has determined that this 

methodology is necessary to provide 

small businesses in the accommodation 

and food services sector the full amount 

of relief provided in the Economic Aid 

Act while allowing these borrowers to 

calculate their average monthly payroll 

costs accurately. 

The Economic Aid Act included a 

new payroll cost calculation for farmers 

and ranchers receiving First Draw PPP 

Loans. However, it did not specify how 

payroll costs should be calculated for 

Second Draw PPP Loans to farmers and 

ranchers. This IFR clarifies that the 

same general calculation for farmers and 

ranchers applicable to First Draw PPP 

Loans applies to Second Draw PPP 

Loans, with adjustments that (i) 

eliminate the provision for refinancing 

of an Economic Injury Disaster Loan 

(EIDL), which does not apply to Second 

Draw PPP Loans, and (ii) apply the 

choice of time period for calculating a 

farmer’s or rancher’s payroll costs for 

Second Draw PPP Loans, consistent 

with other Second Draw PPP Loans. 

This IFR also specifies that, in 

calculating a farmer’s or rancher’s 

maximum loan amount, any employee 

payroll costs should be subtracted from 

the farmer’s or rancher’s gross income to 

avoid double-counting amounts that 

represent pay to the employees of the 

farmer or rancher. 

Subsections (f)(7) and (f)(8) of the IFR 

include tailored calculation 

methodologies for self-employed 

individuals and partnerships. These 

methodologies are based on the 

corresponding methodologies for selfemployed individuals and partnerships 

that are used for First Draw PPP 

Loans.29 These methodologies have 

been adjusted to eliminate the provision 

for refinancing of an EIDL loan, which 

does not apply to Second Draw PPP 

loans and to apply the choice of time 

period for calculating payroll costs, 

consistent with other Second Draw PPP 

loans. 

Finally, subsection (f)(9) provides that 

businesses that are part of a single 

corporate group shall in no event 

receive more than $4,000,000 of Second 

Draw PPP Loans in the aggregate. The 

Administrator, in consultation with the 

Secretary, determined that limiting the 

amount of Second Draw PPP Loans that 

a single corporate group may receive 

will promote the availability of PPP 

loans to the largest possible number of 

borrowers, consistent with the CARES 

and Economic Aid Act. The 

Administrator has concluded that a 

limitation of $4,000,000 is appropriate 

because it is proportional to the 

$20,000,000 maximum amount for 

corporate groups that is provided under 

the Consolidated First Draw PPP IFR 

when the maximum loan amount for a 

single PPP loan is $10,000,000. 

E. Second Draw PPP Loan Application 

and Documentation Requirements 

Subsection (g) of this IFR includes the 

application and documentation 

requirements for Second Draw PPP 

Loans. The documentation required to 

substantiate an applicant’s payroll cost 

calculations is generally the same as 

documentation required for First Draw 

PPP Loans. However, no additional 

documentation to substantiate payroll 

costs will be required if the applicant (i) 

used calendar year 2019 figures to 

determine its First Draw PPP Loan 

amount, (ii) used calendar year 2019 

figures to determine its Second Draw 

PPP Loan amount (instead of calendar 

year 2020), and (iii) the lender for the 

applicant’s Second Draw PPP Loan is 

the same as the lender that made the 

applicant’s First Draw PPP Loan. In 

such cases, additional documentation is 

not required because the lender already 

has the relevant documentation 

supporting the borrower’s payroll costs. 

The lender may request additional 

documentation, however, if on further 

review the lender concludes that it 

would be useful in conducting the 

lender’s good-faith review of the 

borrower’s loan amount calculation. 

For loans with a principal amount 

greater than $150,000, the applicant 

must also submit documentation 

adequate to establish that the applicant 

experienced a revenue reduction of 25% 

or greater in 2020 relative to 2019. (The 

revenue reduction requirement is 

addressed in subsection (c)(1)(iv) of this 

IFR.) Such documentation may include 

relevant tax forms, including annual tax 

forms, or, if relevant tax forms are not 

available, quarterly financial statements 

or bank statements. For loans with a 

principal amount of $150,000 or less, 

such documentation is not required at 

the time the borrower submits its 

application for a loan, but must be 

submitted on or before the date the 

borrower applies for loan forgiveness, as 

required under the Economic Aid Act.30

If a borrower does not submit an 

application for loan forgiveness, such 

documentation must be provided upon 

SBA’s request. 

F. Lender Requirements 

Subsection (g) of this IFR contains the 

provisions specific to lenders for 

Second Draw PPP Loans. Paragraph 

7(a)(37)(K) of the Small Business Act, 

added by the Economic Aid Act, states 

that a lender approved to make First 

Draw PPP loans may make Second Draw 

PPP Loans under the same terms and 

conditions as new First Draw PPP 

Loans. Subsection (g)(2) of this IFR 

provides that lenders are subject to the 

same requirements when making 

Second Draw PPP Loans as when they 

are making First Draw PPP Loans. These 

provisions allow a lender approved to 

make Second Draw PPP Loans to use 

existing program guidance and standard 

operating procedures to the maximum 

extent practicable.31 The requirements 

applicable to PPP lenders are in sections 

(C) and (D) of the Consolidated First 

Draw PPP IFR. If a borrower has not 

submitted new payroll documentation 

with its Second Draw PPP Loan 

application because it previously 

submitted 2019 payroll information to 

the same lender when it applied for its 

First Draw PPP Loan, then the lender 

must confirm the borrower’s average 

monthly payroll costs based on that 

prior documentation. 

In addition, for a Second Draw PPP 

Loan greater than $150,000, the lender 

must confirm the dollar amount and 

percentage of the borrower’s revenue 

reduction by performing a good faith 

review, in a reasonable time, of the 

borrower’s calculations and supporting 

documents concerning the borrower’s 

revenue reduction. If the lender 

identifies errors in the borrower’s 

calculation or a material lack of 

substantiation in the borrower’s 

supporting documents, the lender 

should work with the borrower to 

remedy the issue. 

G. Loans to Borrowers With Unresolved 

First Draw PPP Loans 

As described in SBA’s interim final 

rule on SBA Loan Review Procedures 

and Related Borrower and Lender 

Responsibilities, SBA may review any 

PPP loan, as the Administrator deems 

appropriate.32 Subsection (i) of the IFR 

establishes procedures relating to the 

handling of a Second Draw PPP Loan 

application by a borrower whose First 

Draw PPP Loan is under review by SBA 

(‘‘unresolved borrower’’). If a borrower’s 

First Draw PPP loan is under review by 

SBA and/or information in SBA’s 

possession indicates that the borrower 

may have been ineligible for the First 


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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3717 

33All terms in this subsection have the same 

definitions as in sections 7(a)(36) and (37) of the 

Small Business Act and the Consolidated First 

Draw PPP IFR, as applicable. 

34A lender must make disbursement of the loan 

within ten calendar days of loan approval. See 

subsection (D)(7) of the Consolidated First Draw 

PPP IFR. 

Draw PPP Loan it received or for the 

loan amount it received, the lender will 

receive notification from SBA when the 

lender submits an application for a 

guaranty of a Second Draw PPP Loan 

and will not receive an SBA loan 

number until the issue related to the 

unresolved borrower’s First Draw PPP 

Loan is resolved. SBA will resolve 

issues related to unresolved borrowers 

expeditiously. These procedures are 

designed to promote compliance with 

the eligibility requirements for Second 

Draw PPP Loans by preventing 

additional loans from being made to 

borrowers that were not eligible for a 

First Draw PPP Loan or received an 

impermissible loan amount. At the same 

time, these procedures do not disqualify 

an eligible unresolved borrower from 

receiving a Second Draw PPP Loan, in 

recognition that many flags will be 

resolved in the borrower’s favor. The 

Administrator, in consultation with the 

Secretary, has determined that these 

procedures strike an appropriate 

balance between promoting program 

integrity and preventing abuse, while 

making Second Draw PPP Loans 

available to all eligible borrowers as 

expeditiously as possible. SBA will set 

aside available appropriations to fund 

Second Draw PPP Loans applied for by 

unresolved borrowers in the event they 

are approved. 

H. Loan Forgiveness 

Loan forgiveness of Second Draw PPP 

Loans and the loan review process for 

Second Draw PPP Loans are generally 

subject to the interim final rules 

regarding Loan Forgiveness and SBA 

Loan Review Procedures and Related 

Borrower and Lender Responsibilities, 

as modified to conform to the Economic 

Aid Act by the Consolidated First Draw 

PPP IFR, which is being published 

concurrently with this IFR. Subsection 

(j) contains forgiveness provisions 

specific to Second Draw PPP loans. 

Table of Contents 

(a) Second Draw PPP Loan Program 

(b) What requirements apply to Second Draw 

PPP Loans? 

(c) Who is eligible for a Second Draw PPP 

Loan? 

(d) How do SBA’s affiliation rules affect an 

applicant’s eligibility for a Second Draw 

PPP Loan? 

(e) Who is not eligible for a Second Draw PPP 

Loan? 

(f) What is the maximum loan amount for a 

Second Draw PPP Loan? 

(g) How do I submit an application for a 

Second Draw PPP Loan and what 

documentation must I provide to 

demonstrate eligibility? 

(h) What do lenders need to know and do? 

(i) Will an applicant’s Second Draw PPP 

Loan application be affected if there are 

unresolved issues regarding the 

applicant’s First Draw PPP Loan? 

(j) Are Second Draw PPP Loans eligible for 

loan forgiveness? 

IV. Paycheck Protection Program 

Second Draw Loans 

(a) Second Draw PPP Loan Program 

Under section 7(a)(37) of the Small 

Business Act (15 U.S.C. 636(a)(37)), SBA 

is authorized to guarantee Paycheck 

Protection Program Second Draw Loans 

(‘‘Second Draw PPP Loans’’). 

(b) What requirements apply to Second 

Draw PPP Loans? 

(1) Second Draw PPP Loans are 

subject to SBA’s and the Department of 

the Treasury’s (‘‘Treasury’s’’) 

consolidated interim final rule 

implementing the Paycheck Protection 

Program (‘‘Consolidated First Draw PPP 

IFR’’) and all PPP loan program 

requirements, except as otherwise 

provided in this section, including but 

not limited to the following terms: 

(i) The guarantee percentage is 100 

percent. 

(ii) No collateral will be required. 

(iii) No personal guarantees will be 

required. 

(iv) The interest rate will be 100 basis 

points or one percent, calculated on a 

non-compounding, non-adjustable basis. 

(v) The maturity is five years. 

(vi) All loans will be processed by all 

lenders under delegated authority and 

lenders will be permitted to rely on 

certifications of the borrower in order to 

determine eligibility of the borrower 

and the use of loan proceeds. 

(2) Frequently Asked Questions and 

other guidance issued by SBA or by 

SBA in consultation with the 

Department of the Treasury with respect 

to PPP loans under section 7(a)(36) of 

the Small Business Act (15 U.S.C. 

636(a)(36)) (‘‘First Draw PPP Loans’’) 

apply to Second Draw PPP Loans, 

except as otherwise provided in this 

section. 

(c) Who is eligible for a Second Draw 

PPP Loan? 

Subject to subsection (e) of this 

section, below, the following applicants 

are eligible for Second Draw PPP Loans: 

(1) An applicant is eligible for a 

Second Draw PPP Loan if it is a 

business concern, independent 

contractor, eligible self-employed 

individual, sole proprietor, nonprofit 

organization eligible for a First Draw 

PPP Loan, veterans organization, Tribal 

business concern, housing cooperative, 

small agricultural cooperative, eligible 

501(c)(6) organization or destination 

marketing organization, or an eligible 

nonprofit news organization 33 that: 

(i) Previously received a First Draw 

PPP loan in accordance with the 

eligibility criteria in the Consolidated 

First Draw PPP IFR; 

(ii) has used, or will use, the full 

amount of its First Draw PPP Loan 

(including the amount of any increase 

on such First Draw PPP Loan) on 

authorized uses under subsection 

(B)(11) of the Consolidated First Draw 

PPP IFR on or before the expected date 

on which the Second Draw PPP Loan 

will be disbursed; 34

(iii) employs not more than 300 

employees, unless it satisfies the 

alternative criteria for businesses with a 

North American Industry Classification 

System (‘‘NAICS’’) code beginning with 

72 and eligible news organizations with 

more than one physical location 

described in subsection (c)(3) or (c)(4) of 

this section; and 

(iv) (A) experienced a reduction in 

revenue in calendar year 2020, 

measured as follows: 

(1) the applicant had gross receipts 

during the first, second, third, or fourth 

quarter in 2020 that demonstrate at least 

a 25 percent reduction from the 

applicant’s gross receipts during the 

same quarter in 2019 (for example, an 

applicant that had gross receipts of 

$50,000 in the second quarter of 2019 

and had gross receipts of $30,000 in the 

second quarter of 2020 experienced a 40 

percent revenue reduction between 

these two quarters); 

(2) if the applicant was not in 

business during the first or second 

quarter of 2019, but was in business 

during the third and fourth quarters of 

2019, the applicant had gross receipts 

during the first, second, third, or fourth 

quarter of 2020 that demonstrate at least 

a 25 percent reduction from the 

applicant’s gross receipts during the 

third or fourth quarter of 2019 (for 

example, an applicant that had gross 

receipts of $50,000 in the third quarter 

of 2019 and had gross receipts of 

$30,000 in the third quarter of 2020– 

demonstrating a reduction of 40 percent 

from the applicant’s gross receipts 

during the third quarter in 2019); 

(3) if the applicant was not in 

business during the first, second, or 

third quarter of 2019, but was in 

business during the fourth quarter of 

2019, the applicant had gross receipts 


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3718 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

35See generally section (B)(2) of the Consolidated 

First Draw PPP IFR. 

during the first, second, third, or fourth 

quarter of 2020 that demonstrate at least 

a 25 percent reduction from the fourth 

quarter of 2019 (for example, an 

applicant that had gross receipts of 

$50,000 in the fourth quarter of 2019 

and had gross receipts of $30,000 in the 

fourth quarter of 2020–demonstrating a 

reduction of 40 percent from the 

applicant’s gross receipts during the 

fourth quarter in 2019); or 

(4) if the applicant was not in 

business during 2019, but was in 

operation on February 15, 2020, the 

applicant had gross receipts during the 

second, third, or fourth quarter of 2020 

that demonstrate at least a 25 percent 

reduction from the gross receipts of the 

entity during the first quarter of 2020 

(for example, an applicant that had 

gross receipts of $50,000 in the first 

quarter of 2020 and had gross receipts 

of $30,000 in the fourth quarter of 

2020—demonstrating a reduction of 40 

percent from the applicant’s gross 

receipts during the first quarter in 2020). 

(B) An applicant that was in operation 

in all four quarters of 2019 is deemed to 

have experienced the revenue reduction 

in subsection (c)(1)(iv)(A)(1) if it 

experienced a reduction in annual 

receipts of 25 percent or greater in 2020 

compared to 2019 and the borrower 

submits copies of its annual tax forms 

substantiating the revenue decline. 

(2)(i) Gross receipts includes all 

revenue in whatever form received or 

accrued (in accordance with the entity’s 

accounting method) from whatever 

source, including from the sales of 

products or services, interest, dividends, 

rents, royalties, fees, or commissions, 

reduced by returns and allowances. 

Generally, receipts are considered ‘‘total 

income’’ (or in the case of a sole 

proprietorship, independent contractor, 

or self-employed individual ‘‘gross 

income’’) plus ‘‘cost of goods sold,’’ and 

excludes net capital gains or losses as 

these terms are defined and reported on 

IRS tax return forms. Gross receipts do 

not include the following: Taxes 

collected for and remitted to a taxing 

authority if included in gross or total 

income (such as sales or other taxes 

collected from customers and excluding 

taxes levied on the concern or its 

employees); proceeds from transactions 

between a concern and its domestic or 

foreign affiliates; and amounts collected 

for another by a travel agent, real estate 

agent, advertising agent, conference 

management service provider, freight 

forwarder or customs broker. All other 

items, such as subcontractor costs, 

reimbursements for purchases a 

contractor makes at a customer’s 

request, investment income, and 

employee-based costs such as payroll 

taxes, may not be excluded from gross 

receipts. 

(ii) Gross receipts of affiliates are 

calculated as follows: 

(A) Gross receipts of a borrower with 

affiliates is calculated by adding the 

gross receipts of the business concern 

with the gross receipts of each affiliate. 

(B) If a borrower has acquired an 

affiliate or been acquired as an affiliate 

during 2020, gross receipts includes the 

receipts of the acquired or acquiring 

concern. This aggregation applies for the 

entire period of measurement, not just 

the period after the affiliation arose. 

However, if a concern acquired a 

segregable division of another business 

concern during 2020, gross receipts do 

not include the receipts of the acquired 

division prior to the acquisition. 

(C) The gross receipts of a former 

affiliate are not included. This exclusion 

of gross receipts of such former affiliate 

applies during the entire period of 

measurement, rather than only for the 

period after which affiliation ceased. 

However, if a borrower sold a segregable 

division during 2020, the gross receipts 

will continue to include the receipts of 

the division that was sold. 

(D) All terms in this subsection shall 

have the meaning attributed to them by 

the IRS. 

(iii) For an eligible nonprofit 

organization, a veterans organization, an 

eligible nonprofit news organization, an 

eligible 501(c)(6) organization, or 

eligible destination marketing 

organization, gross receipts means gross 

receipts within the meaning of section 

6033 of the Internal Revenue Code of 

1986. 

(iv) The amount of any forgiven First 

Draw PPP Loan shall not be included 

toward any borrower’s gross receipts. 

(3) Any business concern that has 

more than one physical location and 

that employs not more than 300 

employees per physical location is 

eligible to receive a Second Draw PPP 

Loan if it is assigned a NAICS code 

beginning with 72 at the time of loan 

disbursement and otherwise meets the 

eligibility criteria in subsection (c)(1). 

(4) Any business concern, or any 

station which broadcasts pursuant to a 

license granted by the Federal 

Communications Commission under 

title III of the Communications Act of 

1934 (47 U.S.C. 301 et seq.), that has 

more than one physical location and 

that employs not more than 300 

employees per physical location is 

eligible to receive a Second Draw PPP 

Loan if it meets the eligibility criteria in 

subsection (c)(1) and: (1) Is majority 

owned or controlled by a business 

concern that is assigned a NAICS code 

beginning with 511110 or 5151 or, with 

respect to a public broadcasting entity 

(as defined in section 397(11) of the 

Communications Act of 1934 (47 U.S.C. 

397(11))), has a trade or business that 

falls under such a code; and (2) makes 

a good faith certification that proceeds 

of the loan will be used to support 

expenses at the component of the 

organization that produces or distributes 

locally focused or emergency 

information. 

(d) How do SBA’s affiliation rules affect 

an applicant’s eligibility for a Second 

Draw PPP Loan? 

(1) Eligibility for Second Draw PPP 

Loans is governed by the same 

affiliations rules (and waivers) as First 

Draw PPP Loans, except as described in 

subsection (d)(2). 

(2) The affiliation rules under 13 CFR 

121.301(f) are waived with respect to 

eligibility for a Second Draw PPP Loan 

for: 

(i) Any business concern with not 

more than 300 employees that, as of the 

date on which the covered loan is 

disbursed, is assigned a NAICS code 

beginning with 72; and 

(ii) (A) any business concern 

(including any station which broadcasts 

pursuant to a license granted by the 

Federal Communications Commission 

under title III of the Communications 

Act of 1934 (47 U.S.C. 301 et seq.) 

without regard for whether such a 

station is a concern as defined in 13 

CFR 121.105, or any successor thereto) 

that employs not more than 300 

employees, per physical location of 

such business concern and is majority 

owned or controlled by a business 

concern that is assigned a NAICS code 

beginning with 511110 or 5151; or 

(B) any nonprofit organization that is 

assigned a NAICS code beginning with 

5151. 

(e) Who is not eligible for a Second 

Draw PPP Loan? 

An applicant is not eligible for a 

Second Draw PPP Loan, even if it meets 

the eligibility requirements of 

subsection (c) of this section, if the 

applicant is: 

(1) Excluded from eligibility under 

the Consolidated First Draw PPP IFR; 35

(2) a business concern or entity 

primarily engaged in political activities 

or lobbying activities, as defined in 

section 3 of the Lobbying Disclosure Act 

of 1995 (2 U.S.C. 1602), including any 

entity that is organized for research or 

for engaging in advocacy in areas such 

as public policy or political strategy or 


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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3719 

36Second Draw PPP Loan borrowers who are not 

self-employed, sole proprietorships, or independent 

contractors are also permitted to use the precise 1- 

year period before the date on which the loan is 

made to calculate payroll costs if they choose not 

to use 2019 or 2020. Since most borrowers will use 

2019 or 2020 the rule text refers only to 2019 or 

2020 for simplicity and readability. 

otherwise describes itself as a think tank 

in any public documents; 

(3) any business concern or entity: 

(i) For which an entity created in or 

organized under the laws of the People’s 

Republic of China or the Special 

Administrative Region of Hong Kong, or 

that has significant operations in the 

People’s Republic of China or the 

Special Administrative Region of Hong 

Kong, owns or holds, directly or 

indirectly, not less than 20 percent of 

the economic interest of the business 

concern or entity, including as equity 

shares or a capital or profit interest in 

a limited liability company or 

partnership; or 

(ii) that retains, as a member of the 

board of directors of the business 

concern, a person who is a resident of 

the People’s Republic of China; 

(4) any person required to submit a 

registration statement under section 2 of 

the Foreign Agents Registration Act of 

1938 (22 U.S.C. 612); 

(5) any person or entity that receives 

a grant for shuttered venue operators 

under section 324 of the Economic Aid 

to Hard-Hit Small Businesses, 

Nonprofits, and Venues Act; 

(6) any entity in which the President, 

the Vice President, the head of an 

Executive department, or a Member of 

Congress, or the spouse of such person 

as determined under applicable 

common law, directly or indirectly 

holds a controlling interest in the entity, 

where: 

(i) ‘‘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 an entity; 

(ii) ‘‘equity interest’’ means: 

(A) A share in an entity, without 

regard to whether the share is 

transferable or classified as stock or 

anything similar; 

(B) a capital or profit interest in a 

limited liability company or 

partnership; or 

(C) a warrant or right, other than a 

right to convert, to purchase, sell, or 

subscribe to a share or interest described 

in (A) or (B), respectively; 

(iii) ‘‘Executive department’’ has the 

meaning given the term in section 101 

of title 5, United States Code; 

(iv) ‘‘Member of Congress’’ means a 

Member of the Senate or House of 

Representatives, a Delegate to the House 

of Representatives, and the Resident 

Commissioner from Puerto Rico; and 

(v) For the purpose of determining 

whether a person has a controlling 

interest in the entity, the securities 

owned, controlled, or held by the 

President, the Vice President, the head 

of an Executive department, or a 

Member of Congress, shall be aggregated 

with the securities held by his or her 

spouse as determined under applicable 

common law; 

(7) any issuer, the securities of which 

are listed on an exchange registered as 

a national securities exchange under 

section 6 of the Securities Exchange Act 

of 1934 (15 U.S.C. 78f), where the terms 

‘‘exchange,’’ ‘‘issuer,’’ and ‘‘security’’ 

have the meanings given those terms in 

section 3(a) of the Securities Exchange 

Act of 1934 (15 U.S.C. 78c(a)) (except 

SBA will not consider whether a news 

organization that is eligible under 

subsection (c)(4) is affiliated with an 

entity, which includes any entity that 

owns or controls such news 

organization, that is an issuer); 

(8) an entity that has previously 

received a Second Draw PPP Loan; or 

(9) an entity that has permanently 

closed. 

(f) What is the maximum loan amount 

for a Second Draw PPP Loan? 

(1) In general, the maximum loan 

amount for a Second Draw PPP Loan is 

equal to the lesser of two and half 

months of the borrower’s average 

monthly payroll costs or $2 million, 

except as otherwise specified in this 

subsection (e). A borrower’s average 

monthly payroll costs may be based on 

calendar year 2020, calendar year 

2019,36 or as otherwise specified in 

subsections (f)(2) through (f)(9) of this 

section. ‘‘Payroll costs’’ has the same 

meaning as in subsections (B)(4)(g) and 

(B)(4)(h) of the Consolidated First Draw 

PPP IFR and is calculated in the same 

manner. In calculating a borrower’s 

payroll costs, the borrower must 

subtract any compensation paid to an 

employee in excess of $100,000 on an 

annualized basis, as prorated for the 

time period during which the payments 

are made or the obligation to make the 

payments is incurred. 

(2) Except as otherwise provided in 

subsection (f)(3) through (f)(7), the 

maximum amount of a Second Draw 

PPP Loan is calculated as the lesser of: 

(i) The product obtained by 

multiplying: 

(A) The average total monthly 

payment for payroll costs incurred or 

paid by the borrower during 2019 or 

2020 (at the election of the borrower); by 

(B) 2.5; or 

(ii) $2,000,000. 

(3) The maximum amount of a Second 

Draw PPP Loan to a borrower that is a 

seasonal employer (meaning an 

employer that does not operate for more 

than 7 months in any calendar year or 

that during the preceding calendar year, 

had gross receipts for any 6 months of 

that year that were not more than 33.33 

percent of the gross receipts of the 

employer for the other 6 months of that 

year) is calculated as the lesser of: 

(i) The product obtained by 

multiplying: 

(A) At the election of the borrower, 

the average total monthly payments for 

payroll costs incurred or paid by the 

borrower for any 12-week period 

between February 15, 2019 and 

February 15, 2020; by 

(B) 2.5 (or, only for a borrower 

assigned a NAICS code beginning with 

72 at the time of disbursement as 

defined in subsection (f)(10), 3.5); or 

(ii) $2,000,000. 

(4) The maximum amount of a Second 

Draw PPP Loan to a borrower that did 

not exist during the 1-year period 

preceding February 15, 2020, but was in 

operation on February 15, 2020 (‘‘new 

entity’’), is calculated as the lesser of: 

(i) The product obtained by 

multiplying: 

(A) The quotient obtained by 

dividing: 

(1) The sum of the total monthly 

payments by the borrower for payroll 

costs paid or incurred by the borrower 

as of the date on which the borrower 

applies for the Second Draw PPP Loan; 

by 

(2) the number of months in which 

those payroll costs were paid or 

incurred; by 

(B) 2.5 (or, only for a borrower 

assigned a NAICS code beginning with 

72 at the time of disbursement as 

defined in subsection (f)(10), 3.5); or 

(ii) $2,000,000. 

(5) The maximum amount of a Second 

Draw PPP Loan made to a borrower 

assigned a NAICS code beginning with 

72 at the time of disbursement as 

defined in subsection (f)(10) (that is not 

a seasonal employer or new entity 

addressed in subsection (f)(3) or (f)(4) or 

a borrower with self-employment 

income or a partnership addressed in 

subsection (f)(7) or (f)(8) of this section) 

is calculated as the lesser of: 

(i) The product obtained by 

multiplying: 

(A) The average total monthly 

payment for payroll costs incurred or 

paid by the borrower during either 2019 

or 2020 (at the borrower’s election) by 

(B) 3.5; or 

(ii) $2,000,000. 

(6) (i) The maximum amount of a 

Second Draw PPP Loan to a farmer or 

rancher that: 


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3720 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

37This treatment follows the computation of selfemployment tax from IRS Form 1040 Schedule SE 

Section A line 4 and removes the ‘‘employer’’ share 

of self-employment tax, consistent with how payroll 

costs for employees in the partnership are 

determined. 

(A) Operates as a sole proprietorship 

or as an independent contractor, or is an 

eligible self-employed individual; 

(B) reports farm income or expenses 

on a Schedule F (IRS Form 1040); and 

(C) was in business as of February 15, 

2020; is calculated according to (ii) or 

(iii) of this subsection(e)(6), depending 

on whether the borrower has employees. 

(ii) If a borrower meeting the criteria 

in subsection (6)(i) of this section does 

not have any employees, the maximum 

loan amount is the product obtained by 

multiplying: 

(A) The gross income of the borrower 

in 2019 or 2020, as reported on a 

Schedule F (IRS Form 1040), that is not 

more than $100,000, divided by 12; and 

(B) 2.5. 

(iii) If a borrower meeting the criteria 

in subsection (6)(i) of this section has 

employees, the maximum loan amount 

is calculated as the lesser of: 

(A) The product obtained by 

multiplying: 

(1) The sum of (i) the difference 

between gross income and employee 

payroll costs of the borrower in 2019 or 

2020 (at the election of the borrower), as 

reported on a Schedule F (IRS Form 

1040), that is not more than $100,000, 

divided by 12, and (ii) the average total 

monthly payment for employee payroll 

costs incurred or paid by the borrower 

during the same year elected by the 

borrower; by 

(2) 2.5; or 

(B) $2,000,000. 

(7) The maximum amount of a Second 

Draw PPP Loan to a borrower that has 

income from self-employment and files 

a Form 1040, Schedule C, is calculated 

as follows, depending on whether the 

borrower has employees: 

(i) For a borrower that has income 

from self-employment and does not 

have any employees, the maximum loan 

amount is the lesser of: 

(A) The product obtained by 

multiplying: 

(1) The net profit of the borrower in 

2019 or 2020, as reported on IRS Form 

1040 Schedule C, that is not more than 

$100,000, divided by 12; and 

(2) 2.5 (or, only for a borrower 

assigned a NAICS code beginning with 

72 as defined in subsection (f)(10) at the 

time of disbursement, 3.5). 

(ii) For a borrower that has income 

from self-employment and has 

employees, the maximum loan amount 

is the lesser of: 

(A) The product obtained by 

multiplying: 

(1) The sum of (i) the net profit of the 

borrower in 2019 or 2020 (at the 

election of the borrower), as reported on 

IRS Form 1040 Schedule C, that is not 

more than $100,000, divided by 12; (ii) 

the average total monthly payment for 

employee payroll costs incurred or paid 

by the borrower during the same year 

elected by the borrower; by 

(2) 2.5 (or, only for a borrower 

assigned a NAICS code beginning with 

72 at the time of disbursement as 

defined in subsection (f)(10), 3.5); or 

(B) $2,000,000. 

(8) The maximum amount of a Second 

Draw PPP Loan to a borrower that files 

taxes as a partnership is calculated as 

the lesser of: 

(i) The product obtained by 

multiplying: 

(A) The sum of (1) net earnings from 

self-employment of individual general 

partners in 2019 or 2020 (at the election 

of the borrower), as reported on IRS 

Form 1065 K–1, reduced by section 179 

expense deduction claimed, 

unreimbursed partnership expenses 

claimed, and depletion claimed on oil 

and gas properties, multiplied by 

0.9235,37 that is not more than 

$100,000, divided by 12; (2) the average 

total monthly payment for employee 

payroll costs incurred or paid by the 

borrower during the same year elected 

by the borrower; by 

(B) 2.5 (or, only for a borrower 

assigned a NAICS code beginning with 

72 as defined in subsection (f)(10) at the 

time of disbursal, 3.5); or 

(ii) $2,000,000. 

(9) Businesses that are part of a single 

corporate group shall in no event 

receive more than $4,000,000 of Second 

Draw PPP Loans in the aggregate. 

Corporate group has the same meaning 

as in subsection (B)(4)(f) of the 

Consolidated First Draw PPP IFR. 

(10) For purposes of calculating a 

borrower’s maximum payroll costs, a 

borrower may multiply its average 

monthly payroll costs by 3.5 only if the 

borrower is in the Accommodation and 

Food Services sector and has reported a 

NAICS code beginning with 72 as its 

business activity code on its most recent 

IRS income tax return. 

(g) How do I submit an application for 

a Second Draw PPP Loan and what 

documentation must I provide to 

demonstrate eligibility? 

(1) The applicant must submit to the 

lender SBA Form 2483–SD (Paycheck 

Protection Program Second Draw 

Borrower Application Form) or the 

lender’s equivalent form including the 

required certifications and the 

documentation in subsection (g)(2). 

(2) At the time an applicant submits 

its loan application form, it must submit 

the following unless the documentation 

was submitted to the lender for the First 

Draw PPP Loan (i.e., the applicant used 

calendar year 2019 figures to determine 

both its First Draw PPP Loan amount 

and its Second Draw PPP Loan amount, 

and the lender for the applicant’s 

Second Draw PPP Loan is the same as 

the lender that made the applicant’s 

First Draw PPP Loan): 

(i) If the applicant is not selfemployed, the applicant’s Form 941 (or 

other tax forms containing similar 

information) and state quarterly wage 

unemployment insurance tax reporting 

forms from each quarter in 2019 or 2020 

(whichever was used to calculate 

payroll), as applicable, or equivalent 

payroll processor records, along with 

evidence of any retirement and 

employee group health, life, disability, 

vision and dental insurance 

contributions, must be provided. A 

partnership must also include its IRS 

Form 1065 K–1s. 

(ii) If the applicant is self-employed 

and has employees, the applicant’s 2019 

or 2020 (whichever was used to 

calculate loan amount) IRS Form 1040 

Schedule C, Form 941 (or other tax 

forms or equivalent payroll processor 

records containing similar information) 

and state quarterly wage unemployment 

insurance tax reporting forms from each 

quarter in 2019 or 2020 (whichever was 

used to calculate loan amount), as 

applicable, or equivalent payroll 

processor records, along with evidence 

of any retirement and employee group 

health, life, disability, vision and dental 

insurance contributions, if applicable, 

must be provided. A payroll statement 

or similar documentation from the pay 

period that covered February 15, 2020 

must be provided to establish the 

applicant was in operation on February 

15, 2020. 

(iii) If the applicant is self-employed 

and does not have employees, the 

applicant must provide (a) its 2019 or 

2020 (whichever was used to calculate 

loan amount) Form 1040 Schedule C, (b) 

a 2019 or 2020 (whichever was used to 

calculate loan amount) IRS Form 1099– 

MISC detailing nonemployee 

compensation received (box 7), invoice, 

bank statement, or book of record that 

establishes that the applicant is selfemployed; and (c) a 2020 invoice, bank 

statement, or book of record to establish 

that the applicant was in operation on 

or around February 15, 2020. 

(iv) For loans with a principal amount 

greater than $150,000, documentation 

sufficient to establish that the applicant 

experienced a reduction in revenue, as 

provided in subsection(c)(1)(iv), must be 


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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3721 

38A representative of the applicant can certify for 

the business as a whole if the representative is 

legally authorized to do so. 

provided at the time of application, 

which may include relevant tax forms, 

including annual tax forms, or, if 

relevant tax forms are not available, a 

copy of the applicant’s quarterly income 

statements or bank statements. 

(v) For loans with a principal amount 

of $150,000 or less, the applicant must 

submit documentation sufficient to 

establish that the applicant experienced 

a reduction in revenue as provided in 

subsection (c)(1)(i) of this section at the 

time of application, on or before the 

date the borrower submits an 

application for loan forgiveness, or, if 

the borrower does not apply for loan 

forgiveness, at SBA’s request. Such 

documentation may include relevant tax 

forms, including annual tax forms, or, if 

relevant tax forms are not available, a 

copy of the applicant’s quarterly income 

statements or bank statements. 

(3) On the Second Draw PPP Loan 

borrower application, an authorized 

representative of the applicant 38 must 

make the certifications listed in 

subsection (B)(12) of the Consolidated 

First Draw PPP IFR, except: 

(i) Instead of the certification in 

subsection (B)(12)(v) of the 

Consolidated First Draw PPP IFR, the 

applicant must certify that the applicant 

has not and will not receive another 

Second Draw Paycheck Protection 

Program Loan; and 

(ii) an authorized representative of the 

applicant must also certify: 

(A) The Applicant has realized a 

reduction in gross receipts in excess of 

25% relative to the relevant comparison 

time period. For loans greater than 

$150,000, Applicant has provided 

documentation to the lender 

substantiating the decline in gross 

receipts. For loans of $150,000 or less, 

Applicant will provide documentation 

substantiating the decline in gross 

receipts upon or before seeking loan 

forgiveness for the Second Draw 

Paycheck Protection Program Loan or 

upon SBA request. 

(B) The Applicant received a First 

Draw Paycheck Protection Program 

Loan and, before the Second Draw 

Paycheck Protection Program Loan is 

disbursed, will have used the full loan 

amount (including any increase) of the 

First Draw Paycheck Protection Program 

Loan only for eligible expenses. 

(C) The Applicant is not a business 

concern or entity (a) for which an entity 

created in or organized under the laws 

of the People’s Republic of China or the 

Special Administrative Region of Hong 

Kong, or that has significant operations 

in the People’s Republic of China or the 

Special Administrative Region of Hong 

Kong, owns or holds, directly or 

indirectly, not less than 20 percent of 

the economic interest of the business 

concern or entity, including as equity 

shares or a capital or profit interest in 

a limited liability company or 

partnership; or (b) that retains, as a 

member of the board of directors of the 

business concern, a person who is a 

resident of the People’s Republic of 

China. 

(D) The Applicant is not required to 

submit a registration statement under 

section 2 of the Foreign Agents 

Registration Act of 1938 (22 U.S.C. 612). 

(E) The Applicant is not a business 

concern or entity primarily engaged in 

political or lobbying activities, 

including any entity that is organized 

for research or for engaging in advocacy 

in areas such as public policy or 

political strategy or otherwise describes 

itself as a think tank in any public 

documents. 

(4) A lender must submit SBA Form 

2484–SD (Paycheck Protection Program 

Lender’s Application—Second Draw 

Loan Guaranty) electronically in 

accordance with program requirements 

and maintain the forms and supporting 

documentation in its files. 

(h) What do lenders need to know and 

do? 

(1) A lender approved to make First 

Draw PPP Loans may make Second 

Draw PPP Loans under the same terms 

and conditions applicable to First Draw 

PPP Loans, including all requirements 

under sections (C) and (D) of the 

Consolidated First Draw PPP IFR, 

except as otherwise provided in this 

section. 

(2) What do lenders have to do in 

terms of loan underwriting? 

(i) Each lender shall: 

(A) Confirm receipt of borrower 

certifications contained in Paycheck 

Protection Program Second Draw 

Borrower Application Form (SBA Form 

2483–SD) or lender’s equivalent; 

(B) Confirm receipt of information 

demonstrating that a borrower was 

either an eligible self-employed 

individual, independent contractor, or 

sole proprietorship with no employees 

or had employees for whom the 

borrower paid salaries and payroll taxes 

on or around February 15, 2020; 

(C) Confirm the dollar amount of 

average monthly payroll costs for 2019 

or 2020 (whichever was used to 

calculate loan amount) by reviewing the 

payroll documentation submitted with 

the borrower’s application; 

(D) For a Second Draw PPP Loan 

greater than $150,000 or a loan of 

$150,000 or less where the borrower 

provides documentation of revenue 

reduction, confirm the dollar amount 

and percentage of the borrower’s 

revenue reduction by performing a good 

faith review, in a reasonable time, of the 

borrower’s calculations and supporting 

documents concerning the borrower’s 

revenue reduction. For a loan of 

$150,000 or less where the borrower 

does not provide documentation of 

revenue reduction with its application, 

the lender shall perform this review 

when the borrower provides such 

documentation. If the lender identifies 

errors in the borrower’s calculation or 

material lack of substantiation in the 

borrower’s supporting documents, the 

lender should work with the borrower 

to remedy the issue. 

(E) Follow applicable BSA 

requirements (listed in subsection 

(C)(3)(d) of the Consolidated First Draw 

PPP IFR); and 

(ii) Each lender’s underwriting 

obligation under the Second Draw PPP 

is limited to the items above and 

reviewing the ‘‘Paycheck Protection 

Program Second Draw Borrower 

Application Form’’ (SBA Form 2483– 

SD) or lender’s equivalent form. 

(iii) A lender may rely on any 

certification or documentation 

submitted by an applicant for a PPP 

loan or an eligible recipient or eligible 

entity that (A) is submitted pursuant to 

all applicable statutory requirements, 

regulations, and guidance related to a 

PPP loan, including under sections 

7(a)(36) or (37) of the Small Business 

Act (15 U.S.C. 636(a)(36) and (37)); and 

(B) attests that the applicant, eligible 

recipient, or eligible entity, as 

applicable, has accurately provided the 

certification or documentation to the 

lender in accordance with the statutory 

requirements, regulations, and guidance 

related to PPP loans. With respect to a 

lender that relies on such a certification 

or documentation related to a Second 

Draw PPP Loan, an enforcement action 

may not be taken against the lender, and 

the lender shall not be subject to any 

penalties relating to loan origination or 

forgiveness of the Second Draw PPP 

Loan, if—(A) the lender acts in good 

faith relating to loan origination or 

forgiveness of the Second Draw PPP 

Loan based on that reliance; and (B) all 

other relevant Federal, State, local, and 

other statutory and regulatory 

requirements applicable to the lender 

are satisfied with respect to the Second 

Draw PPP Loan. 

(3) SBA will pay lenders fees for 

processing Second Draw PPP Loans in 

the following amounts: 


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3722 Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 

(i) for a Second Draw PPP Loan of up 

to (and including) $50,000, in an 

amount equal to the lesser of: 

(A) 50 percent of the balance of the 

financing outstanding at the time of 

disbursement of the loan; or 

(B) $2,500; and 

(ii) for a Second Draw PPP Loan of 

more than $50,000, in an amount that is: 

(A) 5 percent of the balance of the 

financing outstanding at the time of 

disbursement of the loan for a loan up 

to (and including) $350,000; and 

(B) 3 percent of the balance of the 

financing outstanding at the time of 

disbursement of the loan for a loan 

above $350,000. 

(i) Will an applicant’s Second Draw PPP 

Loan application be affected if there are 

unresolved issues regarding the 

applicant’s First Draw PPP Loan? 

(1) If a First Draw PPP Loan is under 

review pursuant to PPP rules and/or 

information in SBA’s possession 

indicates that the borrower may have 

been ineligible for the First Draw PPP 

Loan it received or for the loan amount 

received by the borrower, the lender 

will receive notification from SBA when 

the lender submits an application for 

guaranty of a Second Draw PPP Loan 

(‘‘unresolved borrower’’). 

(2) If the lender receives notification 

that the Applicant for a Second Draw 

PPP Loan is an unresolved borrower, the 

lender will not receive an SBA loan 

number. SBA will resolve the issue 

related to the unresolved borrower 

expeditiously and will notify the lender 

of the process to obtain an SBA loan 

number for the Second Draw PPP Loan, 

if appropriate. 

(j) Are Second Draw PPP Loans eligible 

for loan forgiveness? 

Second Draw PPP Loans are eligible 

for loan forgiveness on the same terms 

and conditions as First Draw PPP Loans, 

except that Second Draw PPP Loan 

borrowers with a principal amount of 

$150,000 or less are required to provide 

documentation of revenue reduction if 

such documentation was not provided 

at the time of the loan application as 

specified in subsections (g)(2)(iv) and 

(v) of this section. 

V. Additional Information 

SBA may provide further guidance, if 

needed, through SBA notices and a 

program guide which will be posted on 

SBA’s website at www.sba.gov. 

Questions on the Paycheck Protection 

Program 7(a) Loans (First Draw PPP 

Loans and Second Draw PPP Loans) 

may be directed to the Lender Relations 

Specialist in the local SBA Field Office. 

The local SBA Field Office may be 

found at https://www.sba.gov/tools/ 

local-assistance/districtoffices. 

Compliance With Executive Orders 

12866, 12988, 13132, 13563, and 13771, 

the Paperwork Reduction Act (44 U.S.C. 

Ch. 35), and the Regulatory Flexibility 

Act (5 U.S.C. 601–612) 

Executive Orders 12866, 13563, and 

13771 

This interim final rule is 

economically significant for the 

purposes of Executive Orders 12866 and 

13563, and the Office of Management 

and Budget’s Office of Information and 

Regulatory Affairs (OIRA) had 

determined that this is a major rule 

under the Congressional Review Act (5 

U.S.C. 804(2)). SBA, however, is 

proceeding under the emergency 

provision at Executive Order 12866 

section 6(a)(3)(D) based on the need to 

move expeditiously to mitigate the 

current economic conditions arising 

from the COVID–19 emergency. This 

rule’s designation under Executive 

Order 13771 will be informed by public 

comment. 

This rule is necessary to implement 

the Economic Aid Act in order to 

provide economic relief to small 

businesses nationwide adversely 

impacted under the COVID–19 

Emergency Declaration. We anticipate 

that this rule will result in substantial 

benefits to small businesses, their 

employees, and the communities they 

serve. However, we lack data to estimate 

the effects of this rule. 

The Administrator of OIRA has 

determined that this is a major rule for 

purposes of the Congressional Review 

Act (5 U.S.C. 801 et seq.) (CRA). Under 

section 801(3) of the CRA, a major rule 

takes effect 60 days after the rule is 

published in the Federal Register. 

Notwithstanding this requirement, 

section 808(2) of the CRA allows 

agencies to dispense with the 

requirements of section 801 when the 

agency for good cause finds that such 

procedure would be impracticable, 

unnecessary, or contrary to the public 

interest and the rule shall take effect at 

such time as the agency promulgating 

the rule determines. Pursuant to section 

808(2) of the CRA, SBA finds, for good 

cause, that a 60-day delay in the 

effective date is unnecessary and 

contrary to the public interest. 

As discussed elsewhere in this 

interim final rule, the last day to apply 

for and receive a PPP loan is March 31, 

2021. Given the short duration of this 

program, and the urgent need to issue 

loans quickly, the Administrator in 

consultation with the Secretary has 

determined that it is impractical and not 

in the public interest to provide a 

delayed effective date. An immediate 

effective date will give small businesses 

the maximum amount of time to apply 

for loans and lenders the maximum 

amount of time to process applications 

before the program ends. 

Executive Order 12988 

SBA has drafted this rule, to the 

extent practicable, in accordance with 

the standards set forth in section 3(a) 

and 3(b)(2) of Executive Order 12988, to 

minimize litigation, eliminate 

ambiguity, and reduce burden. The rule 

has no preemptive or retroactive effect. 

Executive Order 13132 

SBA has determined that this rule 

will not have substantial direct effects 

on the States, on the relationship 

between the National Government and 

the States, or on the distribution of 

power and responsibilities among the 

various layers of government. Therefore, 

SBA has determined that this rule has 

no federalism implications warranting 

preparation of a federalism assessment. 

Paperwork Reduction Act, 44 U.S.C. 

Chapter 35 

SBA has determined that this rule 

will impose new recordkeeping or 

reporting requirements under the 

Paperwork Reduction Act (‘‘PRA’’). This 

information collection (IC) consists of 

SBA Form 2483–SD (Paycheck 

Protection Program Second Draw 

Application Form) and SBA Form 2484– 

SD (Paycheck Protection Program 

Lender’s Application—Second Draw 

Loan Guaranty. SBA has requested 

emergency approval for the IC required 

to implement the Second Draw PPP 

Program described above. 

Regulatory Flexibility Act (RFA) 

The Regulatory Flexibility Act (RFA) 

generally requires that when an agency 

issues a proposed rule, or a final rule 

pursuant to section 553(b) of the APA or 

another law, the agency must prepare a 

regulatory flexibility analysis that meets 

the requirements of the RFA and 

publish such analysis in the Federal 

Register. 5 U.S.C. 603, 604. Specifically, 

the RFA normally requires agencies to 

describe the impact of a rulemaking on 

small entities by providing a regulatory 

impact analysis. Such analysis must 

address the consideration of regulatory 

options that would lessen the economic 

effect of the rule on small entities. The 

RFA defines a ‘‘small entity’’ as (1) a 

proprietary firm meeting the size 

standards of the Small Business 

Administration (SBA); (2) a nonprofit 

organization that is not dominant in its 

field; or (3) a small government 


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Federal Register / Vol. 86, No. 9 / Thursday, January 14, 2021 / Rules and Regulations 3723 

jurisdiction with a population of less 

than 50,000. 5 U.S.C. 601(3)–(6). Except 

for small government jurisdictions with 

a population of less than 50,000, neither 

State nor local governments are ‘‘small 

entities.’’ 

The requirement to conduct a 

regulatory impact analysis does not 

apply if the head of the agency ‘‘certifies 

that the rule will not, if promulgated, 

have a significant economic impact on 

a substantial number of small entities.’’ 

5 U.S.C. 605(b). The agency must, 

however, publish the certification in the 

Federal Register at the time of 

publication of the rule, ‘‘along with a 

statement providing the factual basis for 

such certification.’’ If the agency head 

has not waived the requirements for a 

regulatory flexibility analysis in 

accordance with the RFA’s waiver 

provision, and no other RFA exception 

applies, the agency must prepare the 

regulatory flexibility analysis and 

publish it in the Federal Register at the 

time of promulgation or, if the rule is 

promulgated in response to an 

emergency that makes timely 

compliance impracticable, within 180 

days of publication of the final rule. 5 

U.S.C. 604(a), 608(b). 

Rules that are exempt from notice and 

comment are also exempt from the RFA 

requirements, including conducting a 

regulatory flexibility analysis, when 

among other things the agency for good 

cause finds that notice and public 

procedure are impracticable, 

unnecessary, or contrary to the public 

interest. Small Business 

Administration’s Office of Advocacy 

guide: How to Comply with the 

Regulatory Flexibility Ac. Ch.1. p.9. 

Since this rule is exempt from notice 

and comment, SBA is not required to 

conduct a regulatory flexibility analysis. 

Authority: 15 U.S.C. 636(a)(36); 

Coronavirus Aid, Relief, and Economic 

Security Act, Pub. L. 116–136, section 1114; 

and Economic Aid to Hard-Hit Small 

Businesses, Nonprofits, and Venues Act, Pub. 

L. 116–260, section 303. 

Jovita Carranza, 

Administrator. 

[FR Doc. 2021–00452 Filed 1–12–21; 4:15 pm] 

BILLING CODE 8026–03–P 


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