33010 Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations 

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 a new reporting 

requirement on borrowers who request 

forgiveness of their PPP loan. SBA has 

developed Form 3508, Paycheck 

Protection Program—Loan Forgiveness 

Application, for use in collecting the 

information required to determine 

whether a borrower is eligible for loan 

forgiveness. SBA obtained approval of 

Form 3508 from the Office of 

Management and Budget (OMB) as a 

modification to the existing PPP 

collection of information (OMB Control 

Number (3245–0407). This collection of 

information was approved under 

emergency procedures to facilitate 

immediate implementation of the PPP 

and expires on October 31, 2020. 

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 such small government jurisdictions, 

neither State nor local governments are 

‘‘small entities.’’ Similarly, for purposes 

of the RFA, individual persons are not 

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. SBA Office of 

Advocacy guide: How to Comply with 

the Regulatory Flexibility Act, Ch.1. p.9. 

Accordingly, SBA is not required to 

conduct a regulatory flexibility analysis. 

Jovita Carranza, 

Administrator Small Business 

Administration. 

Michael Faulkender, 

Assistant Secretary for Economic Policy, 

Department of the Treasury. 

[FR Doc. 2020–11536 Filed 5–28–20; 8:45 am] 

BILLING CODE 8026–03–P 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 120 

[Docket Number SBA–2020–0033] 

RIN 3245–AH47 

Business Loan Program Temporary 

Changes; Paycheck Protection 

Program—SBA Loan Review 

Procedures and Related Borrower and 

Lender Responsibilities 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Interim final rule. 

SUMMARY: On April 2, 2020, the U.S. 

Small Business Administration (SBA) 

posted an interim final rule announcing 

the implementation of the Coronavirus 

Aid, Relief, and Economic Security Act 

(CARES Act). The CARES Act 

temporarily adds a new program, titled 

the ‘‘Paycheck Protection Program,’’ to 

the SBA’s 7(a) Loan Program. The 

CARES Act also provides for forgiveness 

of up to the full principal amount of 

qualifying loans guaranteed under the 

Paycheck Protection Program (PPP). The 

PPP is intended to provide economic 

relief to small businesses nationwide 

adversely impacted by the Coronavirus 

Disease 2019 (COVID–19). SBA posted 

additional interim final rules on April 3, 

2020, April 14, 2020, April 24, 2020, 

April 28, 2020, April 30, 2020, May 5, 

2020, May 8, 2020, May 13, 2020, May 

14, 2020, May 18, 2020, and May 20, 

2020, and the Department of the 

Treasury (Treasury) posted an 

additional interim final rule on April 

27, 2020. SBA and Treasury posted an 

interim final rule on Loan Forgiveness 

contemporaneously with this interim 

final rule on May 22, 2020. This interim 

final rule supplements the previously 

posted interim final rules in order to 

inform borrowers and lenders of SBA’s 

process for reviewing PPP loan 

applications and loan forgiveness 

applications, and requests public 

comment. 

DATES:

Effective date: This rule is effective 

May 28, 2020. 

Applicability date: This interim final 

rule applies to loan applications and 

loan forgiveness applications submitted 

under the Paycheck Protection Program. 

Comment date: Comments must be 

received on or before July 1, 2020. 

ADDRESSES: You may submit comments, 

identified by number SBA–2020–0033 

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. 

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: A 

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 March 13, 2020, President Trump 

declared the ongoing Coronavirus 

Disease 2019 (COVID–19) pandemic of 

sufficient severity and magnitude to 

warrant an emergency declaration for all 

States, territories, and the District of 


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1https://www.sba.gov/document/support-faqlenders-borrowers. 

Columbia. With the COVID–19 

emergency, many small businesses 

nationwide are experiencing economic 

hardship as a direct result of the 

Federal, State, tribal, and local public 

health measures that are being taken to 

minimize the public’s exposure to the 

virus. These measures, some of which 

are government-mandated, are being 

implemented nationwide and include 

the closures of restaurants, bars, and 

gyms. In addition, based on the advice 

of public health officials, other 

measures, such as keeping a safe 

distance from others or even stay-athome orders, are being implemented, 

resulting in a dramatic decrease in 

economic activity as the public avoids 

malls, retail stores, and other 

businesses. 

On March 27, 2020, the President 

signed the Coronavirus Aid, Relief, and 

Economic Security Act (the CARES Act) 

(Pub. L. 116–136) to provide emergency 

assistance and health care response for 

individuals, families, and businesses 

affected by the coronavirus pandemic. 

The Small Business Administration 

(SBA) received funding and authority 

through the CARES Act to modify 

existing loan programs and establish a 

new loan program to assist small 

businesses nationwide adversely 

impacted by the COVID–19 emergency. 

Section 1102 of the CARES Act 

temporarily permits SBA to guarantee 

100 percent of 7(a) loans under a new 

program titled the ‘‘Paycheck Protection 

Program.’’ Section 1106 of the CARES 

Act provides for forgiveness of up to the 

full principal amount of qualifying 

loans guaranteed under the Paycheck 

Protection Program, and requires SBA to 

issue guidance and regulations 

implementing section 1106 within 30 

days after the date of enactment of the 

CARES Act. On April 2, 2020, SBA 

posted its first PPP interim final rule (85 

FR 20811) (the First Interim Final Rule) 

covering in part loan forgiveness. On 

April 8, 2020 and on April 26, 2020, 

SBA posted Frequently Asked 

Questions on loan forgiveness.1 On 

April 14, 2020, SBA posted another PPP 

interim final rule (85 FR 21747) 

covering in part loan forgiveness. On 

April 24, 2020, the President signed the 

Paycheck Protection Program and 

Health Care Enhancement Act (Pub. L. 

116–139), which provided additional 

funding and authority for the Paycheck 

Protection Program. 

As described below, this interim final 

rule informs borrowers and lenders of 

SBA’s process for reviewing PPP loan 

applications and loan forgiveness 

applications. This interim final rule 

supplements the interim final rule on 

Loan Forgiveness posted 

contemporaneously with this interim 

final rule. 

II. Comments and Immediate Effective 

Date 

The intent of the CARES Act is that 

SBA provide relief to America’s small 

businesses expeditiously. This intent, 

along with the dramatic decrease in 

economic activity nationwide, provides 

good cause for SBA to dispense with the 

30-day delayed effective date provided 

in the Administrative Procedure Act. 

Specifically, it is critical to meet 

lenders’ and borrowers’ need for clarity 

concerning loan forgiveness 

requirements as rapidly as possible 

because borrowers can seek loan 

forgiveness as early as eight-weeks 

following the date of disbursement of 

their PPP loans. Because the first PPP 

loans were disbursed after April 3, 

providing borrowers with certainty on 

SBA’s process for reviewing PPP loan 

applications and loan forgiveness 

applications will enhance borrowers’ 

ability to determine whether, and to 

what extent, they should apply for PPP 

loans and loan forgiveness, and thereby 

carry out the purposes of the CARES Act 

in keeping their workers employed and 

paid, while at the same time taking 

necessary steps to maximize eligible 

loan forgiveness amounts. An 

immediate effective date also is 

necessary for PPP lenders who generally 

will make the loan forgiveness 

determinations, as provided in the 

CARES Act. Specifically, an immediate 

effective date is necessary for lenders so 

that they will have both a degree of 

certainty and sufficient time to develop 

their systems and policies and 

procedures in order to timely process 

loan forgiveness applications. 

This interim final rule supplements 

previous regulations and guidance on 

the discrete issues related to SBA’s 

process for review of PPP loan 

applications and loan forgiveness 

applications. This interim final rule is 

effective without advance notice and 

public comment because section 1114 of 

the CARES Act authorizes SBA to issue 

regulations to implement Title I of the 

CARES Act without regard to notice 

requirements. In addition, SBA has 

determined that there is good cause for 

dispensing with advance public notice 

and comment on the ground that it 

would be contrary to the public interest. 

Specifically, SBA has determined that 

advance notice and public comment 

would delay the ability of PPP 

borrowers to understand with certainty 

SBA’s process for reviewing PPP loan 

applications and loan forgiveness 

applications. By providing a high degree 

of certainty to PPP borrowers through 

this interim final rule, PPP borrowers 

will be able to take immediate steps to 

maximize their loan forgiveness 

amounts. This rule is being issued to 

allow for immediate implementation of 

the forgiveness component of this 

program. Although this interim final 

rule is effective immediately, comments 

are solicited from interested members of 

the public on all aspects of this interim 

final rule, including section III below. 

These comments must be submitted on 

or before July 1, 2020. SBA will 

consider these comments and the need 

for making any revisions as a result of 

these comments. 

III. Paycheck Protection Program 

Requirements for SBA Loan Review 

Procedures and Related Borrower and 

Lender Responsibilities 

Overview 

The CARES Act was enacted to 

provide immediate assistance to 

individuals, families, and organizations 

affected by the COVID–19 emergency. 

Among the provisions contained in the 

CARES Act are provisions authorizing 

SBA to temporarily guarantee loans 

under the Paycheck Protection Program 

(PPP). Loans under the PPP will be 100 

percent guaranteed by SBA, and the full 

principal amount of the loans may 

qualify for loan forgiveness. Additional 

information about the PPP is available 

in interim final rules published by SBA 

and Treasury in the Federal Register (85 

FR 20811, 85 FR 20817, 85 FR 21747, 

85 FR 23450, 85 FR 23917, 85 FR 26321, 

85 FR 26324, 85 FR 27287, 85 FR 29842, 

85 FR 29845, 85 FR 29847, 85 FR 

30835), as well as an SBA interim final 

rule posted on May 20, 2020 and an 

SBA and Treasury interim final rule 

posted on May 22, 2020 (collectively, 

the PPP Interim Final Rules). 

Under the CARES Act, SBA is 

authorized to guarantee loans under the 

PPP, a new temporary 7(a) program, 

through June 30, 2020. The intent of the 

Act is that SBA provide relief to 

America’s small businesses 

expeditiously, which is expressed in the 

Act by giving all lenders delegated 

authority and streamlining the 

requirements of the regular 7(a) loan 

program. 

The Small Business Act authorizes 

the Administrator to conduct 

investigations to determine whether a 

recipient or participant in any 

assistance under a 7(a) program, 

including the PPP, is ineligible for a 

loan, or has violated section 7(a), or any 

rule, regulation or order issued 


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33012 Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations 

2This interim final rule is an exercise of SBA’s 

rulemaking authority under 15 U.S.C. 634(b), 15 

U.S.C. 633(d), and 5 U.S.C. App., Reorg. Plan No. 

4 of 1965, 11(b), 13(a) (abolishing Loan Policy 

Board and transferring functions to the 

Administrator); and CARES Act sections 1106(k) 

and 1114. 

3https://www.sba.gov/document/support—faqlenders-borrowers. 

thereunder. 15 U.S.C. 634(b)(11). 

Additionally, under section 7(a), the 

Administrator is empowered to make 

loans in cooperation with lenders 

through agreements to participate on a 

deferred (guaranteed) basis. 15 U.S.C. 

636(a). Further, the Administrator may 

make such rules and regulations as 

deemed necessary and take any and all 

actions determined to be necessary or 

desirable with respect to 7(a) loans. 15 

U.S.C. 634(b)(6) and (b)(7). Pursuant to 

these provisions of the Small Business 

Act, SBA has issued regulations 

establishing the standards by which it 

will investigate whether a loan met 

program requirements and the 

circumstances under which SBA will be 

released from liability on a guarantee for 

such a loan. 13 CFR 120.524. 

In light of the structure of the PPP 

program established by the CARES Act 

and the PPP Interim Final Rules, in 

which loans and loan forgiveness are 

provided based on the borrower’s 

certifications and documentation 

provided by the borrower, the 

Administrator, in consultation with the 

Secretary of the Treasury (Secretary), 

has determined that it is appropriate to 

adopt additional procedures and criteria 

through which SBA will review whether 

an action by the borrower has resulted 

in its receipt of a PPP loan that did not 

meet program requirements.2 SBA’s 

review of borrower certifications and 

representations regarding the borrower’s 

eligibility for a PPP loan and loan 

forgiveness, and the borrower’s use of 

PPP loan proceeds, is essential to ensure 

that PPP loans are directed to the 

entities Congress intended, and that PPP 

loan proceeds are used for the purposes 

Congress required, including the CARES 

Act’s central purpose of keeping 

workers paid and employed. 

1. SBA Reviews of Individual PPP Loans 

a. Will SBA review individual PPP 

loans? 

Yes. SBA may review any PPP loan, 

as the Administrator deems appropriate, 

as described below. 

b. What borrower representations and 

statements will SBA review? 

The Administrator is authorized to 

review the following: 

Borrower Eligibility: The 

Administrator may review whether a 

borrower is eligible for the PPP loan 

based on the provisions of the CARES 

Act, the rules and guidance available at 

the time of the borrower’s PPP loan 

application, and the terms of the 

borrower’s loan application. See FAQ 17 

(posted April 6, 2020).3 These include, 

but are not limited to, SBA’s regulations 

under 13 CFR 120.110 (as modified and 

clarified by the PPP Interim Final Rules) 

and 13 CFR 121.301(f) and the 

information, certifications, and 

representations on the Borrower 

Application Form (SBA Form 2483 or 

lender’s equivalent form) and Loan 

Forgiveness Application Form (SBA 

Form 3508 or lender’s equivalent form). 

Loan Amounts and Use of Proceeds: 

The Administrator may review whether 

a borrower calculated the loan amount 

correctly and used loan proceeds for the 

allowable uses specified in the CARES 

Act. 

Loan Forgiveness Amounts: CThe 

Administrator may review whether a 

borrower is entitled to loan forgiveness 

in the amount claimed on the 

borrower’s Loan Forgiveness 

Application (SBA Form 3508 or lender’s 

equivalent form). 

c. When will SBA undertake a loan 

review? 

For a PPP loan of any size, SBA may 

undertake a review at any time in SBA’s 

discretion. For example, SBA may 

review a loan if the loan documentation 

submitted to SBA by the lender or any 

other information indicates that the 

borrower may be ineligible for a PPP 

loan, or may be ineligible to receive the 

loan amount or loan forgiveness amount 

claimed by the borrower. 13 CFR 

120.524(c). As noted on the Loan 

Forgiveness Application Form, the 

borrower must retain PPP 

documentation in its files for six years 

after the date the loan is forgiven or 

repaid in full, and permit authorized 

representatives of SBA, including 

representatives of its Office of Inspector 

General, to access such files upon 

request. 

Lenders must comply with applicable 

SBA requirements for records retention, 

which for Federally regulated lenders 

means compliance with the 

requirements of their federal financial 

institution regulator and for SBA 

supervised lenders (as defined in 13 

CFR 120.10 and including PPP lenders 

with authority under SBA Form 3507) 

means compliance with 13 CFR 

120.461. 

d. Will I have the opportunity to 

respond to SBA’s questions in a review? 

Yes. If loan documentation submitted 

to SBA by the lender or any other 

information indicates that the borrower 

may be ineligible for a PPP loan or may 

be ineligible to receive the loan amount 

or loan forgiveness amount claimed by 

the borrower, SBA will require the 

lender to contact the borrower in 

writing to request additional 

information. SBA may also request 

information directly from the borrower. 

The lender will provide any additional 

information provided to it by the 

borrower to SBA. SBA will consider all 

information provided by the borrower in 

response to such an inquiry. 

Failure to respond to SBA’s inquiry 

may result in a determination that the 

borrower was ineligible for a PPP loan 

or ineligible to receive the loan amount 

or loan forgiveness amount claimed by 

the borrower. 

e. If SBA determines that a borrower is 

ineligible for a PPP loan, can the loan 

be forgiven? 

No. If SBA determines that a borrower 

is ineligible for the PPP loan, SBA will 

direct the lender to deny the loan 

forgiveness application. Further, if SBA 

determines that the borrower is 

ineligible for the loan amount or loan 

forgiveness amount claimed by the 

borrower, SBA will direct the lender to 

deny the loan forgiveness application in 

whole or in part, as appropriate. SBA 

may also seek repayment of the 

outstanding PPP loan balance or pursue 

other available remedies. 

Section 1106(b) of the CARES Act 

provides for forgiveness of a PPP loan 

only if the borrower is an ‘‘eligible 

recipient.’’ The Administrator has 

determined that to be an eligible 

recipient that is entitled to forgiveness 

under section 1106(b), the borrower 

must be an ‘‘eligible recipient’’ under 15 

U.S.C. 636(a)(36)(A)(iv) and rules and 

guidance available at the time of the 

borrower’s loan application. This 

requirement promotes the public 

interest, aligns SBA’s functions with 

other governmental policies, and 

appropriately carries out the CARES 

Act’s PPP provisions, including by 

preventing evasion of the requirements 

for PPP loan eligibility and ensuring 

program integrity with respect to this 

emergency financial assistance program. 

It is also consistent with the CARES 

Act’s nonrecourse provision, 15 U.S.C. 

636(a)(36)(F)(v), which limits SBA’s 

recourse against individual 

shareholders, members, or partners of a 

PPP borrower for nonpayment of a PPP 

loan only if the borrower is an eligible 


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4 85 FR 20811, 20815–20816 (April 15, 2020). 

recipient of the loan. Accordingly, the 

PPP Loan Forgiveness Application (SBA 

Form 3508 or lender’s equivalent form) 

notes that SBA may direct a lender to 

disapprove a borrower’s loan 

forgiveness application if SBA 

determines that the borrower does not 

qualify as an eligible recipient for the 

PPP loan. 

f. May a borrower appeal SBA’s 

determination that the borrower is 

ineligible for a PPP loan or ineligible for 

the loan amount or the loan forgiveness 

amount claimed by the borrower? 

Yes. SBA intends to issue a separate 

interim final rule addressing this 

process. 

2. The Loan Forgiveness Process for 

Lenders 

a. What should a lender review? 

For all PPP Loan Forgiveness 

Applications, each lender shall: 

i. Confirm receipt of the borrower 

certifications contained in the Loan 

Forgiveness Application Form. 

ii. Confirm receipt of the 

documentation borrowers must submit 

to aid in verifying payroll and 

nonpayroll costs, as specified in the 

instructions to the Loan Forgiveness 

Application Form. 

iii. Confirm the borrower’s 

calculations on the borrower’s Loan 

Forgiveness Application, including the 

dollar amount of the (A) Cash 

Compensation, Non-Cash 

Compensation, and Compensation to 

Owners claimed on Lines 1, 4, 6, 7, 8, 

and 9 on PPP Schedule A and (B) 

Business Mortgage Interest Payments, 

Business Rent or Lease Payments, and 

Business Utility Payments claimed on 

Lines 2, 3, and 4 on the PPP Loan 

Forgiveness Calculation Form, by 

reviewing the documentation submitted 

with the Loan Forgiveness Application. 

iv. Confirm that the borrower made 

the calculation on Line 10 of the Loan 

Forgiveness Calculation Form correctly, 

by dividing the borrower’s Eligible 

Payroll Costs claimed on Line 1 by 0.75. 

Providing an accurate calculation of 

the loan forgiveness amount is the 

responsibility of the borrower, and the 

borrower attests to the accuracy of its 

reported information and calculations 

on the Loan Forgiveness Application. 

Lenders are expected to perform a goodfaith review, in a reasonable time, of the 

borrower’s calculations and supporting 

documents concerning amounts eligible 

for loan forgiveness. For example, 

minimal review of calculations based on 

a payroll report by a recognized thirdparty payroll processor would be 

reasonable. By contrast, if payroll costs 

are not documented with such 

recognized sources, more extensive 

review of calculations and data would 

be appropriate. The borrower shall not 

receive forgiveness without submitting 

all required documentation to the 

lender. 

As the First Interim Final Rule 4

indicates, lenders may rely on borrower 

representations. 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. As stated in 

paragraph III.3.c of the First Interim 

Final Rule, the lender does not need to 

independently verify the borrower’s 

reported information if the borrower 

submits documentation supporting its 

request for loan forgiveness and attests 

that it accurately verified the payments 

for eligible costs. 

b. What is the timeline for the lender’s 

decision on a loan forgiveness 

application? 

The lender must issue a decision to 

SBA on a loan forgiveness application 

not later than 60 days after receipt of a 

complete loan forgiveness application 

from the borrower. That decision may 

take the form of an approval (in whole 

or in part); denial; or (if directed by 

SBA) a denial without prejudice due to 

a pending SBA review of the loan for 

which forgiveness is sought. In the case 

of a denial without prejudice, the 

borrower may subsequently request that 

the lender reconsider its application for 

loan forgiveness, unless SBA has 

determined that the borrower is 

ineligible for a PPP loan. The 

Administrator has determined that this 

process appropriately balances the need 

for efficient processing of loan 

forgiveness applications with 

considerations of program integrity, 

including affording SBA the 

opportunity to ensure that borrower 

representations and certifications 

(including concerning eligibility for a 

PPP loan) were accurate. 

When the lender issues its decision to 

SBA approving the application (in 

whole or in part), it must include (1) the 

PPP Loan Forgiveness Calculation Form; 

(2) PPP Schedule A; and (3) the 

(optional) PPP Borrower Demographic 

Information Form (if submitted to the 

lender). The lender must confirm that 

the information provided by the lender 

to SBA accurately reflects lender’s 

records for the loan, and that the lender 

has made its decision in accordance 

with the requirements set forth in 2.a. If 

the lender determines that the borrower 

is entitled to forgiveness of some or all 

of the amount applied for under the 

statute and applicable regulations, the 

lender must request payment from SBA 

at the time the lender issues its decision 

to SBA. SBA will, subject to any SBA 

review of the loan or loan application, 

remit the appropriate forgiveness 

amount to the lender, plus any interest 

accrued through the date of payment, 

not later than 90 days after the lender 

issues its decision to SBA. If applicable, 

SBA will deduct EIDL Advance 

Amounts from the forgiveness amount 

remitted to the Lender as required by 

section 1110(e)(6) of the CARES Act. 

When the lender issues its decision to 

SBA determining that the borrower is 

not entitled to forgiveness in any 

amount, the lender must provide SBA 

with the reason for its denial, together 

with (1) the PPP Loan Forgiveness 

Calculation Form; (2) PPP Schedule A; 

and (3) the (optional) PPP Borrower 

Demographic Information Form (if 

submitted to the lender). The lender 

must confirm that the information 

provided by the lender to SBA 

accurately reflects lender’s records for 

the loan, and that the lender has made 

its decision in accordance with the 

requirements set forth in 2.a. The lender 

must also notify the borrower in writing 

that the lender has issued a decision to 

SBA denying the loan forgiveness 

application. SBA reserves the right to 

review the lender’s decision in its sole 

discretion. Within 30 days of notice 

from the lender, a borrower may request 

that SBA review the lender’s decision 

by reviewing the loan in accordance 

with 2.c. below. 

Enabling SBA to use the statutory 90- 

day period to review the PPP loan and 

forgiveness documentation is an 

appropriate procedural protection to 

prevent fraud or misuse of PPP funds, 

ensure that recipients of PPP loans are 

within the scope of entities that the 

CARES Act is intended to assist, and 

confirm compliance with the PPP 

requirements set forth in the statute, 

rules, and guidance. This protection is 

also important in light of the large 

number and diverse types of PPP 

lenders, many of which were not 

previously SBA participating lenders 

and which were approved rapidly in 

order to enable financial assistance to be 

provided as rapidly as feasible to 

millions of small businesses. SBA will 

use the 90-day period to help ensure 

that applicable legal requirements have 

been satisfied. 

SBA will issue additional procedures 

on the process for advance purchase of 

PPP loans. 


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c. What should a lender do if it receives 

notice that SBA is reviewing a loan? 

SBA may begin a review of any PPP 

loan of any size at any time in SBA’s 

discretion. If SBA undertakes such a 

review, SBA will notify the lender in 

writing and the lender must notify the 

borrower in writing within five business 

days of receipt. 

Within five business days of receipt of 

such notice, the lender shall transmit to 

SBA electronic copies of the following: 

i. The Borrower Application Form 

(SBA Form 2483 or lender’s equivalent 

form) and all supporting documentation 

provided by the borrower. 

ii. The Loan Forgiveness Application 

(SBA Form 3508 or lender’s equivalent 

form), and all supporting 

documentation provided by the 

borrower (if the lender has received 

such application). If the lender receives 

such application after it receives notice 

that SBA has commenced a loan review, 

the lender shall transmit electronic 

copies of the application and all 

supporting documentation provided by 

the borrower to SBA within five 

business days of receipt. The lender 

must also request that the borrower 

provide the lender with a copy of the 

Schedule A Worksheet to the Loan 

Forgiveness Application, and the lender 

must submit the worksheet to SBA 

within 5 business days of receipt from 

the borrower. 

iii. A signed and certified transcript of 

account. 

iv. A copy of the executed note 

evidencing the PPP loan. 

v. Any other documents related to the 

loan requested by SBA. 

If SBA has notified the lender that 

SBA has commenced a loan review, the 

lender shall not approve any application 

for loan forgiveness for such loan until 

SBA notifies the lender in writing that 

SBA has completed its review. 

3. Lender Fees 

a. Is the lender eligible for a processing 

fee if SBA determines that a borrower is 

ineligible? 

No. If SBA conducts a loan review 

and determines that the borrower was 

ineligible for a PPP loan, the lender is 

not eligible for a processing fee. 

b. Are lender processing fees subject to 

clawback if SBA determines that a 

borrower is ineligible? 

Yes. For any SBA-reviewed PPP loan, 

if within one year after the loan was 

disbursed SBA determines that a 

borrower was ineligible for a PPP loan 

based on the provisions of the CARES 

Act or applicable rules or guidance 

available at the time of the borrower’s 

loan application, or the terms of the 

loan application, SBA will seek 

repayment of the lender processing fee 

from the lender. However, SBA’s 

determination of borrower eligibility 

will have no effect on SBA’s guaranty of 

the loan if the lender has complied with 

its obligations under section III.3.b of 

the First Interim Final Rule and the 

document collection and retention 

requirements described in the lender 

application form (SBA Form 2484). 

c. Are lender processing fees subject to 

clawback if a lender has not fulfilled its 

obligations under PPP regulations? 

Yes. If a lender fails to satisfy the 

requirements applicable to lenders that 

are set forth in section III.3.b of the First 

Interim Final Rule or the document 

collection and retention requirements 

described in the lender application form 

(SBA Form 2484), SBA will seek 

repayment of the lender processing fee 

from the lender and may determine that 

the loan is not eligible for a guaranty. 

4. Additional Information 

SBA may provide further guidance, if 

needed, through SBA notices that will 

be posted on SBA’s website at 

www.sba.gov. Questions on the 

Paycheck Protection Program 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 is considered a major rule 

under the Congressional Review Act. 

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. 

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 a new reporting 

requirement on the lenders that are 

participating in the PPP. As discussed 

above, when a lender approves or 

denies a request for loan forgiveness, the 

lender must submit to SBA limited 

information from the borrower’s Loan 

Forgiveness Application (SBA Form 

3508 or lender’s equivalent form), 

including the portion of the form used 

to calculate the total amount to be 

forgiven, as well as the schedule used to 

determine the borrower’s payroll 

expenses. In addition, for those loans 

that SBA selects for review, the 

applicable lenders will be required to 

submit information to allow SBA to 

review the loans for borrower eligibility, 

loan amount eligibility, and loan 

forgiveness eligibility. SBA will submit 

the new reporting requirements to OMB 

for approval as a modification to the 

existing PPP information collection. 

This information collection is currently 

approved as an emergency request 

under OMB Control Number 3245–0407 

until October 31, 2020. 

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 


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Federal Register / Vol. 85, No. 105 / Monday, June 1, 2020 / Rules and Regulations 33015 

1ASTM F963 is a consumer product safety 

standard, except for section 4.2 and Annex 4, or any 

provision that restates or incorporates an existing 

mandatory standard or ban promulgated by the 

Commission or by statute. 

2The Commission is not incorporating ASTM 

F963 by reference into part 1253. 

3ASTM F963 contains the following note 

regarding the scope of the solubility requirement: 

NOTE 4—For the purposes of this requirement, the 

following criteria are considered reasonably 

appropriate for the classification of children’s toys 

or parts likely to be sucked, mouthed or ingested: 

(1) All toy parts intended to be mouthed or contact 

food or drink, components of children’s toys which 

are cosmetics, and components of writing 

instruments categorized as children’s toys; (2) 

Children’s toys intended for children less than 6 

years of age, that is, all accessible parts and 

components where there is a probability that those 

parts and components may come into contact with 

the mouth. 

for such small government jurisdictions, 

neither State nor local governments are 

‘‘small entities.’’ Similarly, for purposes 

of the RFA, individual persons are not 

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. SBA Office of 

Advocacy guide: How to Comply with 

the Regulatory Flexibility Act, Ch.1. p.9. 

Accordingly, SBA is not required to 

conduct a regulatory flexibility analysis. 

Jovita Carranza, 

Administrator. 

[FR Doc. 2020–11533 Filed 5–28–20; 8:45 am] 

BILLING CODE 8026–03–P 

CONSUMER PRODUCT SAFETY 

COMMISSION 

16 CFR Part 1253 

[Docket No. CPSC–2019–0023] 

Children’s Toys and Child Care 

Articles: Determinations Regarding 

ASTM F963 Elements and Phthalates 

for Unfinished Manufactured Fibers 

AGENCY: U.S. Consumer Product Safety 

Commission. 

ACTION: Final rule. 

SUMMARY: The Consumer Product Safety 

Commission (CPSC) is issuing a final 

rule determining that certain unfinished 

manufactured fibers do not contain the 

ASTM F963 elements or specified 

phthalates that exceed the limits set 

forth under the CPSC’s statutes and 

regulations for children’s toys and child 

care articles. Based on these 

determinations, the specified unfinished 

manufactured fibers would not be 

required to have third party testing for 

compliance with the requirements of the 

ASTM F963 elements or phthalates for 

children’s toys and child care articles. 

DATES: The rule is effective on July 1, 

2020. 

FOR FURTHER INFORMATION CONTACT: 

Stephen W. Lee, Compliance Officer, 

Office of Compliance and Field 

Operations, U.S. Consumer Product 

Safety Commission, 4330 East West 

Highway, Bethesda, MD 20814–4408: 

telephone 301–504–7814; email: slee@

cpsc.gov. 

SUPPLEMENTARY INFORMATION: 

A. Background 

1. Third Party Testing and Burden 

Reduction 

Section 14(a) of the Consumer 

Product Safety Act (CPSA), as amended 

by the Consumer Product Safety 

Improvement Act of 2008 (CPSIA), 

requires that manufacturers of products 

subject to a consumer product safety 

rule or similar rule, ban, standard, or 

regulation enforced by the CPSC, must 

certify that the product complies with 

all applicable CPSC-enforced 

requirements. 15 U.S.C. 2063(a). For 

children’s products, certification must 

be based on testing conducted by a 

CPSC-accepted third party conformity 

assessment body. Id. Public Law 112–28 

(August 12, 2011) directed the CPSC to 

seek comment on ‘‘opportunities to 

reduce the cost of third party testing 

requirements consistent with assuring 

compliance with any applicable 

consumer product safety rule, ban, 

standard, or regulation.’’ Public Law 

112–28 also authorized the Commission 

to issue new or revised third party 

testing regulations if the Commission 

determines ‘‘that such regulations will 

reduce third party testing costs 

consistent with assuring compliance 

with the applicable consumer product 

safety rules, bans, standards, and 

regulations.’’ Id. 2063(d)(3)(B). 

To provide opportunities to reduce 

the cost of third party testing 

requirements consistent with assuring 

compliance with any applicable 

consumer product safety rule, ban, 

standard, or regulations, the CPSC 

assessed whether children’s toys and 

child care articles manufactured with 

seven manufactured fibers: polyester 

(polyethylene terephthalate (PET)), 

nylon, polyurethane (spandex), viscose 

rayon, natural rubber latex, acrylic, and 

modacrylic, would comply with CPSC’s 

requirements for ASTM F963 elements 

or phthalates. The Commission 

determines that such materials will 

comply with CPSC’s requirements with 

a high degree of assurance. Therefore, 

manufacturers do not need to have those 

materials tested by a third party testing 

laboratory in order to issue a Children’s 

Product Certificate (CPC). 

2. ASTM F963 Elements 

Section 106 of the CPSIA provides 

that the provisions of ASTM 

International, Consumer Safety 

Specifications for Toy Safety (ASTM 

F963), shall be considered to be 

consumer product safety standards 

issued by the Commission.1 15 U.S.C. 

2056b. The Commission has issued a 

rule that incorporates by reference the 

relevant provisions of ASTM F963 at 16 

CFR part 1250.2 Thus, children’s toys 

subject to ASTM F963 must be tested by 

a CPSC-accepted third party laboratory 

and demonstrate compliance with all 

applicable CPSC requirements for the 

manufacturer to issue a CPC before the 

children’s toys can be entered into 

commerce. 

Section 4.3.5 of ASTM F963 requires 

that surface coating materials and 

accessible substrates of children’s toys 

that can be sucked, mouthed, or 

ingested 3 must comply with the 

solubility limits of eight elements given 

in Table 1 of the toy standard. The 

materials and their solubility limits are 

shown in Table 1. We refer to these 

eight elements as ‘‘ASTM F963 

elements.’’ 


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