23450 Federal Register / Vol. 85, No. 82 / Tuesday, April 28, 2020 / Rules and Regulations 

SMALL BUSINESS ADMINISTRATION 

[Docket Number SBA–2020–0021] 

13 CFR Parts 120 and 121 

RIN 3245–AH37 

Business Loan Program Temporary 

Changes; Paycheck Protection 

Program—Requirements—Promissory 

Notes, Authorizations, Affiliation, and 

Eligibility 

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 (the First 

PPP Interim Final Rule) announcing the 

implementation of the Coronavirus Aid, 

Relief, and Economic Security Act 

(CARES Act or the Act). The Act 

temporarily adds a new program, titled 

the ‘‘Paycheck Protection Program,’’ to 

the SBA’s 7(a) Loan Program. The 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, and April 14, 2020. This interim 

final rule supplements the previously 

posted interim final rules with 

additional guidance. SBA requests 

public comment on this additional 

guidance. 

DATES: Effective date: This rule is 

effective April 28, 2020. 

Applicability date: This interim final 

rule applies to applications submitted 

under the Paycheck Protection Program 

through June 30, 2020, or until funds 

made available for this purpose are 

exhausted. 

Comment date: Comments must be 

received on or before May 28, 2020. 

ADDRESSES: You may submit comments, 

identified by number SBA–2020–0021 

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 

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 

or the 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 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 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 Act provides for 

forgiveness of up to the full principal 

amount of qualifying loans guaranteed 

under the Paycheck Protection Program. 

II. Comments and Immediate Effective 

Date 

The intent of the 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 program requirements as 

rapidly as possible because the last day 

eligible borrowers can apply for and 

receive a loan is June 30, 2020. 

This interim final rule supplements 

previous regulations and guidance on 

several important, discrete issues. The 

immediate effective date of this interim 

final rule will benefit lenders so that 

they can swiftly close and disburse 

loans to small businesses. This interim 

final rule is effective without advance 

notice and public comment because 

section 1114 of the Act authorizes SBA 

to issue regulations to implement Title 

I of the Act without regard to notice 

requirements. This rule is being issued 

to allow for immediate implementation 

of this program. Although this interim 

final rule is effective immediately, 

comments are solicited from interested 

members of the public on all aspects of 

the interim final rule, including section 

III below. These comments must be 

submitted on or before May 28, 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 Promissory Notes, 

Authorizations, Affiliation, and 

Eligibility 

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 and any 

accrued interest may qualify for loan 

forgiveness. Additional information 

about the PPP is available in the First 

PPP Interim Final Rule (85 FR 20811), 

a second interim final rule (85 FR 

20817) (the Second PPP Interim Final 

Rule), and a third interim final rule (the 

Third PPP Interim Final Rule) (85 FR 

21747) (collectively, the PPP Interim 

Final Rules). 

1. Requirements for Promissory Notes 

and Authorizations 

This guidance is substantively 

identical to previously posted FAQ 

guidance. 

a. Are lenders required to use a 

promissory note provided by SBA or 

may they use their own? 


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Federal Register / Vol. 85, No. 82 / Tuesday, April 28, 2020 / Rules and Regulations 23451 

1This requirement is satisfied by a lender when 

the lender completes the process of submitting a 

loan through the E-Tran system; no transmission or 

retention of a physical copy of Form 2484 is 

required. 

2However, the Act waives the affiliation rules if 

the borrower receives financial assistance from an 

SBA-licensed Small Business Investment Company 

(SBIC) in any amount. This includes any type of 

financing listed in 13 CFR 107.50, such as loans, 

debt with equity features, equity, and guarantees. 

Affiliation is waived even if the borrower has 

investment from other non-SBIC investors. 

Lenders may use their own 

promissory note or an SBA form of 

promissory note. See FAQ 19 (posted 

April 8, 2020). 

b. Are lenders required to use a 

separate SBA Authorization document 

to issue PPP loans? 

No. A lender does not need a separate 

SBA Authorization for SBA to guarantee 

a PPP loan. However, lenders must have 

executed SBA Form 2484 (the Lender 

Application Form—Paycheck Protection 

Program Loan Guaranty) 1 to issue PPP 

loans and receive a loan number for 

each originated PPP loan. Lenders may 

include in their promissory notes for 

PPP loans any terms and conditions, 

including relating to amortization and 

disclosure, that are not inconsistent 

with Sections 1102 and 1106 of the 

CARES Act, the PPP Interim Final Rules 

and guidance, and SBA Form 2484. See 

FAQ 21 (posted April 13, 2020). The 

decision not to require a separate SBA 

Authorization in order to ensure that 

critical PPP loans are disbursed as 

efficiently as practicable. 

2. Clarification Regarding Eligible 

Businesses 

a. Is a hedge fund or private equity 

firm eligible for a PPP loan? 

No. Hedge funds and private equity 

firms are primarily engaged in 

investment or speculation, and such 

businesses are therefore ineligible to 

receive a PPP loan. The Administrator, 

in consultation with the Secretary, does 

not believe that Congress intended for 

these types of businesses, which are 

generally ineligible for section 7(a) loans 

under existing SBA regulations, to 

obtain PPP financing. 

b. Do the SBA affiliation rules 

prohibit a portfolio company of a 

private equity fund from being eligible 

for a PPP loan? 

Borrowers must apply the affiliation 

rules that appear in 13 CFR 121.301(f), 

as set forth in the Second PPP Interim 

Final Rule (85 FR 20817). The affiliation 

rules apply to private equity-owned 

businesses in the same manner as any 

other business subject to outside 

ownership or control.2 However, in 

addition to applying any applicable 

affiliation rules, all borrowers should 

carefully review the required 

certification on the Paycheck Protection 

Program Borrower Application Form 

(SBA Form 2483) stating that ‘‘[c]urrent 

economic uncertainty makes this loan 

request necessary to support the 

ongoing operations of the Applicant.’’ 

c. Is a hospital owned by 

governmental entities eligible for a PPP 

loan? 

A hospital that is otherwise eligible to 

receive a PPP loan as a business concern 

or nonprofit organization (described in 

section 501(c)(3) of the Internal Revenue 

Code of 1986 and exempt from taxation 

under section 501(a) of such Code) shall 

not be rendered ineligible for a PPP loan 

due to ownership by a state or local 

government if the hospital receives less 

than 50% of its funding from state or 

local government sources, exclusive of 

Medicaid. 

The Administrator, in consultation 

with the Secretary, determined that this 

exception to the general ineligibility of 

government-owned entities, 13 CFR 

120.110(j), is appropriate to effectuate 

the purposes of the CARES Act. 

d. Part III.2.b. of the Third PPP 

Interim Final Rule (85 FR 21747, 21751) 

is revised to read as follows: 

Are businesses that receive revenue 

from legal gaming eligible for a PPP 

Loan? 

A business that is otherwise eligible 

for a PPP Loan is not rendered ineligible 

due to its receipt of legal gaming 

revenues, and 13 CFR 120.110(g) is 

inapplicable to PPP loans. Businesses 

that received illegal gaming revenue 

remain categorically ineligible. On 

further consideration, the 

Administrator, in consultation with the 

Secretary, believes this approach is 

more consistent with the policy aim of 

making PPP loans available to a broad 

segment of U.S. businesses. 

3. Business Participation in Employee 

Stock Ownership Plans 

Does participation in an employee 

stock ownership plan (ESOP) trigger 

application of the affiliation rules? 

No. For purposes of the PPP, a 

business’s participation in an ESOP (as 

defined in 15 U.S.C. 632(q)(6)) does not 

result in an affiliation between the 

business and the ESOP. The 

Administrator, in consultation with the 

Secretary, determined that this is 

appropriate given the nature of such 

plans. Under an ESOP, a business 

concern contributes its stock (or money 

to buy its stock or to pay off a loan that 

was used to buy stock) to the plan for 

the benefit of the company’s employees. 

The plan maintains an account for each 

employee participating in the plan. 

Shares of stock vest over time before an 

employee is entitled to them. However, 

with an ESOP, an employee generally 

does not buy or hold the stock directly 

while still employed with the company. 

Instead, the employee generally receives 

the shares in his or her personal account 

only upon the cessation of employment 

with the company, including retirement, 

disability, death, or termination. 

4. Eligibility of Businesses Presently 

Involved in Bankruptcy Proceedings 

Will I be approved for a PPP loan if 

my business is in bankruptcy? 

No. If the applicant or the owner of 

the applicant is the debtor in a 

bankruptcy proceeding, either at the 

time it submits the application or at any 

time before the loan is disbursed, the 

applicant is ineligible to receive a PPP 

loan. If the applicant or the owner of the 

applicant becomes the debtor in a 

bankruptcy proceeding after submitting 

a PPP application but before the loan is 

disbursed, it is the applicant’s 

obligation to notify the lender and 

request cancellation of the application. 

Failure by the applicant to do so will be 

regarded as a use of PPP funds for 

unauthorized purposes. 

The Administrator, in consultation 

with the Secretary, determined that 

providing PPP loans to debtors in 

bankruptcy would present an 

unacceptably high risk of an 

unauthorized use of funds or nonrepayment of unforgiven loans. In 

addition, the Bankruptcy Code does not 

require any person to make a loan or a 

financial accommodation to a debtor in 

bankruptcy. The Borrower Application 

Form for PPP loans (SBA Form 2483), 

which reflects this restriction in the 

form of a borrower certification, is a 

loan program requirement. Lenders may 

rely on an applicant’s representation 

concerning the applicant’s or an owner 

of the applicant’s involvement in a 

bankruptcy proceeding. 

5. Limited Safe Harbor With Respect to 

Certification Concerning Need for PPP 

Loan Request 

Consistent with section 1102 of the 

CARES Act, the Borrower Application 

Form requires PPP applicants to certify 

that ‘‘[c]urrent economic uncertainty 

makes this loan request necessary to 

support the ongoing operations of the 

Applicant.’’ 

Any borrower that applied for a PPP 

loan prior to the issuance of this 

regulation and repays the loan in full by 

May 7, 2020 will be deemed by SBA to 

have made the required certification in 

good faith. 

The Administrator, in consultation 

with the Secretary, determined that this 

safe harbor is necessary and appropriate 


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23452 Federal Register / Vol. 85, No. 82 / Tuesday, April 28, 2020 / Rules and Regulations 

to ensure that borrowers promptly repay 

PPP loan funds that the borrower 

obtained based on a misunderstanding 

or misapplication of the required 

certification standard. 

6. 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 not impose new or modify existing 

recordkeeping or reporting requirements 

under the Paperwork Reduction Act. 

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. 

[FR Doc. 2020–09098 Filed 4–27–20; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2020–0095; Product 

Identifier 2019–NM–192–AD; Amendment 

39–19904; AD 2020–08–12] 

RIN 2120–AA64 

Airworthiness Directives; The Boeing 

Company Airplanes 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: The FAA is adopting a new 

airworthiness directive (AD) for certain 

The Boeing Company Model 747–8 and 

747–8F series airplanes. This AD was 

prompted by an evaluation by the 

design approval holder (DAH) 

indicating that the skin lap joints at 

certain stringers are subject to 

widespread fatigue damage (WFD). This 

AD requires modifying the left and right 

side lap joints of the fuselage skin, 

repetitive post-modification inspections 

for cracking, and applicable oncondition actions. The FAA is issuing 

this AD to address the unsafe condition 

on these products. 

DATES: This AD is effective June 2, 2020. 

The Director of the Federal Register 

approved the incorporation by reference 

of a certain publication listed in this AD 

as of June 2, 2020. 

ADDRESSES: For service information 

identified in this final rule, contact 

Boeing Commercial Airplanes, 

Attention: Contractual & Data Services 

(C&DS), 2600 Westminster Blvd., MC 

110–SK57, Seal Beach, CA 90740–5600; 

telephone 562–797–1717; internet 

https://www.myboeingfleet.com. You 

may view this service information at the 

FAA, Airworthiness Products Section, 

Operational Safety Branch, 2200 South 

216th St., Des Moines, WA. For 

information on the availability of this 

material at the FAA, call 206–231–3195. 

It is also available on the internet at 

https://www.regulations.gov by 

searching for and locating Docket No. 

FAA–2020–0095. 

Examining the AD Docket 

You may examine the AD docket on 

the internet at https:// 


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