Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 40921 

1By way of contrast, in a normal fiscal year, for 

example FY 2019, SBA guaranteed 51,907 7(a) 

Continued 

SMALL BUSINESS ADMINISTRATION 

13 CFR Part 120 

[Docket Number SBA–2021–0015] 

RIN 3245–AH79 

Business Loan Program Temporary 

Changes; Paycheck Protection 

Program—COVID Revenue Reduction 

Score, Direct Borrower Forgiveness 

Process, and Appeals Deferment 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Interim final rule. 

SUMMARY: This interim final rule 

implements changes related to the 

forgiveness of loans made under the 

Paycheck Protection Program (PPP), 

which was originally established under 

the Coronavirus Aid, Relief, and 

Economic Security Act (CARES Act) to 

provide economic relief to small 

businesses nationwide adversely 

impacted by the Coronavirus Disease 

2019 (COVID–19), as amended. SBA has 

issued a number of interim final rules 

implementing the PPP Program. This 

interim final rule further streamlines the 

forgiveness process for PPP loans of 

$150,000 or less by allowing lenders to 

use a COVID Revenue Reduction Score 

at the time of forgiveness to document 

the required revenue reduction for 

Second Draw PPP Loans, and 

establishing a direct borrower 

forgiveness process for lenders that 

choose to opt-in as an alternative 

method of processing loan forgiveness 

applications. This interim final rule also 

extends the loan deferment period for 

those PPP loans where the borrower 

timely files an appeal of a final SBA 

loan review decision with the SBA 

Office of Hearings and Appeals. 

DATES: 

Effective date: The provisions of this 

interim final rule are effective July 28, 

2021. 

Applicability date: The COVID 

Revenue Reduction Score portion of this 

interim final rule applies to all Second 

Draw PPP Loans for which the lender 

has not yet issued a loan forgiveness 

decision to SBA as of the effective date 

of this rule. The direct borrower 

forgiveness process portion of this rule 

applies to all PPP loans for which a loan 

forgiveness application has not been 

submitted by the borrower to the lender 

as of the effective date of this rule. The 

deferment portion of the rule applies to 

PPP appeals filed after the effective date 

of this rule and to those PPP appeals 

filed before the effective date of this rule 

for which a Notice and Order has not 

been issued. 

Comment date: Comments must be 

received on or before August 30, 2021. 

ADDRESSES: You may submit comments, 

identified by docket number SBA– 

2021–0015 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: 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. If you use a 

telecommunications device for the deaf 

(TDD) or a text telephone (TTY), call the 

Federal Relay Service (FRS), toll free, at 

1–800–877–8339. Individuals with 

disabilities can obtain this document in 

an accessible format that may be 

provided in Rich Text Format (RTF) or 

text format (txt), a thumb drive, an mp3 

file, Braille, large print, audiotape, or 

compact disc, or other accessible 

formats. 

SUPPLEMENTARY INFORMATION: 

I. Background Information 

On March 27, 2020, the Coronavirus 

Aid, Relief, and Economic Security Act 

(CARES Act) (Pub. L. 116–136) was 

enacted to provide emergency assistance 

and health care response for 

individuals, families, and businesses 

affected by the Coronavirus Disease 

2019 (COVID–19) pandemic. Section 

1102 of the CARES Act temporarily 

permitted the Small Business 

Administration (SBA) to guarantee 100 

percent of 7(a) loans under a new 

program titled the ‘‘Paycheck Protection 

Program,’’ pursuant to section 7(a)(36) 

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

636(a)(36)) (First Draw PPP Loans). 

Section 1106 of the CARES Act 

provided for forgiveness of up to the full 

principal amount of qualifying loans 

guaranteed under the Paycheck 

Protection Program (PPP). On April 24, 

2020, the Paycheck Protection Program 

and Health Care Enhancement Act (Pub. 

L. 116–139) was enacted, which 

provided additional funding and 

authority for the PPP Program. 

On June 5, the Paycheck Protection 

Program Flexibility Act of 2020 (PPP 

Flexibility Act) (Pub. L. 116–142) was 

enacted, which changed provisions of 

the PPP relating to the maturity of PPP 

loans, the deferral of PPP loan 

payments, and the forgiveness of PPP 

loans. On July 4, 2020, Public Law 116– 

147 extended the authority to guarantee 

PPP loans to August 8, 2020. 

On December 27, 2020, the Economic 

Aid to Hard-Hit Small Businesses, 

Nonprofits and Venues Act (Economic 

Aid Act) (Pub. L. 116–260) was enacted. 

The Economic Aid Act reauthorized 

lending under the PPP through March 

31, 2021. The Economic Aid Act added 

a new temporary section 7(a)(37) to the 

Small Business Act, which authorizes 

SBA to guarantee additional PPP loans 

(Second Draw PPP Loans) to certain 

eligible borrowers that previously 

received a First Draw PPP Loan under 

generally the same terms and conditions 

available under section 7(a)(36) of the 

Small Business Act. Among other 

things, to be eligible for a Second Draw 

PPP Loan, the borrower must have 

experienced a revenue reduction of not 

less than 25% in at least one quarter of 

2020 compared to the same quarter in 

2019. The Economic Aid Act also 

redesignated section 1106 of the CARES 

Act as section 7A of the Small Business 

Act, to appear after section 7 of the 

Small Business Act. Additionally, the 

Economic Aid Act provided for a 

simplified forgiveness application 

process for PPP loans of $150,000 or 

less. 

On March 11, 2021, the American 

Rescue Plan Act (ARPA) (Pub. L. 117– 

2) was enacted, and among other things, 

expanded eligibility for First Draw PPP 

Loans and Second Draw PPP Loans and 

revised exclusions from payroll costs for 

purposes of forgiveness. On March 30, 

2021, the PPP Extension Act of 2021 

(Pub. L. 117–6) was enacted, extending 

SBA’s PPP program authority through 

June 30, 2021. 

From April 3, 2020, through August 8, 

2020, when the 2020 round of PPP 

expired, SBA guaranteed over 5.2 

million PPP loans made by over 5,000 

PPP lenders under delegated authority. 

From January 11, 2021, when the PPP 

reopened, through June 30, 2021, when 

the PPP program authority expired, SBA 

guaranteed over 6.6 million additional 

PPP loans. Thus, the total number of 

PPP loans guaranteed by SBA exceeds 

11.8 million.1 The total dollar amount of 


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40922 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 

loans. The astronomical increase in SBA’s 7(a) 

portfolio, of which the PPP is a part, has strained 

SBA’s resources and will continue to strain SBA’s 

resources going forward. 

2As of July 12, 2021, SBA has received over 4.5 

million forgiveness decisions from PPP lenders 

through the Platform. 

3Although borrowers with loans of $150,000 or 

less may now use SBA Form 3508S, only those 

borrowers with loans of $50,000 or less may use the 

de minimis exemption from the FTE and salary/ 

wage reduction penalty. 

the PPP loans guaranteed by SBA 

exceeds $806 billion. 

SBA posted the first interim final rule 

implementing the PPP on SBA’s website 

on April 2, 2020, and published the rule 

in the Federal Register on April 15, 

2020 (85 FR 20811). SBA subsequently 

issued numerous additional interim 

final rules. On June 1, 2020, SBA 

published an interim final rule on loan 

forgiveness requirements (85 FR 33004) 

and an interim final rule on loan review 

procedures (85 FR 33010). Prior to the 

publication of the loan forgiveness and 

loan review interim final rules, on May 

15, 2020, SBA issued SBA Form 3508, 

which was a loan forgiveness 

application to be used by all PPP 

borrowers. 

On June 26, 2020, SBA published an 

interim final rule revising the loan 

forgiveness and loan review procedures 

to conform to the key forgiveness 

changes made by the PPP Flexibility Act 

(85 FR 38304). In conjunction with the 

rule, SBA issued a second loan 

forgiveness application form, SBA Form 

3508EZ, which is a streamlined form 

that incorporates the forgiveness safe 

harbors established under the PPP 

Flexibility Act. 

SBA’s 2020 PPP program authority 

expired on August 8, 2020. On August 

10, 2020, SBA began accepting PPP 

lender decisions on PPP borrower loan 

forgiveness applications through SBA’s 

Paycheck Protection Platform (Platform) 

(forgiveness.sba.gov). PPP borrowers 

were required to submit their loan 

forgiveness applications to their PPP 

lenders, and as required by section 1106 

of the CARES Act (now section 7A of 

the Small Business Act), lenders were 

required to issue a decision to SBA on 

the borrower’s loan forgiveness 

application within 60 days of receipt of 

the application. On August 27, 2020, 

SBA issued an interim final rule on 

Appeals of SBA Loan Review Decisions 

under the Paycheck Protection Program 

(85 FR 52883). On October 2, 2020, SBA 

began remitting forgiveness payments to 

PPP lenders that submitted forgiveness 

decisions to SBA through the Platform. 

SBA continues to remit forgiveness 

payments to PPP lenders, and as of July 

12, 2021, SBA has remitted over 4.3 

million forgiveness payments to 

lenders.2

On October 19, 2020, in response to 

borrower and lender concerns about the 

complexity of the loan forgiveness 

process for the smallest of borrowers, 

SBA and the Department of the Treasury 

(Treasury) jointly issued an interim final 

rule revising the loan forgiveness and 

loan review procedures to simplify the 

forgiveness process for PPP loans of 

$50,000 or less. Among other things, the 

rule exempted borrowers with loans of 

$50,000 or less from the full-time 

equivalent employee (FTE) and salary/ 

wage reduction penalties included in 

section 1106 of the CARES Act, under 

the joint SBA/Treasury statutory 

authority to make de minimis 

exemptions to those penalties. In 

conjunction with the rule, SBA issued a 

third loan forgiveness application, SBA 

Form 3508S, which was a further 

streamlined loan forgiveness application 

available for use by borrowers with 

loans of $50,000 or less. 

On January 14, 2021, SBA published 

interim final rules implementing the 

Economic Aid Act amendments to the 

PPP. The first interim final rule 

implemented Economic Aid Act 

changes to, among other things, PPP 

eligibility, and consolidated numerous 

prior interim final rules on PPP (86 FR 

3692) (Consolidated Eligibility IFR). The 

second interim final rule implemented 

the Second Draw PPP Loan program 

authorized by the Economic Aid Act 

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

Business Act (86 FR 3712) (Second 

Draw IFR). On February 5, 2021, SBA 

published a third interim final rule 

implementing Economic Aid Act 

changes related to the forgiveness and 

review of PPP loans (86 FR 8283) 

(Consolidated Forgiveness and Loan 

Review IFR). Among other things, the 

Consolidated Forgiveness and Loan 

Review IFR implemented the simplified 

forgiveness application process for loans 

of $150,000 or less required by the 

Economic Aid Act. In conjunction with 

this rule, on January 19, 2021, SBA 

issued a revised SBA Form 3508S, 

which increased the loan amount for 

which the form could be used from 

$50,000 to $150,000.3 The new SBA 

Form 3508S was also shortened to one 

page, as required by the Economic Aid 

Act, and no longer requires the 

submission of supporting forgiveness 

documentation, as mandated by the 

Economic Aid Act. 

Following the publication of the 

interim final rules implementing the 

Economic Aid Act, SBA published 

another interim final rule on March 8, 

2021, revising certain loan amount 

calculation and eligibility provisions for 

PPP (86 FR 13149). On March 22, 2021, 

SBA published an interim final rule 

implementing the PPP provisions of 

ARPA (86 FR 15083). 

As described below, this interim final 

rule further streamlines the forgiveness 

process for PPP loans of $150,000 or less 

by (a) allowing lenders to use a COVID 

Revenue Reduction Score at the time of 

loan forgiveness to document the 

required revenue reduction for Second 

Draw PPP loans of $150,000 or less, and 

(b) establishing a direct borrower 

forgiveness process for lenders that 

choose to opt-in as an alternative 

method of processing loan forgiveness 

applications for PPP Loans of $150,000 

or less. This interim final rule also 

extends the loan deferment period for 

those PPP loans where the borrower 

timely files an appeal of a final SBA 

loan review decision with the SBA 

Office of Hearings and Appeals. 

II. Comments and Immediate Effective 

Date 

This interim final rule is being issued 

without advance notice and public 

comment because section 1114 of the 

CARES Act and section 303 of the 

Economic Aid Act authorize SBA to 

issue regulations to implement the 

Paycheck Protection Program without 

regard to notice requirements. Even 

otherwise, SBA finds good cause for 

setting aside the advance notice-andpublic-comment procedure because that 

procedure would be impracticable and 

contrary to the public interest. The 

intent of the CARES Act and the 

Economic Aid Act is to afford SBA the 

flexibility to provide relief to America’s 

small businesses and nonprofit 

organizations expeditiously. Given the 

urgent need to provide borrowers with 

timely relief, the purpose of the rule is 

to minimize the burdens of the current 

loan forgiveness process that, without 

modification, could result in borrowers 

unnecessarily having to make principal 

and interest payments on loans that 

should be forgiven. If SBA were to 

follow the advance notice-and-publiccomment process, that would delay 

issuance of the rule by at least three 

months. SBA understands—based on its 

expertise and consistent portfolio 

analysis—that a significant number of 

borrowers will have to apply for loan 

forgiveness in the next three months. 

Therefore, if the proposed rule is still 

undergoing notice and comment during 

that time, these borrowers will be 

applying under the current process, 

which (as noted above) would mean 

these borrowers could unnecessarily 

have to make principal and interest 

payments on loans that should be 

forgiven and would not be positively 


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Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 40923 

4Borrowers may submit and lenders may accept 

paper versions of loan forgiveness applications, but 

given the volume of PPP loans made by lenders, 

electronic processing of loan forgiveness is more 

efficient. 

5As set forth in the Consolidated Eligibility IFR, 

Lenders must comply with the applicable lender 

obligations set forth in the interim final rule, but 

will be held harmless for borrowers’ failure to 

comply with program criteria and will not be 

subject to any enforcement action or penalty 

relating to loan origination or forgiveness of the PPP 

Continued 

impacted by a later rule change. 

Providing for notice and comment 

would render the rule effectively moot 

and useless for millions of intended 

beneficiaries. 

For these same reasons, SBA 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 allow SBA 

to expedite loan forgiveness to small 

businesses and nonprofit organizations 

and remit forgiveness payments to 

lenders. 

This good cause justification also 

supports waiver of the 60-day delayed 

effective date for major rules under 

Subtitle E of the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (also known as the Congressional 

Review Act) at 5 U.S.C. 808(2). 

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. 

These comments must be submitted 

on or before August 30, 2021. SBA will 

consider these comments and the need 

for making any revisions as a result of 

these comments. 

III. Paycheck Protection Program— 

COVID Revenue Reduction Score, 

Direct Borrower Forgiveness Process, 

and Appeals Deferment 

Overview 

A. Further Streamlining Forgiveness for 

PPP Loans of $150,000 or Less 

A key feature of the PPP is that a 

borrower may obtain forgiveness of up 

to the full amount of its PPP loan 

provided that the borrower complied 

with PPP requirements. Since SBA 

issued the first loan forgiveness 

application form (SBA Form 3508) in 

May 2020 and published the first loan 

forgiveness and loan review rules in 

June 2020, SBA has received comments 

from borrowers and lenders that the 

loan forgiveness process is 

overwhelming and difficult to manage 

and requesting simplification of the 

process. In response to borrower and 

lender requests for simplification of the 

loan forgiveness process, Congress 

enacted the PPP Flexibility Act in June 

2020, which created safe harbors from 

the FTE and salary/wage reduction 

penalties of section 1106 of the CARES 

Act, and in response, SBA issued a new 

streamlined loan forgiveness application 

(SBA Form 3508EZ) implementing those 

changes. 

In October 2020, SBA and Treasury 

exempted borrowers with loans of 

$50,000 or less from the FTE and salary/ 

wage reduction penalties and issued a 

second new streamlined loan 

forgiveness application (SBA Form 

3508S) implementing those changes. 

Borrowers and lenders continued to 

express concerns about the complexity 

of the loan forgiveness process, and in 

December 2020, Congress enacted the 

Economic Aid Act, which provides for 

a simplified loan forgiveness 

application process for borrowers with 

loans of $150,000 or less. SBA 

implemented this requirement by 

revising the second streamlined loan 

forgiveness application (SBA Form 

3508S) to allow all borrowers with loans 

of $150,000 or less to use the form. 

Loans of $150,000 or less represent 93 

percent of the outstanding PPP loans. 

Despite the implementation of the 

streamlined loan forgiveness application 

for borrowers with loans of $150,000 or 

less, many smaller PPP lenders continue 

to express concerns to SBA that they do 

not have the technology or human 

resources to develop efficient electronic 

loan forgiveness platforms to process 

the new streamlined loan forgiveness 

application.4 SBA has also become 

aware that because lenders are 

overwhelmed by the volume of PPP 

loans and are mindful of the statutory 

60-day requirement for lenders to issue 

a forgiveness decision to SBA from 

receipt of the borrower’s loan 

forgiveness application, lenders are 

limiting when loan forgiveness 

applications are accepted from 

borrowers, creating uncertainty among 

borrowers that they are going to have to 

start making payments on their PPP 

loans while they are waiting for their 

lenders to accept and process their loan 

forgiveness applications. 

Additionally, SBA has heard concerns 

from PPP lenders of all sizes that the 

requirement for borrowers to submit and 

lenders to review at the time of 

forgiveness the revenue reduction 

documentation for Second Draw PPP 

Loans of $150,000 or less is delaying the 

forgiveness process for these borrowers. 

To further simplify and streamline the 

forgiveness process for loans $150,000 

or less, SBA is making two changes 

under this interim final rule. First, for 

Second Draw PPP Loans of $150,000 or 

less, where the borrower is required to 

provide revenue reduction 

documentation at the time of loan 

forgiveness, SBA is allowing lenders to 

use a COVID Revenue Reduction Score 

developed by SBA’s contractor as an 

optional method to document the 

borrower’s revenue reduction. Second, 

SBA is making available a direct 

borrower forgiveness process for lenders 

that choose to opt-in as an alternative 

method for processing borrower loan 

forgiveness applications for all PPP 

loans of $150,000 or less. 

1. COVID Revenue Reduction Score 

Among other things, to be eligible for 

a Second Draw PPP Loan, a PPP 

borrower is required to have 

experienced a revenue reduction of not 

less than 25% during one quarter of 

2020 compared to the same quarter in 

2019. Under section 7(a)(37)(I) of the 

Small Business Act, when a borrower 

applies for a Second Draw PPP Loan of 

$150,000 or less, the borrower can 

submit a certification that the borrower 

meets the revenue reduction standard, 

provided that on or before the date on 

which the borrower submits an 

application for loan forgiveness, the 

borrower produces adequate 

documentation that the borrower has 

met the revenue reduction standard. All 

Second Draw PPP Loan borrowers were 

required to certify on their loan 

applications (SBA Forms 2483–SD and 

2483–SD–C) that they realized a 

reduction in gross receipts in excess of 

25% relative to the relevant comparison 

time period. 

The Second Draw PPP Loan IFR and 

the Loan Forgiveness and Loan Review 

IFR implementing the Economic Aid 

Act provide that if a borrower with a 

Second Draw PPP Loan of $150,000 or 

less did not produce documentation of 

revenue reduction at the time of 

application, the borrower must, on or 

before the date the borrower applies for 

loan forgiveness, submit to the lender 

documentation adequate to establish 

that the borrower experienced a revenue 

reduction of 25% or greater in 2020 

relative to 2019, and 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. The rules also provide that 

where a borrower with a Second Draw 

PPP Loan of $150,000 or less does not 

provide documentation of revenue 

reduction with its loan application, the 

lender must perform a good faith review 

of the documents provided by the 

borrower at or before forgiveness, 

including the borrower’s calculations 

and supporting documents.5


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loan if the lender acts in good faith relating to the 

origination or forgiveness of the PPP loan and 

satisfies all other applicable Federal, State, local, 

and other statutory or regulatory requirements (as 

provided in section 7A(h) of the Small Business 

Act, as amended) (86 FR 3692, 3695). 

6The independent third-party contractor will use 

a Consumer Demand Recovery Index that combines 

multiple data sources of the consumption of 

products and/or services (foot traffic, third party 

data, credit card spending, etc.) provided by 

businesses. Further, using the Business Operations 

Response Index, the score will measure the 

businesses’ return to operational status, which 

includes employment and unemployment data, 

business to business payment transactions, mobility 

and foot traffic on workplace and visitor frequency 

at physical locations. The resulting score will 

reflect declines in revenue. The contractor has 

advised SBA that this methodology will result in a 

score that will adequately document that the 

borrower met the revenue reduction standard as 

required by section 7(a)(37)(I)(i)(II) of the Small 

Business Act. 

To streamline forgiveness of Second 

Draw PPP Loans of $150,000 or less 

where the borrower did not submit 

documentation of revenue reduction at 

the time of the loan application, SBA 

has determined that an alternative form 

of revenue reduction confirmation is 

warranted to document the borrower’s 

revenue reduction. An independent 

third-party SBA contractor has 

developed a COVID Revenue Reduction 

Score (score) based on a variety of 

inputs including industry, geography, 

and business size. The score uses 

current data on economic recovery and 

return of businesses to operational 

status.6 Each Second Draw PPP Loan of 

$150,000 or less will be assigned a 

score, which will be maintained in the 

Platform and will be visible to lenders 

to use on an optional basis as an 

alternative to document revenue 

reduction. Additionally, the score will 

be visible to those borrowers that submit 

their loan forgiveness applications 

through the Platform using the direct 

borrower forgiveness process. 

When the score meets or exceeds the 

value required for validation of the 

borrower’s revenue reduction, use of the 

score will satisfy the requirement for the 

borrower to document revenue 

reduction. When the score does not 

meet the value required for validation of 

the borrower’s revenue reduction, and if 

the borrower has not already provided 

documentation to the lender that 

validates the borrower’s revenue 

reduction, the borrower must provide 

documentation either directly to the 

lender (for those lenders that do not optin to the direct borrower forgiveness 

process) or provide documentation to 

the lender by uploading it to the 

Platform. 

Shortly after issuance of this rule, 

SBA will be providing additional 

guidance regarding the procedures for 

lenders and borrowers to use the COVID 

Revenue Reduction Score, including 

when a score meets or exceeds the value 

required for validation of the required 

reductions in gross receipts and thus is 

considered adequate documentation of 

the borrower’s revenue reduction. 

2. Direct Borrower Forgiveness Process 

In response to PPP lender and 

borrower concerns, SBA is 

implementing a direct borrower 

forgiveness process. The direct borrower 

forgiveness process is an optional 

technology solution that SBA is 

providing to PPP lenders that will 

leverage SBA’s existing and proven 

Platform and align with and seamlessly 

integrate the streamlined forgiveness 

application for loans of $150,000 or less 

mandated by the Economic Aid Act. 

When a PPP lender opts-in to the 

direct borrower forgiveness process, the 

Platform will provide a single secure 

location for all of its borrowers with 

loans of $150,000 or less to apply for 

loan forgiveness through the Platform 

using the electronic equivalent of SBA 

Form 3508S. Upon receipt of notice that 

a borrower has applied for forgiveness 

through the Platform, lenders will 

review the loan forgiveness application 

in the Platform and issue a forgiveness 

decision to SBA inside the Platform. 

SBA believes that lenders that opt-in to 

using the direct borrower forgiveness 

process will benefit with reduced costs, 

increased efficiency, and more timely 

remittance of forgiveness payments from 

SBA, while borrowers will benefit from 

the ability to submit loan forgiveness 

applications directly through the 

Platform and reduce the wait time and 

uncertainty associated with submission 

through their lender. 

Shortly after issuance of this rule, 

SBA will be issuing more detailed 

procedural guidance regarding (1) the 

process for lenders to opt-in to the 

direct borrower forgiveness process, (2) 

the process for borrowers with loans of 

$150,000 or less to access the Platform 

and submit their loan forgiveness 

applications directly through the 

Platform, and (3) the process for lenders 

to access the forgiveness applications in 

the Platform to perform reviews of their 

borrowers’ applications, issue 

forgiveness decisions to SBA, and 

request forgiveness payments from SBA. 

During the transition period after the 

launch of the direct borrower 

forgiveness process, lenders that opt-in 

will be expected to complete the 

processing of any loan forgiveness 

applications that have already been 

submitted by borrowers to the lender 

and should inform such borrowers not 

to submit a duplicate loan forgiveness 

application through the Platform. 

After the launch of the direct 

borrower forgiveness process, borrowers 

will continue to submit loan forgiveness 

applications to their lenders, rather than 

through the Platform, under the 

following circumstances: 

• The PPP lender does not opt-in to 

use the direct borrower forgiveness 

process; 

• The borrower’s PPP loan amount is 

greater than $150,000; 

• The borrower does not agree with 

the data as provided by the SBA system 

of record, or cannot validate their 

identity in the Platform (for example, if 

there is an unreported change of 

ownership); or 

• For any other reason where the 

Platform rejects the borrower’s 

submission. 

In such circumstances, borrowers 

must follow instructions from their 

lender regarding how the lender expects 

the borrower to submit a forgiveness 

application for its PPP loan. 

B. Deferment Extension for OHA 

Appeals 

Currently, the rule for appeals of final 

SBA loan review decisions on PPP loans 

provides that because a PPP borrower 

must begin making payments of 

principal and interest on the remaining 

balance of its PPP loan when SBA 

remits the loan forgiveness amount to 

the PPP lender (or notifies the lender 

that no loan forgiveness is allowed), an 

appeal by a PPP borrower of any final 

SBA loan review decision does not 

extend the deferment period of the PPP 

loan. SBA is amending the appeals rule 

to, among other things, provide that a 

borrower’s timely appeal of a final SBA 

loan review decision will extend the 

deferment period for the PPP loan until 

SBA’s Office of Hearings and Appeals 

(OHA) issues a final decision on the 

appeal. The revised OHA rule will 

provide that the borrower should notify 

the lender of the appeal so that the 

lender can extend the deferment period. 

Under the revised OHA rule, an appeal 

petition must be filed with OHA within 

30 calendar days after the appellant’s 

receipt of the final SBA loan review 

decision. 

SBA has determined that, in order to 

avoid the potential administrative 

burden of having to reverse 

implementation of the final SBA loan 

review decision, including the refund of 

borrower payments by the lender and 

the processing of forgiveness payments 

by SBA, a timely appeal by a PPP 

borrower of a final SBA loan review 

decision should extend the deferment 

period of the PPP loan. SBA believes 


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Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 40925 

27SBA Form 3508, 3508EZ, 3508S, as applicable, 

or lender equivalent. Loan Forgiveness Application 

forms were amended to conform to the Economic 

Aid Act, including section 307, which requires a 

simplified forgiveness application for loans of not 

more than $150,000. The Simplified Forgiveness 

Application is SBA Form 3508S (as amended). 

31This subsection was originally published at 85 

FR 38304, section III.1.e. (June 26, 2020), was 

modified to conform to sections 306 and 307 of the 

Economic Aid Act by 86 FR 8283, 8288 (February 

5, 2021), and is being further modified to 

incorporate deferments due to appeals. 

68See subsection (g)(2)(v) of the interim final rule 

on Second Draw PPP Loans. 86 FR 3712, 3721 (Jan. 

14, 2021). 

85See subsection (h)(2)(i)(D) of the interim final 

rule on Second Draw PPP Loans. 86 FR 3712, 3721 

(Jan. 14, 2021). 

that allowing for continued deferment is 

in the best interest of the borrower. For 

these reasons, SBA is conforming the 

applicable PPP rules to provide that a 

timely appeal by a PPP borrower of a 

final SBA loan review decision extends 

the deferment period of the PPP loan 

until OHA’s decision becomes final 

under 13 CFR 134.1211. 

IV. Revisions to Prior PPP Rules 

Therefore, the following changes are 

made to PPP rules: 

1st Revision: The first sentence of Part 

IV.2.a. of the Consolidated Forgiveness 

and Loan Review IFR (86 FR 8283, 

8287) is revised to read as follows: 

2. Loan Forgiveness Process 

a. What is the general process to 

obtain loan forgiveness? 

To receive loan forgiveness on either 

a First Draw PPP Loan or a Second Draw 

PPP Loan, a borrower must complete 

and submit the Loan Forgiveness 

Application 27 to its lender (or to the 

lender servicing its loan), or for loans of 

$150,000 or less if directed by its lender, 

through the Paycheck Protection 

Platform (forgiveness.sba.gov). * * * 

* * * * * 

2nd Revision: Part IV.2.b. of the 

Consolidated Forgiveness and Loan 

Review IFR (86 FR 8283, 8288) is 

revised by adding a sentence to the end 

of the paragraph to read as follows: 

b. When must a borrower apply for 

loan forgiveness or start making 

payments on a loan? 31

* * * Notwithstanding the foregoing, 

a borrower’s timely appeal of a final 

SBA loan review decision extends the 

deferment period on the PPP loan until 

SBA’s Office of Hearings and Appeals 

issues a final decision on the appeal 

under 13 CFR 134.1211. 

3rd Revision: Part IV.6.a. of the 

Consolidated Forgiveness and Loan 

Review IFR (86 FR 8283, 8293) is 

revised by adding a sentence to the end 

of the first paragraph to read as follows: 

6. Documentation Requirements 

a. What must borrowers submit for 

forgiveness of their PPP loans? 

* * * If a Second Draw PPP Loan 

borrower’s COVID Revenue Reduction 

Score in the Paycheck Protection 

Platform meets or exceeds the value 

required to validate the borrower’s 

revenue reduction, no additional 

documentation is required to be 

submitted by the borrower. 

* * * * * 

4th Revision: The first sentence of 

Part IV.6.b. of the Consolidated 

Forgiveness and Loan Review IFR (86 

FR 8283, 8293) is revised to read as 

follows: 

b. What documentation are borrowers 

who are individuals with selfemployment income who file a Form 

1040, Schedule C or F required to 

submit to their lender with their request 

for loan forgiveness? 

For borrowers that received loans of 

$150,000 or less that use the SBA Form 

3508S, the borrower must submit the 

certification and information required 

by section 7A(l)(1)(A) of the Small 

Business Act and, for a Second Draw 

PPP Loan, revenue reduction 

documentation (which could be the 

COVID Revenue Reduction Score, if 

applicable) if such documentation was 

not provided at the time of 

application.68 * * * 

* * * * * 

5th Revision: Part IV.6.c. of the 

Consolidated Forgiveness and Loan 

Review IFR (86 FR 8283, 8293) is 

revised by adding a sentence to the end 

of the third paragraph to read as follows: 

c. What additional documentation 

must a borrower submit when the 

President of the United States, Vice 

President of the United States, the head 

of an Executive department, or a 

Member of Congress, or the spouse of 

any of the preceding, directly or 

indirectly holds a controlling interest in 

the borrower? 

* * * * * 

* * * If a borrower with a First Draw 

PPP Loan of $150,000 or less submits its 

loan forgiveness application through the 

Paycheck Protection Platform 

(Platform), the borrower must submit 

any required SBA Form 3508D through 

the Platform not later than 30 days after 

submitting its application through the 

Platform. 

* * * * * 

6th Revision: Footnote 82 in Part 

V.1.f. of the Consolidated Forgiveness 

and Loan Review IFR (86 FR 8283, 

8295) is revised to read as follows: 

See 85 FR 52833 (Aug. 27, 2020), as 

amended. 

7th Revision: The SBA Form 3508S 

subsection of Part V.2.a. of the 

Consolidated Forgiveness and Loan 

Review IFR (86 FR 8283, 8296) is 

revised to read as follows: 

2. The Loan Forgiveness Process for 

Lenders 

a. What should a lender review? 

* * * * * 

When a borrower submits SBA Form 

3508S or lender’s equivalent form, the 

lender shall: 

i. Confirm receipt of the borrower 

certifications contained in the SBA 

Form 3508S or lender’s equivalent form. 

ii. In the case of a Second Draw PPP 

Loan of $150,000 or less for which the 

borrower did not provide 

documentation of revenue reduction 

with its application and the lender did 

not conduct a review of the 

documentation at the time of 

application: 

If the borrower submits its loan 

forgiveness application to the lender, 

the lender may review the borrower’s 

COVID Revenue Reduction Score (score) 

in the Platform to confirm that it meets 

or exceeds the value required to validate 

the required reduction in gross receipts. 

If the borrower’s score does not meet or 

exceed the required value, 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.85

If the borrower submits its loan 

forgiveness application through the 

Paycheck Protection Platform 

(Platform), the lender must review the 

borrower’s score in the Platform to 

confirm that it meets or exceeds the 

value required to validate the required 

reduction in gross receipts. If the 

borrower’s score does not meet or 

exceed the required value, the lender 

must review the revenue reduction 

documentation uploaded by the 

borrower into the Platform and 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 those borrowers that are required 

to submit documentation regarding 

revenue reduction (other than a COVID 

Revenue Reduction Score), if the lender 

identifies errors in the borrower’s 

calculation or material lack of 

substantiation in the borrower’s 

supporting documents regarding 

revenue reduction, the lender should 

work with the borrower to remedy the 

issue. Providing an accurate calculation 


lotter on DSK11XQN23PROD with RULES1
40926 Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 

86 85 FR 20811, 20815–20816 (Apr. 15, 2020). 

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. 

The borrower shall not receive 

forgiveness without submitting all 

required documentation to the lender. 

As the First Interim Final Rule 86 and 

section IV.7 above indicate, lenders may 

rely on borrower representations. 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 (if required) and attests that 

it accurately verified the payments for 

eligible costs. 

8th Revision: The first sentence of the 

first paragraph of Part V.2.b. of the 

Consolidated Forgiveness and Loan 

Review IFR (86 FR 8283, 8296) is 

revised to read as follows: 

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 or, if applicable, 

notification by the Paycheck Protection 

Platform (Platform) that the borrower 

has submitted a loan forgiveness 

application into the Platform. * * * 

* * * * * 

9th Revision: Part III.B.9. of the 

Consolidated Eligibility IFR (86 FR 

3692, 3703) is revised to add a fourth 

paragraph at the end that reads as 

follows: 

9. When will I have to begin paying 

principal and interest on my PPP loan? 

* * * * * 

Notwithstanding the foregoing, a 

borrower’s timely appeal of a final SBA 

loan review decision extends the 

deferment period on the PPP loan until 

SBA’s Office of Hearings and Appeals 

issues a final decision on the appeal 

under 13 CFR 134.1211. 

10th Revision: Part IV.(g)(2)(v) of the 

Second Draw IFR (86 FR 3712, 3721) is 

revised to read as follows: 

(g) How do I submit an application for 

a Second Draw PPP Loan and what 

documentation must I provide to 

demonstrate eligibility? 

* * * * * 

(2) * * * 

(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. A COVID 

Revenue Reduction Score that meets or 

exceeds the value required to validate 

the required reduction in gross receipts 

will be considered adequate 

documentation of the borrower’s 

revenue reduction. 

11th Revision: Part IV.(h)(2)(D) of the 

Second Draw IFR (86 FR 3712, 3721) is 

revised to read as follows: 

(h) What do lenders need to know and 

do? 

(2) * * * 

(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. For loans of 

$150,000 or less where the lender elects 

to use the COVID Revenue Reduction 

Score (score) in the Paycheck Protection 

Platform (Platform) or where the lender 

has opted-in to the direct borrower 

forgiveness process and the borrower 

submits a loan forgiveness application 

to the lender through the Platform, the 

lender must review the borrower’s score 

to confirm that it meets or exceeds the 

value required to validate the required 

reduction in gross receipts, otherwise 

the lender must review the borrower’s 

supporting documentation in 

accordance with the foregoing 

requirements. 

* * * * * 

12th Revision: Part IV.(j) of the 

Second Draw IFR (86 FR 3712, 3722) is 

revised to read as follows: 

(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. If a lender elects to 

use the COVID Revenue Reduction 

Score (score) in the Paycheck Protection 

Platform (Platform) or where the lender 

has opted-in to the direct borrower 

forgiveness process and the borrower 

submits a loan forgiveness application 

to the lender through the Platform, a 

score that meets or exceeds the value 

required to validate the required 

reduction in gross receipts will be 

considered adequate documentation of 

the borrower’s revenue reduction. 

V. 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 and 13563, the 

Congressional Review Act, the 

Administrative Procedure Act, the 

Paperwork Reduction Act (44 U.S.C. 

Ch. 35), and the Regulatory Flexibility 

Act (5 U.S.C. 601–612). 

Executive Orders 12866 and 13563 

OMB’s Office of Information and 

Regulatory Affairs (OIRA) has 

determined that this interim final rule is 

economically significant for the 

purposes of Executive Orders 12866 and 

13563. SBA, however, is proceeding 

under the emergency provision at 

Executive Order 12866 section 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 is necessary to provide 

economic relief to small businesses and 

nonprofit organizations nationwide 

adversely impacted under the COVID– 

19 Emergency Declaration. We 

anticipate that this rule will result in 

substantial benefits to small businesses, 

nonprofit organizations, their 

employees, and the communities they 

serve. However, we lack data to estimate 

the effects of this rule. 


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Federal Register / Vol. 86, No. 144 / Friday, July 30, 2021 / Rules and Regulations 40927 

Congressional Review Act and 

Administrative Procedure Act 

OIRA has determined that this is a 

major rule for purposes of Subtitle E of 

the Small Business Regulatory 

Enforcement and Fairness Act of 1996 

(also known as the Congressional 

Review Act or CRA) (5 U.S.C. 804(2) et 

seq.). Under the CRA, a major rule takes 

effect 60 days after the rule is published 

in the Federal Register. 5 U.S.C. 

801(a)(3). 

Notwithstanding this requirement, 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. 5 U.S.C. 808(2). 

Pursuant to section 808(2), SBA for good 

cause finds that a 60-day delay to 

provide public notice is impracticable 

and contrary to the public interest. 

Likewise, for the same reasons, SBA for 

good cause finds that there are grounds 

to waive the 30-day effective date delay 

under the Administrative Procedure 

Act. 5 U.S.C. 553(d)(3). 

As discussed elsewhere in this 

interim final rule, given the urgent need 

to provide borrowers with timely relief 

and the short period of time before 

certain borrowers will be required to 

begin making principal and interest 

payments if they have not yet applied 

for forgiveness with their lenders, SBA 

has determined that it is impractical and 

not in the public interest to provide a 

delayed effective date. An immediate 

effective date will allow SBA to 

expedite loan forgiveness to small 

businesses and nonprofit organizations 

and remit forgiveness payments to 

lenders. 

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 require revisions to existing 

recordkeeping or reporting requirements 

of the Paycheck Protection Program 

(PPP) information collection, OMB 

Control Number 3245–0407. The 

revisions will affect SBA Forms 3508S 

and 3508D. SBA Form 3508S will be 

revised to incorporate the direct 

borrower forgiveness process and the 

COVID Revenue Reduction Score. SBA 

Form 3508D will be revised to 

incorporate the direct borrower 

forgiveness process. 

SBA has requested Office of 

Management and Budget (OMB) 

emergency approval of the revisions to 

the information collections to give small 

businesses and nonprofits affected by 

this interim final rule the maximum 

amount of time to apply for loan 

forgiveness under the new procedures. 

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 

Administrative Procedure Act 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. 

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. 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); 15 U.S.C. 

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

Isabella Casillas Guzman, 

Administrator. 

[FR Doc. 2021–16358 Filed 7–28–21; 4:15 pm] 

BILLING CODE 8026–03–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2020–0333; Product 

Identifier 2020–NM–015–AD; Amendment 

39–21623; AD 2021–13–18] 

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 all The 

Boeing Company Model 737 airplanes 

powered by LEAP–1B engines. This AD 

was prompted by reports of inadvertent 

release of the spring energy of the spring 

door opening system (SDOS) actuator 

with a certain part number, causing 

injury and the potential for injury to 

maintenance personnel. This AD 

requires replacing each affected SDOS 

actuator with a new SDOS actuator, and 

verifying that new safety markers are 

installed in the proper locations. The 

FAA is issuing this AD to address the 

unsafe condition on these products. 

DATES: This AD is effective September 3, 

2021. 

The Director of the Federal Register 

approved the incorporation by reference 

of a certain publication listed in this AD 

as of September 3, 2021. 

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–2020–0333. 

Examining the AD Docket 

You may examine the AD docket on 

the internet at https://

www.regulations.gov by searching for 

and locating Docket No. FAA–2020– 

0333; or in person at Docket Operations 

between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

The AD docket contains this final rule, 

any comments received, and other 


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