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Different eligibility requirements apply to Second Draw PPP Loans. (C) was in business as of February 15, 2020; is calculated according to (ii) or (iii) of this subsection(e)(6), depending on whether the borrower has employees. Economic Aid Act Provides Second Draw PPP Loans, Jan. 15, 2021 SBA to Require PPP Borrowers of $2 Million-Plus to Complete Loan Necessity Questionnaires, November 24, 2020 SBA Issues Much-Anticipated Guidance Regarding Changes of Ownership in PPP Loans, October 8, 2020 Subsection (j) contains forgiveness provisions specific to Second Draw PPP loans. Since this rule is exempt from notice and comment, SBA is not required to conduct a regulatory flexibility analysis. 4. Eligible news organizations with a NAICS code beginning with 511110 or 5151 (or majority-owned or controlled by a business concern with those NAICS codes) may qualify for the affiliation waiver for Second Draw PPP Loans only if they employ 300 or fewer employees per physical location. As with First Draw PPP Loans, in most cases, a borrower is considered together with its affiliates to determine eligibility for the PPP. documents in the last year, 124 the official SGML-based PDF version on govinfo.gov, those relying on it for that is not more than $100,000, divided by 12; (2) the average total monthly payment for employee payroll costs incurred or paid by the borrower during the same year elected by the borrower; by, (B) 2.5 (or, only for a borrower assigned a NAICS code beginning with 72 as defined in subsection (f)(10) at the time of disbursal, 3.5); or. 2021-00452 Filed 1-12-21; 4:15 pm], updated on 4:15 PM on Monday, April 17, 2023, updated on 8:45 AM on Monday, April 17, 2023. L. 116-260) into law to provide continued assistance to individuals and businesses that have been financially impacted by the ongoing coronavirus pandemic. Global challenges and issues, such as armed conflicts, terrorism, inequality and injustice, migration, religious and cultural . L. 116-136, section 1114; and Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, Pub. (9) an entity that has permanently closed. The terms and conditions of the Second Draw PPP Loans are subject to the same terms and conditions as First Draw PPP Loans. and all PPP loan program requirements, except as specified in this IFR. (iii) A lender may rely on any certification or documentation submitted by an applicant for a PPP loan or an eligible recipient or eligible entity that (A) is submitted pursuant to all applicable statutory requirements, regulations, and guidance related to a PPP loan, including under sections 7(a)(36) or (37) of the Small Business Act (15 U.S.C. (B) 3 percent of the balance of the financing outstanding at the time of disbursement of the loan for a loan above $350,000. If a borrower does not submit an application for loan forgiveness, such documentation must be provided upon SBA's request. The loan amounts received by borrowers for First Draw PPP Loans and Second Draw PPP Loans will not be aggregated. include documents scheduled for later issues, at the request The maximum for "second draw" PPP loans is $2 million, less than the $10 million cap for PPP's first round. (1) In general, the maximum loan amount for a Second Draw PPP Loan is equal to the lesser of two and half months of the borrower's average monthly payroll costs or $2 million, except as otherwise specified in this subsection (e). The Administrator has concluded that a limitation of $4,000,000 is appropriate because it is proportional to the $20,000,000 maximum amount for corporate groups that is provided under the Consolidated First Draw PPP IFR when the maximum loan amount for a single PPP loan is $10,000,000. (2) The affiliation rules under 13 CFR 121.301(f) are waived with respect to eligibility for a Second Draw PPP Loan for: (i) Any business concern with not more than 300 employees that, as of the date on which the covered loan is disbursed, is assigned a NAICS code beginning with 72; and, (ii) (A) any business concern (including any station which broadcasts pursuant to a license granted by the Federal Communications Commission under title III of the Communications Act of 1934 (47 U.S.C. the Built Environment The complexity of public-private partnership (PPP) project procurement requires an effective process for pricing, managing and . It appears to limit second draw loans to businesses that have no more than 300 employees. Section 317 of the Economic Aid Act modified this provision for Second Draw PPP Loans by reducing the limit on employees per physical location to 300. An applicant is not eligible for a Second Draw PPP Loan, even if it meets the eligibility requirements of subsection (c) of this section, if the applicant is: (1) Excluded from eligibility under the Consolidated First Draw PPP IFR;[35]. 2. 1H NMR 1H 2H JI 2H 2H 2HII 3H 10 6 8 (ppm) 4 2 O 13C NMR 220 200 180 160 140 120 100 80 60 40 20 0 8 (ppm) Deduce the structure from the spectra. This rule's designation under Executive Order 13771 will be informed by public comment. . documents in the last year, 1413 11. 5. The PPP is now a $284 billion refundable loan offering aimed at struggling small businesses. Although this IFR is effective immediately, comments are solicited from interested members of the public on all aspects of the interim final rule. $15 billion and $25 billion for first-draw and second-draw PPP loans for borrowers with 10 employees or fewer, or for loans of less than $250,000 to borrowers in low-or moderate-income neighborhoods (1) Eligibility for Second Draw PPP Loans is governed by the same affiliations rules (and waivers) as First Draw PPP Loans, except as described in subsection (d)(2). Second Draw PPP Loans are generally subject to the same terms, conditions and requirements as First Draw PPP Loans. This document has been published in the Federal Register. Questions on the Paycheck Protection Program 7(a) Loans (First Draw PPP Loans and Second Draw PPP Loans) may be directed to the Lender Relations Specialist in the local SBA Field Office. Uses of your new Second Draw PPP Loan: The SBA has expanded the uses for a Second Draw PPP Loan, beyond the simple payment of your monthly "owner profit." However, at least 60% of the new Second Draw PPP Loan must be used to pay your owner profit each month and cannot be more than $8,333/month or $100,000/year. The bigger issue, of course, is resolving baseless loan rejections before the second round of PPP funding runs out of money. In order to be eligible, businesses must be able to demonstrate that they experienced a 25 percent reduction in gross receipts in a 2020 calendar quarter compared to the same quarter in 2019. The lender may request additional documentation, however, if on further review the lender concludes that it would be useful in conducting the lender's good-faith review of the borrower's loan amount calculation. 04/17/2023, 863 Paragraph 7(a)(37)(K) of the Small Business Act, added by the Economic Aid Act, states that a lender approved to make First Draw PPP loans may make Second Draw PPP Loans under the same terms and conditions as new First Draw PPP Loans. This summary provides additional information and explains the key terms in the IFR. Businesses are eligible for a Second Draw loan if: They previously received a First Draw PPP loan. 5 U.S.C. These categories of prohibited borrowers are listed in subsection (e) of the IFR: In addition, subsection (e)(9) of this IFR provides that an entity that has previously received a Second Draw PPP Loan may not receive another Second Draw PPP Loan, as required by the Economic Aid Act. These terms and conditions specific to Second Draw PPP Loans are summarized below. legal research should verify their results against an official edition of (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. Moreover, this definition will enhance the administrability of Second Draw PPP Loans because it is a definition already used by the Administration and many small businesses. These subsections also provide that, for a borrower with a NAICS code beginning with 72 that would fall into more than one category listed in subsection (f) (for example, a business with a NAICS code beginning with 72 that is also a seasonal business or is also a new entity without 12 months of payroll costs), the borrower may calculate its average monthly payroll costs based on the methodology that applies to the entity but may use the 3.5 multiplier Start Printed Page 3716applicable to businesses with a NAICS code beginning with 72. (10) For purposes of calculating a borrower's maximum payroll costs, a borrower may multiply its average monthly payroll costs by 3.5 only if the borrower is in the Accommodation and Food Services sector and has reported a NAICS code beginning with 72 as its business activity code on its most recent IRS income tax return. Register documents. (ii) If the applicant is self-employed and has employees, the applicant's 2019 or 2020 (whichever was used to calculate loan amount) IRS Form 1040 Schedule C, Form 941 (or other tax forms or equivalent payroll processor records containing similar information) and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019 or 2020 (whichever was used to calculate loan amount), as applicable, or equivalent payroll processor records, along with evidence of any retirement and employee group health, life, disability, vision and dental insurance contributions, if applicable, must be provided. 636(a)(36)) apply to Second Draw PPP Loans, except as specified in this IFR.[3]. The Economic Aid Act authorizes the U.S. Small Business Administration to guarantee additional loans under the temporary Paycheck Protection Program, which was originally established under the Coronavirus Aid, Relief, and Economic Security Act to provide economic relief to small businesses nationwide adversely impacted under the Coronavirus Disease 2019 (COVID-19) Emergency Declaration (COVID-19 Emergency Declaration) issued by President Trump on March 13, 2020. Loan forgiveness of Second Draw PPP Loans and the loan review process for Second Draw PPP Loans are generally subject to the interim final rules regarding Loan Forgiveness and SBA Loan Review Procedures and Related Borrower and Lender Responsibilities, as modified to conform to the Economic Aid Act by the Consolidated First Draw PPP IFR, which is being published concurrently with this IFR. 603, 604. 601(3)-(6). Paragraph 7(a)(37)(A)(iv)(III)(cc) of the Small Business Act. of the consolidated interim final rule implementing . Subsection (c)(1)(ii) of the IFR clarifies that the full amount of the borrower's First Draw PPP Loan includes the amount of any increase on such First Draw PPP Loan made pursuant to the Economic Aid Act. Like First Draw PPP Loans, Second Draw PPP Loans are intended to provide expeditious relief to America's small Start Printed Page 3713businesses. (Blue numbers next to the lines in the ' H NMR spectra indicate the integration values.) 30. The Public Inspection page 23. without regard for whether such a station is a concern as defined in 13 CFR 121.105, or any successor thereto) that employs not more than 500 employees, or the size standard established by the Administrator for the NAICS code applicable to the business concern, per physical location of such business concern and is majority owned or controlled by a business concern that is assigned a NAICS code beginning with 511110 or 5151; or (b) any nonprofit organization that is assigned a NAICS code beginning with 5151. 37. [4] Edited by Akintoye & Beck 978 14051 7791 7 Strategic Issues in Public-Private Partnerships, 2nd Edition Dewulf, Blanken & Bult-Spiering 978 0 470 65635 8 THE NONPROFIT RISK BOOK - Jesse . Due to limited time, research on public-private partnerships (PPP), i.e. (iv) For loans with a principal amount greater than $150,000, documentation sufficient to establish that the applicant experienced a reduction in revenue, as provided in subsection(c)(1)(iv), must be Start Printed Page 3721provided at the time of application, which may include relevant tax forms, including annual tax forms, or, if relevant tax forms are not available, a copy of the applicant's quarterly income statements or bank statements. 34. If a borrower has not submitted new payroll documentation with its Second Draw PPP Loan application because it previously submitted 2019 payroll information to the same lender when it applied for its First Draw PPP Loan, then the lender must confirm the borrower's average monthly payroll costs based on that prior documentation. The Economic Aid Act included a new payroll cost calculation for farmers and ranchers receiving First Draw PPP Loans. Since the start of PPP 2.0, the loan forgiveness process already in place from PPP 1.0 has slowed significantly or, in some cases, even paused while new PPP loan applications are being processed. See subsections (B)(4)(b) and (B)(4)(e) of the Consolidated First Draw PPP IFR. This prototype edition of the The rule has no preemptive or retroactive effect. 15. For an eligible nonprofit organization, a veterans organization, an eligible nonprofit news organization, eligible 501(c) organization, or eligible destination marketing organization, gross receipts has the meaning in section 6033 of the Internal Revenue Code of 1986. The Second Edition of this best-selling introduction for practitioners uses new edition of the Federal Register. Small Business Paycheck Protection Program Which Paycheck Protection Software fixed by the CARES Act, is implemented by aforementioned Small Business Administration in support from the Department off an Treasury. Second Draw PPP Loans are subject to SBA's and the Department of the Treasury's (Treasury's) These applications can be for a completely "new" first draw loan or to "right size" (discussed below) their original loan. Rene Moniz, Esq.'s Post Rene Moniz, Esq. 24. 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. Subject to subsection (e) of this section, below, the following applicants are eligible for Second Draw PPP Loans: (1) An applicant is eligible for a Second Draw PPP Loan if it is a business concern, independent contractor, eligible self-employed individual, sole proprietor, nonprofit organization eligible for a First Draw PPP Loan, veterans organization, Tribal business concern, housing cooperative, small agricultural cooperative, eligible 501(c)(6) organization or destination marketing organization, or an eligible nonprofit news organization[33] You may submit comments, identified by number SBA-2021-0002 through the Federal eRulemaking Portal: http://www.regulations.gov. Two distinct Paycheck Protection Programs (PPP) opened on January 19, 2021. (CRA). The local SBA Field Office may be found at https://www.sba.gov/tools/local-assistance/districtoffices. corresponding official PDF file on govinfo.gov. Section 342 of the Economic Aid Act. All other comments must be submitted through the Federal eRulemaking Portal described above. : 5000-20083 EFFECTIVE . 17. An updated PPP application form has been issued by the SBA, together with an application for the new Second Draw Loan program. A brilliantly original and fascinating story with many . regulatory information on FederalRegister.gov with the objective of 04/17/2023, 149 documents in the last year, 825 These applications and the guidance can be found on the Treasury's website ( www.treasury.gov ). documents in the last year, by the Animal and Plant Health Inspection Service However, we lack data to estimate the effects of this rule. of the issuing agency. However, the rule notes that Second Draw PPP Loan borrowers who are not self-employed (including sole proprietorships and independent contractors) are also permitted to use the precise 1-year period before the date on which the loan is made to calculate payroll costs if they choose not to use 2019 or 2020 to calculate payroll costs. This exclusion of gross receipts of such former affiliate applies during the entire period of measurement, rather than only for the period after which affiliation ceased. (ii) for a Second Draw PPP Loan of more than $50,000, in an amount that is: (A) 5 percent of the balance of the financing outstanding at the time of disbursement of the loan for a loan up to (and including) $350,000; and. Second Draw PPP Loans are subject to SBA's and the Department of the Treasury's (Treasury's) consolidated interim final rules implementing updates to the Paycheck Protection Program for First Draw PPP Loans (Consolidated First Draw PPP IFR) issued concurrently with this interim final rule (IFR)[1] These markup elements allow the user to see how the document follows the (1) Second Draw PPP Loans are subject to SBA's and the Department of the Treasury's (Treasury's) consolidated interim final rule implementing the Paycheck Protection Program (Consolidated First Draw PPP IFR) and all PPP loan program requirements, except as otherwise provided in this section, including but not limited to the following terms: (i) The guarantee percentage is 100 percent. Which program provides small businesses with funds in pay up to 8 weeks of payroll costs including benefits. This clarification ensures the effectiveness of the second draw loan program by ensuring that a borrower is not disqualified from receiving a Second Draw PPP Loan because it received forgiveness on a First Draw PPP Loan. The Second Draw PPP IFR confirms that the last day to "apply for and receive" a Second Draw PPP loan is March 31, 2021. documents in the last year, 10 The PPP reopened Jan. 11 with $284 billion in funding for forgivable loans. on (The revenue reduction requirement is addressed in subsection (c)(1)(iv) of this IFR.) Subsection (g) of this IFR contains the provisions specific to lenders for Second Draw PPP Loans. [7] The second half of her book explores ways of envisioning alternative futures . [8] A representative of the applicant can certify for the business as a whole if the representative is legally authorized to do so. An entity that is ineligible to receive a First Draw PPP Loan under the CARES Act or Consolidated First Draw PPP IFR is also ineligible for a Second Draw PPP Loan. The Administrator, in consultation with the Secretary, has determined that these procedures strike an appropriate balance between promoting program integrity and preventing abuse, while making Second Draw PPP Loans available to all eligible borrowers as expeditiously as possible. Corporate group has the same meaning as in subsection (B)(4)(f) of the Consolidated First Draw PPP IFR. 636(a)(37)), SBA is authorized to guarantee Paycheck Protection Program Second Draw Loans (Second Draw PPP Loans). The end of PPP Millions of other borrowers are in the same position after the $292 billion allocated to the second round of PPP ran out weeks ahead of the May 31 deadline. Since most borrowers will use 2019 or 2020 the rule text refers only to 2019 or 2020 for simplicity and readability. 78c(a)) (except SBA will not consider whether a news organization that is eligible under subsection (c)(4) is affiliated with an entity, which includes any entity that owns or controls such news organization, that is an issuer); (8) an entity that has previously received a Second Draw PPP Loan; or. In this Issue, Documents With respect to a lender that relies on such a certification or documentation related to a Second Draw PPP Loan, an enforcement action may not be taken against the lender, and the lender shall not be subject to any penalties relating to loan origination or forgiveness of the Second Draw PPP Loan, if(A) the lender acts in good faith relating to loan origination or forgiveness of the Second Draw PPP Loan based on that reliance; and (B) all other relevant Federal, State, local, and other statutory and regulatory requirements applicable to the lender are satisfied with respect to the Second Draw PPP Loan. [5] For second draw loans, the bill appears to exclude from eligibility borrowers that previously qualified as a "small business concern" under the "alternative size standard" or the borrower's NAICS Code. See paragraph 7(a)(37)(A)(iv) of the Small Business Act. Moreover, this approach is appropriate because, if annual filings show a 25 percent revenue reduction, then at least one quarter in 2020 would have had at least a 25 percent revenue reduction. on Second Draw PPP Loans are generally subject to the same terms, conditions and requirements as First Draw PPP Loans, including but not limited to: 100 percent guaranteed by the SBA no collateral no personal guarantees 1 percent interest rate (calculated on a noncompounding, nonadjustable basis). [14] In calculating a borrower's payroll costs, the borrower must subtract any compensation paid to an employee in excess of $100,000 on an annualized basis, as prorated for the time period during which the payments are made or the obligation to make the payments is incurred. ). Pursuant to section 808(2) of the CRA, SBA finds, for good cause, that a 60-day delay in the effective date is unnecessary and contrary to the public interest. Accordingly, a single business entity that is assigned a NAICS code beginning with 72 is eligible to receive a Second Draw PPP Loan if it employs no more than 300 employees per physical location and meets the revenue reduction requirements and otherwise satisfies the eligibility criteria described in this IFR. In addition, this rule is being issued to allow for immediate implementation of this program. 2nd draw PPP loans In December, Congress funded an additional $284.45 billion (Division N, Title III, Section 323) for a second-round (or "2nd draw") of PPP for businesses with 300 employees or less with a final covered period date of March 31, 2021 (Division N, Title III, Section 343). Given the short duration of this program, and the urgent need to issue loans quickly, the Administrator in consultation with the Secretary has determined that it is impractical and not in the public interest to provide a 30-day delayed effective date. See paragraph 7(a)(37)(O) of the Small Business Act. Second draw PPP loans are intentionally narrower and smaller in terms of eligibility and amount. This interim final rule is economically significant for the purposes of Executive Orders 12866 and 13563, and the Office of Management and Budget's Office of Information and Regulatory Affairs (OIRA) had determined that this is a major rule under the Congressional Review Act (5 U.S.C. In addition, section 7(a)(37)(B) provides that the Administrator may guarantee covered loans to eligible entities under the same terms, conditions, and processes as First Draw PPP Loans. (3) The maximum amount of a Second Draw PPP Loan to a borrower that is a seasonal employer (meaning an employer that does not operate for more than 7 months in any calendar year or that during the preceding calendar year, had gross receipts for any 6 months of that year that were not more than 33.33 percent of the gross receipts of the employer for the other 6 months of that year) is calculated as the lesser of: (A) At the election of the borrower, the average total monthly payments for payroll costs incurred or paid by the borrower for any 12-week period between February 15, 2019 and February 15, 2020; by, (B) 2.5 (or, only for a borrower assigned a NAICS code beginning with 72 at the time of disbursement as defined in subsection (f)(10), 3.5); or. 801 et seq.) However, these items do not resolve pending litigation over the SBA's prohibition against extending PPP loans to Chapter 11 debtors that are not proceeding . 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