Temporary changes to the business loan program; Paycheque Protection Program Second Draw Loans

B-332917

February 5, 2021

The Honorable Sherrod Brown
President
Member of the ranking Patrick J. Toomey
Banking, Housing and Urban Affairs Committee
United States Senate

The Honorable Richard Neal
President
The Honorable Kevin Brady
republican leader
Ways and Means Committee
House of Representatives

Material: Small Business Administration: Temporary Changes to the Business Loan Program; Paycheque Protection Program Second Draw Loans

Pursuant to Section 801 (a) (2) (A) of Title 5, United States Code, this is our report on a major rule promulgated by the Small Business Administration (SBA) titled “Temporary Changes to the Business Loan Program; Paycheck Protection Program Second Draw Loans ”(RIN: 3245-AH63). We received the rule on January 22, 2021. It was published in the Federal Register as an interim final rule on January 14, 2021. 86 Fed. Reg. 3712. The effective date of the rule is January 12, 2021.

According to the SBA, this interim final rule announces the implementation of Section 311 of the Law on Economic Assistance to Small Businesses, Nonprofits and Hard-Affected Sites, Pub. L. n ° 116-260, div. N, title III, 134 Stat. 1182, 1993 (Dec. 27, 2020), (Economic Aid Act). The SBA said the Economic Aid Act allows it to guarantee additional loans under the Temporary Paycheck Protection Program, which was originally created under the Aid, Relief Act. and Economic Security from Coronaviruses, Pub. L. n ° 116-136, 134 Stat. 281 (March 27, 2020), to bring economic relief to small businesses across the country affected by the 2019 Coronavirus Disease Emergency Declaration issued by President Trump on March 13, 2020, 85 Fed. Reg. 15337. Section 311 of the Economic Aid Act, according to the SBA, adds a second temporary program to the SBA 7 (a) loan program called “Second Draw Pay Check Protection Program”. The rule, according to the SBA, implements key provisions of Section 311 of the Economic Aid Act and invites public comment.

The Congressional Review Act (CRA) requires a 60-day period for the effective date of a major rule from the date of publication in the federal register or receipt of the rule by Congress, whichever is later. 5 USC § 801 (a) (3) (A). The 60-day deadline for the effective date may be waived, however, if the agency believes for good reason that the delay is impracticable, unnecessary or contrary to the public interest, and the agency incorporates a statement conclusions and its reasons in the rule. Posted. 5 USC § 808 (2). For this interim final rule, the SBA said it concluded, for good reason, that a 60-day delay in the effective date was unnecessary and against the public interest. The SBA said the last day to apply for and receive a Paycheck Protection Program loan is March 31, 2021, and given the short duration of the program and the urgent need to issue loans quickly, the SBA has said The SBA administrator, in consultation with the Secretary of the Treasury Department, has determined that it is impractical and in the public interest to provide a delayed effective date. According to the SBA, an immediate effective date will give small businesses the maximum time to apply for loans and lenders the maximum time to process applications before the program ends.

Attached is our assessment of the SBA’s compliance with the procedural steps required by Section 801 (a) (1) (B) (i) through (iv) of Title 5 in relation to the rule. If you have any questions about this report or would like to contact the GAO officials responsible for the assessment work related to the purpose of the rule, please contact Shari Brewster, Deputy General Counsel, at (202) 512-6398.

Shirley A. Jones
Associate Legal Director

Pregnant

cc: Yvonne Walters
Jural advisor
Office of the Advocate General
Small business management

PREGNANT

REPORT UNDER 5 USC § 801 (a) (2) (A) ON A MAJOR RULE
ISSUED BY THE
SMALL BUSINESS ADMINISTRATION
ENTITLED
“” TEMPORARY CHANGES TO THE BUSINESS LOAN PROGRAM;
SECOND DRAFT READY PAY CHECK PROTECTION PROGRAM »
(RIN: 3245-AH63)

(i) Cost-benefit analysis

The Small Business Administration (SBA) said it expects this interim final rule to translate into substantial benefits for small businesses, their employees and the communities they serve. The SBA noted that it lacked data to estimate the effects of the rule.

(ii) Agency actions relating to the Regulatory Flexibility Act (RFA), 5 USC §§ 603-605, 607 and 609

The SBA said rules that are exempt from notice and comment are also exempt from RFA requirements, including performing a regulatory flexibility analysis, where, among other things, the agency finds for good reasons that public notice and procedures are impracticable, unnecessary or contrary to the public interest. According to the SBA, since this interim final rule is exempt from notice and comment, the SBA is not required to conduct a regulatory flexibility analysis.

(iii) Agency actions regarding sections 202-205 of the Unfunded Mandates Reform Act 1995, 2 USC §§ 1532-1535

The SBA did not discuss the law in this interim final rule. In its brief, the agency indicated that it had determined that the preparation of a written statement under section 202 of the Act was not applicable.

(iv) Other relevant information or requirements under laws and decrees

Administrative Procedure Act, 5 USC §§ 551 et seq.

The SBA has said that this interim final rule is being released without notice or public comment, as Section 303 of the Economic Assistance to Small Businesses, Nonprofits, and Hard-Affected Sites Act, Pub. L. n ° 116-260, div. N, title III, 134 Stat. 1182, 1993 (December 27, 2020) (Economic Aid Act), authorizes the SBA to make regulations to implement the Economic Aid Act without regard to notice requirements. SBA has further stated that the rule is issued to allow immediate implementation of this program. According to the SBA, the intention of the Economic Aid Act is for the SBA to provide relief to small American businesses quickly. The SBA said the last day to apply for and receive a Payment Protection Program loan is March 31, 2021, and given the short duration of this program and the urgent need to issue loans quickly, the administrator of the SBA, in consultation with the Secretary of the Treasury Department, has determined that it is impractical and in the public interest to provide a delayed effective date of 30 days. The SBA said an immediate effective date will give small businesses the maximum time to apply for loans and lenders the maximum time to process applications before the program ends. Although the rule is effective immediately, the SBA has said that comments are sought from interested members of the public on all aspects of the rule, and that the SBA will consider the comments and the need for revisions as a result. comments.

Red Tape Reduction Act (PRA), 44 USC §§ 3501-3520

The SBA has determined that this interim final rule will impose new record keeping or reporting requirements under the PRA. The SBA said the information collection consists of SBA 2483-SD (Paycheck Protection Program Second Drawdown Request Form) and SBA 2484-SD (Personal Protection Program Loan Application). Paychecks – Second Draw Loan Guarantee). The SBA said it has sought emergency approval for the collection of information required to implement the Second Draw Payment Protection Program.

Legal authorization of the rule

The SBA promulgated this Interim Final Rule pursuant to Section 636 (a) (36) of Title 15, United States Code; article 1114 of the law on aid, relief and economic security against coronaviruses, public law 116-136; and Article 303 of the Law on Economic Assistance to Small Businesses, Nonprofit Organizations and Badly Affected Sites, Public Law 116-260.

Executive Decree No. 12866 (Planning and Revision of Regulations)

The SBA determined that this interim final rule is economically important for the purposes of the order, but said it was proceeding under the emergency provision in section 6 (a) (3) (D) of the order due to the need to move quickly to ease the current economic conditions resulting from the 2019 coronavirus disease emergency.

Executive Decree No. 13132 (Federalism)

The SBA has determined that this interim final rule will not have substantial direct effects on states, on national government-state relations, or on the distribution of powers and responsibilities between different levels of government. Therefore, the SBA determined that the rule does not affect federalism justifying the preparation of a federalism assessment.

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