In this section-
An eligible recipient shall be eligible for forgiveness of indebtedness on a covered loan in an amount equal to the sum of the following costs incurred and payments made during the covered period:
Amounts which have been forgiven under this section shall be considered canceled indebtedness by a lender authorized under section 636(a) of this title.
For purposes of the purchase of the guarantee for a covered loan by the Administrator, amounts which are forgiven under this section shall be treated in accordance with the procedures that are otherwise applicable to a loan guaranteed under section 636(a) of this title.
Not later than 90 days after the date on which the amount of forgiveness under this section is determined, the Administrator shall remit to the lender an amount equal to the amount of forgiveness, plus any interest accrued through the date of payment.
A lender authorized under section 636(a) of this title, or, at the discretion of the Administrator, a third party participant in the secondary market, may, report to the Administrator an expected forgiveness amount on a covered loan or on a pool of covered loans of up to 100 percent of the principal on the covered loan or pool of covered loans, respectively.
The Administrator shall purchase the expected forgiveness amount described in subparagraph (A) as if the amount were the principal amount of a loan guaranteed under section 636(a) of this title.
Not later than 15 days after the date on which the Administrator receives a report under subparagraph (A), the Administrator shall purchase the expected forgiveness amount under subparagraph (B) with respect to each covered loan to which the report relates.
The amount of loan forgiveness under this section shall not exceed the principal amount of the financing made available under the applicable covered loan.
The amount of loan forgiveness under this section shall be reduced, but not increased, by multiplying the amount described in subsection (b) by the quotient obtained by dividing-
For purposes of subparagraph (A), the average number of full-time equivalent employees shall be determined by calculating the average number of full-time equivalent employees for each pay period falling within a month.
The amount of loan forgiveness under this section shall be reduced by the amount of any reduction in total salary or wages of any employee described in subparagraph (B) during the covered period that is in excess of 25 percent of the total salary or wages of the employee during the most recent full quarter during which the employee was employed before the covered period.
An employee described in this subparagraph is any employee who did not receive, during any single pay period during 2019, wages or salary at an annualized rate of pay in an amount more than $100,000.
An eligible recipient with tipped employees described in section 203(m)(2)(A) of title 29 may receive forgiveness for additional wages paid to those employees.
In a circumstance described in subparagraph (B), the amount of loan forgiveness under this section shall be determined without regard to a reduction in the number of full-time equivalent employees of an eligible recipient or a reduction in the salary of 1 or more employees of the eligible recipient, as applicable, during the period beginning on February 15, 2020 and ending on the date that is 30 days after March 27, 2020.
A circumstance described in this subparagraph is a circumstance-
The Administrator and the Secretary of the Treasury may prescribe regulations granting de minimis exemptions from the requirements under this subsection.
During the period beginning on February 15, 2020, and ending on December 31, 2020 (or, with respect to a covered loan made on or after December 27, 2020, ending on the last day of the covered period with respect to such covered loan), the amount of loan forgiveness under this section shall be determined without regard to a proportional reduction in the number of full-time equivalent employees if an eligible recipient, in good faith-
To receive loan forgiveness under this section, an eligible recipient shall use at least 60 percent of the covered loan amount for payroll costs, and may use up to 40 percent of such amount for any payment of interest on any covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation), any payment on any covered rent obligation, any payment on any covered operations expenditure, any payment on any covered property damage cost, any payment on any covered supplier cost, any payment on any covered worker protection expenditure, or any covered utility payment.
Except as provided in subsection (l), an eligible recipient seeking loan forgiveness under this section shall submit to the lender that is servicing the covered loan an application, which shall include-
No eligible recipient shall receive forgiveness under this section without submitting to the lender that is servicing the covered loan the documentation required under subsection (e) or the certification required under subsection (l), as applicable.
Not later than 60 days after the date on which a lender receives an application for loan forgiveness under this section from an eligible recipient, the lender shall issue a decision on the an1 application.
In this subsection, the term "initial or second draw PPP loan" means a covered loan or a loan under paragraph (37) of section 636(a) of this title.
A lender may rely on any certification or documentation submitted by an applicant for an initial or second draw PPP loan or an eligible recipient or eligible entity receiving initial or second draw PPP loan that-
With respect to a lender that relies on a certification or documentation described in paragraph (2) related to an initial or 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 initial or second draw PPP loan, if-
For purposes of title 26-
The cancellation of indebtedness on a covered loan under this section shall not otherwise modify the terms and conditions of the covered loan.
Not later than 30 days after March 27, 2020, the Administrator shall issue guidance and regulations implementing this section.
With respect to a covered loan made to an eligible recipient that is not more than $150,000, the covered loan amount shall be forgiven under this section if the eligible recipient-
An eligible recipient of a covered loan that is not more than $150,000 shall not, at the time of the application for forgiveness, be required to submit any application or documentation in addition to the certification and information required to substantiate forgiveness.
Nothing in subparagraph (A) or (B) shall be construed to exempt an eligible recipient from having to provide documentation independently to a lender to satisfy relevant Federal, State, local, or other statutory or regulatory requirements, or in connection with an audit as authorized under subparagraph (E).
The certification established by the Administrator under subparagraph (A) shall include a means by which an eligible recipient may, at the discretion of the eligible recipient, submit demographic information of the owner of the eligible recipient, including the sex, race, ethnicity, and veteran status of the owner.
The Administrator may-
With respect to a covered loan in an amount that is more than $150,000, the eligible recipient shall submit to the lender that is servicing the covered loan the documentation described in subsection (e).
The process for submitting the documentation described in subsection (e) shall include a means by which an eligible recipient may, at the discretion of the eligible recipient, submit demographic information of the owner of the eligible recipient, including the sex, race, ethnicity, and veteran status of the owner.
Not later than 45 days after December 27, 2020, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives an audit plan that details-
Not later than 30 days after the date on which the Administrator submits the audit plan required under subparagraph (A), and each month thereafter, the Administrator shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report on the forgiveness review and audit activities of the Administrator under this subsection, which shall include-
1So in original.
15 U.S.C. § 636m
EDITORIAL NOTES
REFERENCES IN TEXTThe National Emergencies Act, referred to in subsec. (a)(9)(A), is Pub. L. 94-412, Sept. 14, 1976, 90 Stat. 1255, which is classified principally to chapter 34 (§1601 et seq.) of Title 50, War and National Defense. For complete classification of this Act to the Code, see Short Title note set out under section 1601 of Title 50 and Tables. Section 1102 of this Act, referred to in subsec. (a)(12), means section 1102 of div. A of Pub. L. 116-136. Section 2301 of the CARES Act, referred to in subsec. (a)(12), is section 2301 of Pub. L. 116-136 which is set out as a note under section 3111 of Title 26, Internal Revenue Code.Section 303 of the Taxpayer Certainty and Disaster Relief Act of 2020, referred to in subsec. (a)(12), is section 303 of div. EE of Pub. L. 116-260, 134 Stat. 3075. Subsec. (d)(3)(C) of section 303 of the Act amended provisions set out as notes under section 3111 of Title 26, Internal Revenue Code. Subsecs. (a) to (c) and the rest of subsec. (d) of section 303 of the Act are not classified to the Code.
CODIFICATIONSection was formerly classified to section 9005 of this title prior to renumbering by section 304(b)(1)(A) of title III of div. N of Pub. L. 116-260.
AMENDMENTS2021-Subsec. (a)(12). Pub. L. 117-2, §5001(c)(1)(B), which directed insertion of ",or premiums taken into account in determining the credit allowed under section 6432 of title 26" before the period at the end of par. (12), was executed by making the insertion before the period at end of the penultimate sentence, to reflect the probable intent of Congress and the addition of a duplicative final sentence by section 303(g) of Pub. L. 116-260. See 2020 Amendment note below. Pub. L. 117-2, §5001(c)(1)(A), substituted "CARES Act," for "CARES Act or". 2020-Subsec. (a)(1). Pub. L. 116-260, div. N, §304(b)(1)(B)(i), substituted "section 636(a)(36) of this title" for "paragraph (36) of section 636(a) of this title, as added by section 1102". Subsec. (a)(3). Pub. L. 116-260, div. N, §304(b)(2)(A)(v), added par. (3). Former par. (3) redesignated (4). Pub. L. 116-142, §3(b)(1), added par. (3) and struck out former par. (3) which read as follows: "the term 'covered period' means the 8-week period beginning on the date of the origination of a covered loan;".Subsec. (a)(4). Pub. L. 116-260, div. N, §306(A), amended par. (4) generally. Prior to amendment, par. (4) read as follows: "the term 'covered period' means, subject to subsection (l), the period beginning on the date of the origination of a covered loan and ending the earlier of-"(A) the date that is 24 weeks after such date of origination; or"(B) December 31, 2020;". Pub. L. 116-260, div. N, §304(b)(2)(A)(iii), (iv), redesignated par. (3) as (4). Former par. (4) redesignated (6). Subsec. (a)(5) to (11). Pub. L. 116-260, div. N, §304(b)(2)(A)(i)-(iv), (vi)-(viii), added pars. (5), (7), and (9) and redesignated former pars. (4), (5), (6), and (7) as (6), (8), (10), and (11), respectively. Former par. (8) redesignated (12).Subsec. (a)(11)(E) to (H). Pub. L. 116-260, div. N, §304(b)(2)(A)(ix), added subpars. (E) to (H). Subsec. (a)(12). Pub. L. 116-260 div. EE, §303(g), inserted at end "Such payroll costs shall not include qualified wages taken into account in determining the credit allowed under subsection (a) or (d) of section 303 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020." Pub. L. 116-260 div. EE, §206(c)(1), inserted at end "Such payroll costs shall not include qualified wages taken into account in determining the credit allowed under section 2301 of the CARES Act or qualified wages taken into account in determining the credit allowed under subsection (a) or (d) of section 303 of the Taxpayer Certainty and Disaster Relief Act of 2020." Pub. L. 116-260, div. N, §315(b), amended par. (12) generally. Prior to amendment, par. (12) read as follows: "the term 'payroll costs' has the meaning given that term in paragraph (36) of section 636(a) of this title, as added by section 1102 of this Act." Pub. L. 116-260, div. N, §304(b)(2)(A)(i), redesignated par. (8) as (12). Subsec. (b)(5) to (8). Pub. L. 116-260, div. N, §304(b)(2)(B), added pars. (5) to (8).Subsec. (c). Pub. L. 116-260, div. N, §304(b)(1)(B)(ii), made technical amendment to references in original act which appear in text wherever appearing as references to section 636(a) of this title.Subsec. (d)(5)(B)(i)(II), (ii)(II). Pub. L. 116-260, div. N, §311(b)(1)(A), inserted "(or, with respect to a covered loan made on or after December 27, 2020, not later than the last day of the covered period with respect to such covered loan)" after "December 31, 2020". Pub. L. 116-142, §3(b)(2)(A), substituted "December 31, 2020" for "June 30, 2020".Subsec. (d)(7). Pub. L. 116-260, div. N, §311(b)(1)(B), in introductory provisions and subpar. (B) inserted "(or, with respect to a covered loan made on or after December 27, 2020, ending on the last day of the covered period with respect to such covered loan)" after "December 31, 2020" and in subpar. (A)(ii) inserted "(or, with respect to a covered loan made on or after December 27, 2020, on or before the last day of the covered period with respect to such covered loan)" after "December 31, 2020". Pub. L. 116-142, §3(b)(2)(B), added par. (7).Subsec. (d)(8). Pub. L. 116-260, div. N, §304(b)(2)(C), inserted "any payment on any covered operations expenditure, any payment on any covered property damage cost, any payment on any covered supplier cost, any payment on any covered worker protection expenditure," after "rent obligation,". Pub. L. 116-142, §3(b)(2)(B), added par. (8).Subsec. (e). Pub. L. 116-260, div. N, §307(a)(1), substituted "Except as provided in subsection (l), an eligible" for "An eligible" in introductory provisions. Subsec. (e)(2). Pub. L. 116-260, div. N, §304(b)(2)(D)(i), inserted "purchase orders, orders, invoices," after "transcripts of accounts," and substituted "covered rent obligations, payments on covered operations expenditures, payments on covered property damage costs, payments on covered supplier costs, payments on covered worker protection expenditures," for "covered lease obligations,". Subsec. (e)(3)(B). Pub. L. 116-260, div. N, §304(b)(2)(D)(ii), inserted "make payments on covered operations expenditures, make payments on covered property damage costs, make payments on covered supplier costs, make payments on covered worker protection expenditures," after "rent obligation,". Subsec. (f). Pub. L. 116-260, div. N, §307(a)(2), inserted "or the certification required under subsection (l), as applicable" after "subsection (e)". Subsec. (h). Pub. L. 116-260, div. N, §305(a), amended subsec. (h) generally. Prior to amendment, text read as follows: "If a lender has received the documentation required under this section from an eligible recipient attesting that the eligible recipient has accurately verified the payments for payroll costs, payments on covered mortgage obligations, payments on covered lease obligations, or covered utility payments during covered period- "(1) an enforcement action may not be taken against the lender under section 657t(e) of this title relating to loan forgiveness for the payments for payroll costs, payments on covered mortgage obligations, payments on covered lease obligations, or covered utility payments, as the case may be; and"(2) the lender shall not be subject to any penalties by the Administrator relating to loan forgiveness for the payments for payroll costs, payments on covered mortgage obligations, payments on covered lease obligations, or covered utility payments, as the case may be." Subsec. (i). Pub. L. 116-260, div. N, §276(a)(1), amended subsec. (i) generally. Prior to amendment, text read as follows: "For purposes of title 26, any amount which (but for this subsection) would be includible in gross income of the eligible recipient by reason of forgiveness described in subsection (b) shall be excluded from gross income." Subsec. (l). Pub. L. 116-260, div. N, §307(a)(3), added subsec. (l). Pub. L. 116-260, div. N, §306(1), struck out subsec. (l). Text read as follows: "An eligible recipient that received a covered loan before June 5, 2020, may elect for the covered period applicable to such covered loan to end on the date that is 8 weeks after the date of the origination of such covered loan." Pub. L. 116-142, §3(b)(3), added subsec. (l).
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2021 AMENDMENT Amendment by Pub. L. 117-2 applicable only with respect to applications for forgiveness of covered loans made under pars. (36) or (37) of section 636(a) of this title received on or after Mar. 11, 2021, see section 5001(c)(3) of Pub. L. 117-2 set out as a note under section 636 of this title.
EFFECTIVE DATE OF 2020 AMENDMENT Pub. L. 116-260, div. N, title II, §276(a)(2), Dec. 27, 2020, 134 Stat. 1979, provided that: "The amendment made by this subsection [amending this section] shall apply to taxable years ending after the date of the enactment of the CARES Act [Mar. 27, 2020]."Amendment by section 304(b)(1)(A), (B), (2) of div. N of Pub. L. 116-260 effective as if included in Pub. L. 116-136 and applicable to any loan made pursuant to section 636(a)(36) of this title before, on, or after Dec. 27, 2020, including forgiveness of such a loan, with provisions relating to exclusion of loans already forgiven, see section 304(c) of Pub. L. 116-260 set out as a note under section 636 of this title. Pub. L. 116-260, div. N, title III, §305(b), Dec. 27, 2020, 134 Stat. 1997, provided that: "The amendment made by subsection (a) [amending this section] shall be effective as if included in the CARES Act (Public Law 116-136; 134 Stat. 281) and shall apply to any loan made pursuant to section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)) before, on, or after the date of enactment of this Act [Dec. 27, 2020], including forgiveness of such a loan." Pub. L. 116-260, div. N, title III, §307(b), Dec. 27, 2020, 134 Stat. 2000, provided that: "The amendments made by subsection (a) [amending this section] shall be effective as if included in the CARES Act (Public Law 116-136; 134 Stat. 281) and shall apply to any loan made pursuant to section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)) before, on, or after the date of enactment of this Act [Dec. 27, 2020], including forgiveness of such a loan." Amendment by section 315(b) of div. N of Pub. L. 116-260 effective as if included in Pub. L. 116-136 and applicable to any loan made pursuant to section 636(a)(36) of this title before, on, or after Dec. 27, 2020, including forgiveness of such a loan, see section 315(c) of Pub. L. 116-260 set out as a note under section 636 of this title.Except as otherwise provided, amendment by title III of div. N of Pub. L. 116-260 effective on Dec. 27, 2020, and applicable to loans and grants made on or after Dec. 27, 2020, see section 348 of Pub. L. 116-260 set out as a note under section 636 of this title.
MODIFICATION OF DATES Pub. L. 116-260, div. N, title III, §311(b)(2), Dec. 27, 2020, 134 Stat. 2007, provided that: "The Administrator [of the Small Business Administration] and the Secretary of the Treasury may jointly, by regulation, modify any date in section 7A(d) of the Small Business Act [15 U.S.C. 636m(d)], as redesignated and transferred by section 304 of this Act [probably means section 304 of title III of div. N of Pub. L. 116-260], other than a deadline established under an amendment made by paragraph (1) [amending this section], in a manner consistent with the purposes of the Paycheck Protection Program to help businesses retain workers and meet financial obligations."
- Administration
- the terms "Administration" and "Administrator" mean the Small Business Administration and the Administrator thereof, respectively; and
- Administrator
- the terms "Administration" and "Administrator" mean the Small Business Administration and the Administrator thereof, respectively; and