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Title II — Modifications to the Paycheck Protection Program

S. 4818 · 116th Congress · Oct 20, 2020 · Lineage

II Modifications to the Paycheck Protection Program

Sec. 201 Periods for loan forgiveness and application submission

(a)
Period for costs that are eligible for forgiveness and application submission— Section 1106 of the CARES Act (15 U.S.C. 9005) is amended—
(1)
in subsection (a), by striking paragraph (3) and inserting the following:

“(3) the term covered period means the period beginning on the date of the origination of a covered loan and ending on a date selected by the eligible recipient of the covered loan that—

“(A) is not earlier than the date that is 8 weeks after such date of origination; and

“(B) is not later than the date that is 24 weeks after such date of origination;”

(2)
in subsection (d), by striking “December 31, 2020” each place it appears and inserting “September 30, 2021”; and
(3)
by striking subsection (l) and inserting the following:

“(l) Application deadline—An eligible recipient may apply for forgiveness under this section with respect to a covered loan any time after the covered period applicable to the covered loan ends if—

“(1) proceeds from the covered loan have been spent; and

“(2) the eligible recipient is in compliance with subsections (e) and (f).”

(b)
Applicability of amendments— The amendments made by subsection (a) shall be effective as if included in the CARES Act (Public Law 116–136) 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)) or section 1109 of the CARES Act (15 U.S.C. 9008).

Sec. 202 Supplemental covered loans for certain business concerns

Section 7(a)(36)(B) of the Small Business Act (15 U.S.C. 636(a)(36)(B)) is amended—
(1)
by striking “Except” and inserting the following:

“(i) In general—Except”

(2)
by adding at the end the following:

“(ii) Supplemental covered loans

“(I) Definitions—In this clause—

“(aa) the terms exchange, issuer, and security have the meanings given those terms in section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a));

“(bb) the term gross receipts means gross receipts within the meaning of section 448(c) of the Internal Revenue Code of 1986;

“(cc) the term national securities exchange means an exchange registered as a national securities exchange under section 6 of the Securities Exchange Act of 1934 (15 U.S.C. 78f);

“(dd) the term publicly traded entity means an issuer, the securities of which are listed on a national securities exchange;

“(ee) the term significant loss in revenue means that, due to the impact of COVID–19—

“(AA) the gross receipts of the eligible recipient during the first, second, or third calendar quarter of 2020 are less than 75 percent of the gross receipts of the eligible recipient during the same calendar quarter in 2019;

“(BB) if the eligible recipient was not in business on April 1, 2019, the gross receipts of the eligible recipient during any 2-month period during the first 3 calendar quarters of 2020 are less than 75 percent of the amount of the gross receipts of the eligible recipient during any prior 2-month period during the first 3 calendar quarters of 2020; or

“(CC) if the eligible recipient is seasonal employer, as determined by the Administrator, the gross receipts of the eligible recipient during any 2-month period during the first 3 calendar quarters of 2020 are less than 75 percent of the amount of the gross receipts of the eligible recipient during the same 2-month period in 2019; and

“(ff) the term smaller concern means an eligible recipient that—

“(AA) has not more than 200 employees;

“(BB) operates under a sole proprietorship or as an independent contractor; or

“(CC) is an eligible self-employed individual.

“(II) Authority—Except as otherwise provided in this clause, for an eligible recipient that has received a covered loan under clause (i), the Administrator may guarantee a single supplemental covered loan to the eligible recipient under the same terms, conditions, and processes as a covered loan made under clause (i).

“(III) Choice of lender—An eligible recipient may apply for a supplemental covered loan under this clause with the lender that made the covered loan under clause (i) to the eligible recipient or another lender.

“(IV) Eligibility

“(aa) In general—A supplemental covered loan under this clause—

“(AA) may only be made to an eligible recipient that is a smaller concern that has had a significant loss in revenue and has used, or is expending funds at a rate that the eligible recipient will use on or before the expected date of the disbursement of the supplemental covered loan under this clause, the full amount of the covered loan received under clause (i); and

“(BB) may not be made to a publicly traded or foreign owned entity as described in clause (x) of subparagraph (D).

“(bb) Business concerns with more than 1 physical location

“(AA) In general—For purposes of a supplemental covered loan under this clause, subparagraph (D)(iii)(I) shall be applied by substituting “not more than 200 employees per physical location” for “not more than 500 employees per physical location”.

“(BB) Limit for multiple locations—For an eligible recipient with more than 1 physical location, the total amount of all supplemental covered loans made under this clause to the eligible recipient shall not be more than $2,000,000.

“(V) Maximum amount—The maximum amount of a supplemental covered loan under this clause is the lesser of—

“(aa) the product obtained by multiplying—

“(AA) the average total monthly payments for payroll costs by the eligible recipient used to determine the maximum amount of the covered loan under clause (i) made to the eligible recipient under this paragraph; by

“(BB) 2.5; or

“(bb) $2,000,000.

“(VI) Exception from certain certification requirements—An eligible recipient applying for a supplemental covered loan under this clause shall not be required to make the certification described in clause (iii) or (iv) of subparagraph (G).

“(VII) Reimbursement for processing supplemental PPP—For a supplemental covered loan under this clause of not more than $50,000, the reimbursement under subparagraph (P)(i)(I) by the Administrator shall not be less than $2,500.”

Sec. 203 Certifications and documentation for streamlined forgiveness of covered loans

Section 1106 of the CARES Act (15 U.S.C. 9005) is amended—
(1)
in subsection (e), in the matter preceding paragraph (1), by striking “An eligible recipient” and all that follows through “an application,” and inserting “Subject to subsection (f), an eligible recipient applying for loan forgiveness under this section shall provide proof of the use of covered loan proceeds,”;
(2)
by amending subsection (f) to read as follows:

“(f) Documentation requirements—To receive loan forgiveness under this section, an eligible recipient shall comply with the following requirements:

“(1) With respect to a covered loan in an amount that is not more than $50,000, the eligible recipient—

“(A) shall certify to the Administrator that the eligible recipient has used proceeds from the covered loan in compliance with the requirements of section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)), including a description of the amount of proceeds used for payroll costs and the number of employees the eligible recipient was able to retain because of the covered loan;

“(B) is not required to submit any documentation or application to receive forgiveness under this section;

“(C) shall certify to the Administrator that the eligible recipient can make the documentation described under subsection (e) available, upon request, for a period of time determined by the Administrator, which period shall be not less than 3 years; and

“(D) may submit to the Administrator demographic information of the owner of the eligible recipient, including the sex, race, ethnicity, and veteran status of the owner, through a process established by the Administrator.

“(2) With respect to a covered loan in an amount that is more than $50,000 but not more than $150,000, the eligible recipient—

“(A) shall submit to the lender that is servicing the covered loan the certification described in paragraph (1)(A) and a simplified one-page application form that does not require the submission of any documentation described in subsection (e);

“(B) shall make the certification described in paragraph (1)(C); and

“(C) may submit to the Administrator demographic information of the owner of the eligible recipient, including the sex, race, ethnicity, and veteran status of the owner, as established by the Administrator on the application form described in subparagraph (A).

“(3) With respect to a covered loan in an amount that is more than $150,000, the eligible recipient—

“(A) shall submit to the lender that is servicing the covered loan the documentation described in subsection (e); and

“(B) may submit to the Administrator demographic information of the owner of the eligible recipient, including the sex, race, ethnicity, and veteran status of the owner, through a process established by the Administrator.”

(3)
by amending subsection (g) to read as follows:

“(g) Lender submission—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 only be required to review the application to ensure completion, including that required attestations have been made, before submitting the application to the Administrator.”

Sec. 204 Eligibility of certain organizations for loans under the Paycheck Protection Program

Section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36))—
(1)
in subparagraph (A)—
(A)
in clause (vii), by inserting “covered” before “nonprofit”;
(B)
in clause (viii)(II)—
(i)
in item (dd), by striking “or” at the end;
(ii)
in item (ee), by adding “or” at the end; and
(iii)
by adding at the end the following:

“(ff) any compensation of an employee who is a registered lobbyist under the Lobbying Disclosure Act of 1995 (2 U.S.C. 1601 et seq.);”

(C)
by amending clause (ix) to read as follows:

“(ix) the term covered organization means—

“(I) an organization described in section 501(c) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code that is not a covered nonprofit organization;

“(II) an entity created by a State or local government that derives the majority of its operating budget from the production of live events; or

“(III) a destination marketing organization;”

(D)
in clause (xi)(IV), by striking “and” at the end;
(E)
in clause (xii), by striking the period at the end and inserting a semicolon; and
(F)
by adding at the end the following:

“(xiii) the term housing cooperative means a cooperative housing corporation (as defined in section 216(b) of the Internal Revenue Code of 1986); and

“(xiv) the term destination marketing organization means a nonprofit entity that is an organization described in section 501(c)(6) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of such Code, a State, or a political subdivision of a State (including any instrumentality of such entities) engaged in marketing and promoting communities and facilities to businesses and leisure travelers through a range of activities, including—

“(I) assisting with the location of meeting and convention sites;

“(II) providing travel information on area attractions, lodging accommodations, and restaurants;

“(III) providing maps; and

“(IV) organizing group tours of local historical, recreational, and cultural attractions.”

(2)
in subparagraph (D)—
(A)
in clause (i)—
(i)
by inserting “covered” before “nonprofit organization” each place it appears; and
(ii)
by striking “veterans organization” each place it appears and inserting “housing cooperative, covered organization”;
(B)
in clause (iii)—
(i)
by amending the clause heading to read as follows: “Requirements for restaurants and certain news organizations”;
(ii)
by striking “During the covered period, any business concern that employs” and inserting the following:

“(I) that, during the covered period, employs”

(iii)
in subclause (I), as so designated, by striking the period at the end and inserting a semicolon; and
(iv)
by adding at the end the following:

“(II) that—

“(aa) was not eligible to receive a covered loan the day before the date of enactment of this subclause, is assigned a North American Industry Classification System code beginning with 511110, 515112, or 515120, and an individual physical location of the business concern at the time of disbursal does not exceed the size standard established by the Administrator for the applicable code shall, notwithstanding clause (x), be eligible to receive a covered loan for expenses associated with an individual physical location of that business concern to support the continued provision of local news, information, content, or emergency information, and, at the time of disbursal, the individual physical location; or

“(bb) was not eligible to receive a covered loan the day before the date of enactment of this subclause, has a trade or business that falls under a North American Industry Classification System code beginning with 5151 as a public broadcast entity (as defined in section 397(11) of the Communications Act of 1934 (47 U.S.C. 397(11))), and is a covered nonprofit organization or another organization otherwise subject to section 511(a)(2) of the Internal Revenue Code of 1986, shall be eligible to receive a covered loan for expenses to support the continued provision of local news, information, content, or emergency information by such entity; or

“(III) that was not eligible to receive a covered loan the day before the date of enactment of this subclause, is assigned a North American Industry Classification System code of 519130, is identified as a Internet-only news publisher or Internet-only periodical publisher, and is engaged in the collection and distribution of local or regional and national news and information shall be eligible to receive a covered loan for expenses to support the continued provision of news, information, content, or emergency information.”

(C)
in clause (iv)—
(i)
in subclause (II), by striking “and” at the end;
(ii)
in subclause (III), by striking the period at the end and inserting “; and”; and
(iii)
by adding at the end the following:

“(IV) an individual physical location of a business concern described in clause (iii)(II), if such concern does not pay, distribute, or otherwise provide any portion of the covered loan to any other entity other than the individual physical location that is the intended recipient of the covered loan.”

(D)
in clause (v), by striking “nonprofit organization, veterans organization,” and inserting “covered organization, covered nonprofit organization, housing cooperative,”;
(E)
in clause (vi), by striking “nonprofit organization and a veterans organization” and inserting “covered organization, a covered nonprofit organization, and a housing cooperative”; and
(F)
by adding at the end the following:

“(vii) Additional requirements and additional eligibility for covered organizations and covered nonprofit organizations

“(I) Lobbying restriction on smaller covered organizations—During the covered period, a covered organization described in clause (i) may only receive a covered loan if—

“(aa) the covered organization does not receive more than 10 percent of its receipts from lobbying activities;

“(bb) the lobbying activities of the covered organization do not comprise more than 10 percent of the total activities of the covered organization; and

“(cc) with respect to a covered organization described in section 501(c)(4) of the Internal Revenue Code of 1986 that is exempt from taxation under subsection (a) of such section, such covered organization has not made and will not make a contribution, expenditure, independent expenditure, or electioneering communication within the meaning of the Federal Election Campaign Act of 1971 (52 U.S.C. 30101 et seq.), and has not undertaken and will not undertake similar campaign finance activities in State and local elections, during the election cycle which ends on the date of the general election in calendar year 2020.

“(II) Eligibility of larger organizations

“(aa) Covered nonprofit organizations—During the covered period, a covered nonprofit organization that employs more than the maximum number of employees allowed under clause (i) shall be eligible to receive a covered loan if the covered nonprofit organization has had a significant loss in revenue (as defined in subparagraph (B)(ii)(I)(ee)).

“(bb) Covered organizations—During the covered period, a covered organization that employs more than the maximum number of employees allowed under clause (i) shall be eligible to receive a covered loan if the covered organization—

“(AA) meets the requirements of items (aa), (bb), and (cc) of subclause (I); and

“(BB) has had a significant loss in revenue (as defined in subparagraph (B)(ii)(I)(ee)).

“(viii) Inclusion of critical access hospitals—During the covered period, any covered organization that is a critical access hospital (as defined in section 1861(mm) of the Social Security Act (42 U.S.C. 1395x(mm))) shall be eligible to receive a covered loan, regardless of the status of such a hospital as a debtor in a case under chapter 11 of title 11, United States Code, or the status of any debts owed by such a hospital to the Federal Government.

“(ix) Additional requirements for certain news entities

“(I) In general—With respect to an individual physical location of a business concern described in item (aa) of clause (iii)(II), each such location shall be treated as an independent, nonaffiliated entity for purposes of this paragraph.

“(II) Demonstration of need—Any individual physical location of a business concern described in item (aa) of clause (iii)(II) that is a franchise or affiliate of, or owned or controlled by a parent company, investment company, or the management thereof, shall demonstrate, upon request of the Administrator, the need for a covered loan to support the continued provision of local news, information, content, or emergency information, and, at the time of disbursal, the individual physical location.

“(III) Limitation on use of funds—A business concern, or a parent company, investment company, or management company of 1 or more physical locations of a business concern, described in item (aa) of clause (iii)(II) may not use any portion of the proceeds of a covered loan for any expense that is not directly related to the individual physical location described in subclause (I) of this clause with respect to which the covered loan was made.

“(IV) Waiver of certain limitations—For an organization described in item (bb) of clause (iii)(II), during the covered period, the provisions applicable to affiliations under section 121.103 of title 13, Code of Federal Regulations, or any successor regulation, the provisions of section 120.110(j) of title 13, Code of Federal Regulations, or any successor regulation, and any otherwise applicable covered loan limitations based on number of employees or loss in revenue are waived with respect to determining eligibility for a covered loan under such item.”

Sec. 205 Limit on aggregate loan amount for eligible recipients with more than 1 physical location

Section 7(a)(36)(E) of the Small Business Act (15 U.S.C. 636(a)(36)(E)) is amended by adding at the end the following flush matter:

Sec. 206 Allowable uses of covered loans; forgiveness

(a)
Paycheck protection program— Section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)) is amended—
(1)
in subparagraph (F)(i)—
(A)
in subclause (VI), by striking “and” at the end;
(B)
in subclause (VII), by striking the period at the end and inserting a semicolon; and
(C)
by adding at the end the following:

“(VIII) costs related to the provision of personal protective equipment for employees or other equipment or supplies determined by the employer to be necessary to protect the health and safety of employees and the general public;

“(IX) payments for inventory, raw materials, or supplies; and

“(X) costs related to property damage, vandalism, or looting due to public disturbances that occurred during 2020 that were not covered by insurance or other compensation.”

(2)
in subparagraph (G)—
(A)
in the subparagraph heading, by striking “Borrower requirements” and all that follows through “eligible recipient applying” and inserting “Borrower certification requirements.—An eligible recipient applying”;
(B)
by redesignating subclauses (I) through (IV) as clauses (i) through (iv), respectively, and adjusting the margins accordingly; and
(C)
in clause (ii), as so redesignated, by striking “to retain workers” and all that follows through “utility payments” and inserting “for an allowable use described in subparagraph (F)”.
(b)
Forgiveness—
(1)
Definition of expected forgiveness amount— Section 1106(a)(7) of the CARES Act (15 U.S.C. 9005(a)(7)) is amended—
(A)
in subparagraph (C), by striking “and” at the end;
(B)
in subparagraph (D), by striking “and” at the end; and
(C)
by adding at the end the following:

“(E) interest on any other debt obligations that were incurred before the covered period;

“(F) any amount that was a loan made under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) that was refinanced as part of a covered loan and authorized by section 7(a)(36)(F)(iv) of the such Act;

“(G) payments made for the provision of personal protective equipment for employees or other equipment or supplies determined by the employer to be necessary to protect the health and safety of employees and the general public;

“(H) payments made for inventory, raw materials, or supplies; and

“(I) payments related to property damage, vandalism, or looting due to public disturbances that occurred during 2020 that were not covered by insurance or other compensation; and”

(2)
Forgiveness— Section 1106(b) of the CARES Act (15 U.S.C. 9005(b)), is amended by adding at the end the following:

“(5) Any payment of interest on any other debt obligations that were incurred before the covered period.

“(6) Any amount that was a loan made under section 7(b)(2) of the Small Business Act (15 U.S.C. 636(b)(2)) that was refinanced as part of a covered loan and authorized by section 7(a)(36)(F)(iv) of such Act.

“(7) Any payment made for the provision of personal protective equipment for employees or other equipment or supplies determined by the employer to be necessary to protect the health and safety of employees.

“(8) Any payment made for inventory, raw materials, or supplies.

“(9) Any payment related to property damage, vandalism, or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation.”

(3)
Conforming amendments— Section 1106 of the CARES Act (15 U.S.C. 9005) is amended—
(A)
in subsection (e), as amended by section 203—
(i)
in paragraph (2), by striking “payments on covered mortgage obligations, payments on covered lease obligations, and covered utility payments” and inserting “payments or amounts refinanced described in subsection (b) (other than payroll costs)”; and
(ii)
in paragraph (3)(B), by striking “, make interest payments” and all that follows through “or make covered utility payments” and inserting “, make payments described in subsection (b), or that was refinanced as part of a covered loan and authorized by section 7(a)(36)(F)(iv) of the Small Business Act”; and
(B)
in subsection (h), by striking “payments for payroll costs, payments on covered mortgage obligations, payments on covered lease obligations, or covered utility payments” each place it appears and inserting “payments or amounts refinanced described in subsection (b)”.

Sec. 207 Documentation required for certain eligible recipients

Section 7(a)(36)(D)(ii)(II) of the Small Business Act (15 U.S.C. 636(a)(36)(D)(ii)(II)) is amended by striking “as is necessary” and all that follows through the period at the end and inserting “as determined necessary by the Administrator and the Secretary, to establish such individual as eligible.”.

Sec. 208 Exclusion of certain publicly traded and foreign entities

Section 7(a)(36)(D) of the Small Business Act (15 U.S.C. 636(a)(36)(D)), as amended by section 204, is amended by adding at the end the following:

“(x) Exclusion of certain publicly traded and foreign entities—Effective on the date of enactment of this clause—

“(I) a publicly traded entity, as defined in subparagraph (B)(ii), is not eligible to receive a covered loan; and

“(II) an entity that is 51 percent or more owned by a foreign person, or the management and daily business operations of which are controlled by a foreign person (excluding an entity owned and controlled by a person domiciled in a territory or possession of the United States), is not eligible to receive a covered loan.”

Sec. 209 Election of 12-week period by seasonal employers

Section 7(a)(36)(E)(i)(I)(aa)(AA) of the Small Business Act (15 U.S.C. 636(a)(36)(E)(i)(I)(aa)(AA)) is amended by striking “, in the case of an applicant” and all that follows through “June 30, 2019” and inserting the following: “an applicant that is a seasonal employer, as determined by the Administrator, shall use the average total monthly payments for payroll for any 12-week period selected by the seasonal employer between February 15, 2019, and December 31, 2019”.

Sec. 210 Inclusion of certain refinancing in nonrecourse requirements

Section 7(a)(36)(F)(v) of the Small Business Act (15 U.S.C. 636(a)(36)(F)(v)) is amended by striking “clause (i)” and inserting “clause (i) or (iv)”.

Sec. 211 Credit elsewhere requirements

Section 7(a)(36)(I) of the Small Business Act (15 U.S.C. 636(a)(36)(I)) is amended to read as follows:

“(I) Credit elsewhere—The requirement that a small business concern is unable to obtain credit elsewhere (as defined in section 3(h))—

“(i) shall not apply to—

“(I) a covered loan approved by the Administrator before the date of enactment of the Heroes Small Business Lifeline Act; or

“(II) a covered loan made to a covered organization, covered nonprofit organization, or housing cooperative; and

“(ii) shall only apply to covered loans in an amount greater than $350,000 approved by the Administrator on or after the date of the enactment of the Heroes Small Business Lifeline Act.”

Sec. 212 Prohibition on receiving duplicative amounts for payroll costs

(a)
Paycheck protection program— Clause (iv) of section 7(a)(36)(G) of the Small Business Act (15 U.S.C. 636(a)(36)(G)), as redesignated by section 206, is amended—
(1)
by striking “December 31, 2020” and inserting “June 30, 2020”; and
(2)
by striking “the same purpose and” and inserting “payments for payroll costs incurred during such period”.
(b)
Treasury program— Section 1109(f) of the CARES Act (15 U.S.C. 9008(f)) is amended—
(1)
in paragraph (1), by striking “for the same purpose” and inserting “for payments for payroll costs (as defined in section 7(a)(36)(A)(viii) of the Small Business Act (15 U.S.C. 636(a)(36)(A)(viii)))”; and
(2)
in paragraph (2), by striking “December 31, 2020” and inserting “June 30, 2020”.

Sec. 213 Application of certain terms through life of covered loan

Section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)) is amended—
(1)
in subparagraph (H), in the matter preceding clause (i), by striking “During the covered period, with” and inserting “With”;
(2)
in subparagraph (J), in the matter preceding clause (i), by striking “During the covered period, with” and inserting “With”; and
(3)
in subparagraph (M)—
(A)
in clause (ii), in the matter preceding subclause (I), by striking “During the covered period, the” and inserting “The”; and
(B)
in clause (iii), by striking “During the covered period, with” and inserting “With”.

Sec. 214 Interest calculation on covered loans

Section 7(a)(36)(L) of the Small Business Act (15 U.S.C. 636(a)(36)(L)) is amended by inserting “, calculated on a non-compounding, non-adjustable basis” after “4 percent”.

Sec. 215 Reimbursement for processing

Section 7(a)(36)(P) of the Small Business Act (15 U.S.C. 636(a)(36)(P)) is amended—
(1)
in clause (ii), by adding at the end the following: “Such fees shall be paid by the eligible recipient and may not be paid out of the proceeds of a covered loan. A lender shall only be responsible for paying fees to an agent for services for which the lender directly contracts with the agent.”; and
(2)
by amending clause (iii) to read as follows:

“(iii) Timing—A reimbursement described in clause (i) shall be made not later than 5 days after the reported disbursement of the covered loan and may not be required to be repaid by a lender unless the lender is found guilty of an act of fraud in connection with the covered loan.”

Sec. 216 Duplication requirements for economic injury disaster loan recipients

Section 7(a)(36)(Q) of the Small Business Act (15 U.S.C. 636(a)(36)(Q)) is amended by striking “during the period beginning on January 31, 2020, and ending on the date on which covered loans are made available”.

Sec. 217 Reapplication for and modification to Paycheck Protection Program

(a)
Definitions— In this section, the terms covered loan and eligible recipient have the meanings given those terms in 7(a)(36)(A) of the Small Business Act (15 U.S.C. 636(a)(36)(A)).
(b)
Rules or guidance— Not later than 7 days after the date of enactment of this Act, the Administrator shall issue rules or guidance to ensure that an eligible recipient of a covered loan that returns amounts disbursed under the covered loan or does not accept the full amount of the covered loan for which the eligible recipient was approved—
(1)
in the case of an eligible recipient that returned all or part of a covered loan, the eligible recipient may reapply for a covered loan for an amount equal to the difference between the amount retained and the maximum amount applicable; and
(2)
in the case of an eligible recipient that did not accept the full amount of a covered loan, the eligible recipient may request a modification to increase the amount of the covered loan to the maximum amount applicable, subject to the requirements of section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)).

Sec. 218 Treatment of certain criminal violations

(a)
In general— Section 7(a)(36) of the Small Business Act (15 U.S.C. 636(a)(36)), as amended by section 101, is amended by adding at the end the following:

“(U) Treatment of certain criminal violations

“(i) Financial fraud or deception—An entity that is a business, organization, cooperative, or enterprise may not receive a covered loan if an owner of 20 percent or more of the equity of the entity, during the 5-year period preceding the date on which the entity applies for a covered loan, has been convicted of a felony of financial fraud or deception under Federal, State, or Tribal law.

“(ii) Arrests or convictions—An entity that is a business, organization, cooperative, or enterprise shall be an eligible recipient notwithstanding a prior arrest or conviction under Federal, State, or Tribal law of an owner of 20 percent or more of the equity of the entity, unless the owner is currently incarcerated.

“(iii) Waiver—The Administrator may waive the requirements of clause (i).”

(b)
Rulemaking— Not later than 15 days after the date of enactment of this Act, the Administrator shall make necessary revisions to any rules to carry out the amendment made by this section.

Sec. 219 Eligibility and treatment of Farm Credit System institutions

(a)
Definition of Farm Credit System institution— In this section, the term Farm Credit System institution—
(1)
means an institution of the Farm Credit System chartered under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.); and
(2)
does not include the Federal Agricultural Mortgage Corporation.
(b)
Facilitation of participation in PPP and second draw loans—
(1)
Applicable rules— Solely with respect to loans under paragraph (36) of section 7(a) of the Small Business Act (15 U.S.C. 636(a)), Farm Credit Administration regulations and guidance issued as of July 14, 2020, and compliance with such regulations and guidance, shall be deemed functionally equivalent to requirements referenced in section 3(a)(iii)(II) of the interim final rule of the Administration entitled “Business Loan Program Temporary Changes; Paycheck Protection Program” (85 Fed. Reg. 20811 (April 15, 2020)).
(2)
Applicability of certain loan requirements— For purposes of making loans under paragraph (36) of section 7(a) of the Small Business Act (15 U.S.C. 636(a)) or forgiving those loans in accordance with section 1106 of the CARES Act (15 U.S.C. 9005), sections 4.13, 4.14, and 4.14A of the Farm Credit Act of 1971 (12 U.S.C. 2199, 2202, 2202a) (including regulations issued under those sections) shall not apply.
(3)
Risk weight—
(A)
In general— With respect to the application of Farm Credit Administration capital requirements, a loan described in subparagraph (B)—
(i)
shall receive a risk weight of zero percent; and
(ii)
shall not be included in the calculation of any applicable leverage ratio or other applicable capital ratio or calculation.
(B)
Loans described— A loan referred to in subparagraph (A) is—
(i)
a loan made by a Farm Credit Bank described in section 1.2(a) of the Farm Credit Act of 1971 (12 U.S.C. 2002(a)) to a Federal Land Bank Association, a Production Credit Association, or an agricultural credit association described in that section to make loans under paragraph (36) of section 7(a) of the Small Business Act (15 U.S.C. 636(a)) or forgive those loans in accordance with section 1106 of the CARES Act (15 U.S.C. 9005); or
(ii)
a loan made by a Federal Land Bank Association, a Production Credit Association, an agricultural credit association, or the bank for cooperatives described in section 1.2(a) of the Farm Credit Act of 1971 (12 U.S.C. 2002(a)) under paragraph (36) of section 7(a) of the Small Business Act (15 U.S.C. 636(a)).