B&I CARES Act Program) interim final rule

31035

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Federal Register
Vol. 85, No. 100
Friday, May 22, 2020

This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents.

DEPARTMENT OF AGRICULTURE
Rural Business-Cooperative Service
Rural Utilities Service
7 CFR Parts 4279
[Docket No. RBS–20–BUSINESS- 0016]
RIN 0570–AB07

Guaranteed Loanmaking and Servicing
Regulations
Rural Business-Cooperative
Service and Rural Utilities Service,
USDA.
ACTION: Interim final rule.
AGENCY:

The Rural BusinessCooperative Service (RBCS), a Rural
Development agency of the United
States Department of Agriculture
(USDA), is issuing an interim final rule
to update the Business and Industry
(B&I) Guaranteed Loan Program to allow
flexibility to obligate federal funds for
guaranteed loans pursuant to the
Coronavirus Aid, Relief, and Economic
Security Act (CARES Act) in response to
the national COVID–19 Public Health
Emergency. The RBCS is responsible for
administering the B&I Guaranteed Loan
Program.
DATES:
Effective Date: May 22, 2020.
Applicability date: This interim final
rule applies to applications submitted
under the B&I CARES Act Guaranteed
Loan Program through June 22, 2020 or
until funds made available for this
purpose are expended.
Comment Date: This rule is being
issued to allow for immediate
implementation of this program.
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 and received on or before
June 22, 2020. The RBCS will consider
these comments and the need for
SUMMARY:

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making any revisions as a result of these
comments.
ADDRESSES: Comments may be
submitted on this interim final rule
using the following method:
• Electronically using the Federal
eRulemaking Portal: Go to http://
www.regulations.gov and in the ‘‘Search
Documents’’ box, enter the Docket
Number RBS–20–BUSINESS–0016 or
the RIN # (0570–AB07), and click the
‘‘Search’’ button. To submit a comment,
choose the ‘‘Comment Now!’’ button.
Information on using Regulations.gov,
including instructions for accessing
documents, submitting comments, and
viewing the docket after the close of the
comment period, is available under the
‘‘Help’’ tab at the top of the Home page.
In the Docket ID column, select RBS–
20–BUSINESS–0016 to submit or view
public comments and to view
supporting and related materials
available electronically. Information on
using Regulations.gov, including
instructions for accessing documents,
submitting comments, and viewing the
docket after the close of the comment
period, is available through the site’s
‘‘User Tips’’ link.
Other Information: Additional
information about Rural Development
and its programs is available on the
internet at http://www.rd.usda.gov.
FOR FURTHER INFORMATION CONTACT:
Mark Brodziski, Acting Administrator,
Rural Business and Cooperative Service,
Rural Development, U.S. Department of
Agriculture, 1400 Independence Avenue
SW, Stop Washington, DC 20250–3221;
email: [email protected];
telephone (202) 205–0903.
SUPPLEMENTARY INFORMATION:
Executive Summary
Background Information
On March 13, 2020, President Trump
declared the ongoing Coronavirus
Disease 2019 (COVID–19) pandemic of
sufficient severity and magnitude to
warrant an emergency declaration for all
states, territories, and the District of
Columbia. With the COVID–19
emergency, many businesses
nationwide are experiencing economic
hardship as a direct result of the
Federal, State, and local public health
measures that are being taken to
minimize the public’s exposure to the
virus. These measures, as well as advice
to physically social distance from other

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people and to stay at home or ‘‘shelter
in place,’’ have resulted in a dramatic
negative impact on the livelihood of
many Americans and, in turn,
negatively impacted the national
economy.
In order to provide some financial
relief to American families, on March
27, 2020, the President signed the
Coronavirus Aid, Relief, and Economic
Security Act (the CARES Act or the Act)
(Pub. L. 116–136) to provide emergency
assistance and health care response for
individuals, families, and businesses
affected by the coronavirus pandemic.
The Rural Business Cooperative Service
(RBCS) received funding and authority
through Division B, Title I of the CARES
Act to provide for additional funds for
use under the Business & Industry (B&I)
Guaranteed Loan Program.
Rural Development is a mission area
within the USDA comprised of the
Rural Utilities Service, Rural Housing
Service and RBCS. Its mission is to
increase economic opportunity and
improve the quality of life in rural
communities by providing the
leadership, infrastructure, access to
capital, and technical support that
enables rural communities to prosper.
To achieve its mission, Rural
Development provides financial support
through more than 40 programs
including direct loans, grants, loan
guarantees, and technical assistance to
help improve the quality of life and
provide the foundation for economic
development in rural areas.
The B&I Guaranteed Loan Program
was authorized by the Rural
Development Act of 1972. The loans are
made by private lenders to rural
businesses for the purpose of creating
new businesses, expanding existing
businesses, and for other purposes that
create employment opportunities in
rural America. Businesses in rural areas
are eligible for this program. Rural areas,
as defined at 7 CFR 4279.108(c), are any
area of a State other than a city or town
that has a population of greater than
50,000 inhabitants and any urbanized
area contiguous and adjacent to such a
city or town. The types of borrowers
that are served by the B&I Guaranteed
Loan Program are cooperative
organizations, corporations,
partnerships, or other legal entities
organized and operated on a profit or
nonprofit basis; Indian tribes on a
Federal or State reservation or other

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federally recognized tribal group; public
bodies; or individuals, provided the
borrower is engaged in, or proposing to
engage in, a business. Loans can be
made for a variety of purposes,
including business acquisition,
expansion or improvement; purchase of
real estate, machinery and equipment,
or supplies; limited debt refinancing;
and working capital. The rate and term
of the loan is negotiated between the
business and the lender.
Purpose of the Regulatory Action
The Rural Business Cooperative
Service (RBCS) received funding and
authority through Division B, Title I of
the CARES Act to provide for additional
funds for use under the Business &
Industry (B&I) Guaranteed Loan
Program. In accordance with the CARES
Act, the purpose of the additional B&I
funding is to prevent, prepare for and
respond to the effects of the COVID–19
pandemic. It is the Agency’s intent that
guaranteed loan funds will be used for
working capital loan purposes to
support business operations and
facilities in rural areas. This funding
will assist rural businesses that are
impacted due to the economic impacts
of the COVID–19 emergency. This
critical funding will allow rural
businesses to have access to funding for
operating expenses to allow them to
sustain operations. This rule will
supplement the current B&I Guaranteed
Loan Program as implemented in 7 CFR
part 4279—Guaranteed Loan Making
and 7 CFR part 4287—Servicing, with
the new B&I CARES Act Guaranteed
Loan Program (B&I CARES Act
Program).
Beneficiaries of the B&I CARES Act
Program Provision
Currently, with the COVID–19
emergency, there is a lack of access to
much needed capital to support
business operations and facilities. This
holds true particularly for businesses in
rural areas. Shelter in place
requirements and restrictions on
businesses reducing operations to only
essential services are having an adverse
impact on rural businesses and their
capacities to fund operating expenses.
Input and feedback to the Agency
from businesses and business
associations, bankers and bank
associations, and other rural
stakeholders highlight a growing
concern that the erosion of working
capital will require businesses to seek
funding for working capital to sustain
businesses during the COVID–19
emergency and to restart and ramp up
business operations once the COVID–19
emergency is resolved. The National

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Rural Lenders Association, Rural
Lenders Roundtable, ICBA Agriculture
and Rural Lenders, and ABA
Agriculture and Rural Banking
committee reached out to the Agency to
emphasize that many of the rural
business borrowers will be unable to
meet lenders’ requirements for working
capital loans without the support of a
government guarantee. Rural businesses
have limited options to access credit
due to the limited number of banks
serving rural communities. The B&I
Guaranteed Loan program enables local
lenders to serve rural businesses as
evidenced by the fact that over 75
percent of the lenders in the B&I loan
portfolio are local community banks
financing local businesses.
In addition to agricultural lenders,
agribusiness and agricultural producer
stakeholders have reached out to the
Agency to emphasize the adverse
impacts of the COVID–19 emergency to
agricultural producers and
agribusinesses, the financial needs of
agricultural producers and the lack of
assistance available to agricultural
producers that are too large to qualify
for SBA programs or USDA Farm
Service Agency (FSA) guaranteed loan
programs. The B&I CARES Act Program
will also serve farmers, farm labor, and
agribusiness. The eligibility
requirements of the B&I Guaranteed
Loan Program focus on the use of loan
funds and not on the borrowers’ primary
industry classification, such as
agricultural production. Loan proceeds
of B&I guaranteed loans cannot
generally be used for costs related to
agricultural production; however, the
B&I CARES Act Program will expand
eligible use of loan funds to include
loans to agricultural producers whose
financial needs are greater than loan
amounts available under FSA
guaranteed loans or are otherwise
ineligible for FSA guaranteed loans.
Expansion of the program to larger
agricultural producers, currently
ineligible under B&I, could result in
high utilization of available program
funding by agricultural producers and
limit availability of funding to other
rural businesses. To enable large
agricultural producers and rural
businesses of all industry sectors access
to the program, the aggregate total
amount of loans for agricultural
production will initially be limited to 50
percent of the total amount of program
level for the B&I CARES Act Program.
This restriction is intended to provide
eligible rural businesses of all industry
sectors the flexibility they need to use
the program effectively. The Agency
may publish future notices in the

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Federal Register revising the limitation
of the amount of funding made available
for loans for agricultural production to
align with the demand for these loans.
Agribusinesses (non-agricultural
production businesses such as supply
services, marketing, processing, and
other services) are eligible and include
agribusinesses owned by agricultural
producers. Certain food processing and
distribution businesses located in urban
areas may be eligible if certain
requirements are met including the
processing of agricultural commodities
whereby the food sold is grown locally
or regionally.
The New B&I CARES Act Guaranteed
Loan Program
The B&I Guaranteed Loan program, as
funded by the CARES ACT, is similar,
yet different from other Federal
Government programs. The B&I CARES
Act Program will focus assistance to
rural businesses, including
agribusinesses and agricultural
producers, with financial needs unmet
by other Federal Government programs
to prevent, prepare for, and respond to
the coronavirus pandemic. The Small
Business Administration (SBA)
Economic Injury Disaster Loans (EIDL)
provides working capital to help small
businesses survive until normal
operations resume after a disaster. EIDL
can provide up to $2 million to help
meet financial obligations and operating
expenses that could have been met had
the disaster not occurred. EIDL
assistance is available only to small
businesses when SBA determines they
are unable to obtain credit elsewhere.
Currently, access to the EIDL program is
further limited and SBA is accepting
new EIDL and EIDL Advance
applications on a limited basis only to
provide relief to U.S. agricultural
businesses. Although loan purposes
under the B&I CARES Act Program may
overlap with loan purposes of EIDL, the
B&I CARES Act Program will focus
assistance to rural businesses that are
ineligible to submit new EIDL
applications or that are too large or
otherwise not eligible for EIDL or have
financial needs due to the coronavirus
pandemic greater than EIDL assistance.
SBA also administers the Paycheck
Protection Program (PPP). PPP is
designed to provide a direct incentive
for small businesses to keep their
employees on the payroll. PPP loans are
eligible for forgiveness of up to the full
principal amount of the loans if
employee and compensation levels are
maintained or restored to full-time
employment by June 30, 2020 and the
loan proceeds are used for payroll, rent,
mortgage interest, or utilities. At least

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75% of the forgiven amount must have
been used for certain qualifying payroll
costs. The guaranteed loans funded by
the B&I CARES Act Program will be for
working capital loan purposes to
support business operations and
facilities in rural areas. While loan
purposes under the B&I CARES Act
Program may overlap with some of the
purposes of the SBA PPP, the B&I
CARES Act Program guaranteed loans
will cover a broader range of typical
business operating expenses and will
not be focused on payroll costs. The B&I
CARES Act Program will include
funding for inventory, raw materials,
supplies, and critical operating
expenses for rural manufacturing
businesses, including purposes that
were not included in the allowable uses
of PPP funds.
The B&I CARES Act guaranteed loan
funds may be used by eligible
businesses to finance business operating
expenses incurred for a period up to 12
months, whereas the PPP maximum
loan amount is for a period of 2.5
months and the amount of forgiveness
of a PPP loan depends on the borrower’s
payroll costs over an eight-week period.
B&I CARES Act Program guaranteed
loan funds may be used by rural
businesses that require additional
working capital to sustain and ramp up
business operations once the emergency
is resolved. The maximum B&I CARES
Act Program loan amount a business
may receive will be reduced by the
amount of any SBA EIDL or PPP loans
and other Federal emergency assistance
they receive in order to prevent
duplication of program services.
The B&I CARES Act Program
guaranteed loan will be a 90% guarantee
and require the lender to retain a
percentage of the loan and thus hold
some of the risk. The loans do not
include terms for loan forgiveness and
require 100% repayment by the
borrower. The loans must be secured
with business collateral and may require
personal guarantees.
A bank or lender that is not already
a participating lender in SBA’s
guaranteed business loan program (7(a)
loan program) must be approved or
authorized by the SBA. All lenders that
are subject to supervision and credit
exam by a Federal or State agency are
automatically eligible to participate in
the B&I program. Non-supervised
lenders may apply to the Agency for
approval as an eligible lender.
There are also differences in borrower
eligibility requirements between this
B&I CARES Act Program and SBA PPP.
The PPP is limited to certain businesses
and non-profit enterprises qualifying by
size of business, mainly based on the

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number of employees. SBA does not
have any geographic restrictions or
preferences. The B&I program is
available only to businesses located in
rural areas as defined in the B&I statute,
with limited exceptions. Businesses
with multiple locations, rural and nonrural, are eligible when the use of loan
funds is to support business facilities
and operations in eligible rural areas.
The program does not have any
restriction on the size of business or
business ownership structures.
Summary of Modifications to the B&I
Program Regulation To Provide for the
B&I CARES Act Guaranteed Loans
Program
The B&I CARES Act Program will
expand eligible use of loan funds to
include loans for agricultural
production when the borrower’s
financial needs are greater than loan
amounts available under FSA
guaranteed loans or is otherwise
ineligible for FSA guaranteed loans.
All the standard requirements of
commercial loan applications may
further restrict rural businesses’ ability
to access credit. For example, access to
appraisal services and accounting and
financial services may be limited due to
social distancing and business service
restrictions. Balancing credit
underwriting standards with businesses’
needs to access capital, the Agency is
modifying its requirements for certain
loan application information for the B&I
CARES Act Guaranteed Loan Program.
The Agency is providing more
flexibility to lenders by accepting
appraisals completed within the last
two years (rather than a current year
appraisal), and updated appraisals
(rather than completely new appraisals).
The Agency is also increasing the
threshold of the loan amount which
triggers when appraisals are required for
loans in order to align with guidance by
FDIC and other credit supervision
agencies. The Agency will not require
discounting the value of collateral for
working capital loans but will continue
to require security for loans and will
continue limiting the amount of the loan
so that it does not exceed the market
value of collateral.
The Agency is also providing more
flexibility to lenders to accept
borrowers’ tax records in lieu of
obtaining historical financial statements
to document a borrower’s financial
history and loan repayment ability. Use
of tax records is standard in commercial
lending practices. Agricultural
producers’ financial records must meet
the industry’s standard accounting
practices.

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Loss of income and ongoing fixed
operating expenses may deplete a
business’s working capital and attempts
by a business to finance working capital
with additional debt will decrease the
equity of a business. The Agency is
providing borrowers more flexibility in
the form of alternatives to meet the B&I
requirement of 10% investment in the
business by the borrower. Businesses
currently facing financial distress will
need time to recover. Repayment
requirements of additional debt may
further distress and lengthen their
financial recovery period. To ease a
borrower’s capital requirement, the B&I
CARES Act Program utilizes existing
authorities for deferral of principal and
interest payments in the first three years
from loan origination and extends the
maximum repayment term for working
capital loans from 7 years to 10 years.
Interest shall be paid at least annually
from the date of the note.
In summary, the Agency considered
the type of enhancements that
participating lenders would need to be
able to generate quality loans and
approve and disburse loan funds in a
timely and efficient manner in these
critical times. The Agency focused on
adjusting several requirements under
the current B&I program which would
enable lenders greater flexibility in
structuring loans while taking into
consideration the borrowers’ current
financial condition and capacity, but
also assuring that such adjustments can
be made without compromising Agency
underwriting standards. For the B&I
CARES Act Program guaranteed loans,
the Agency made program adjustments
to the following: (a) Maximum
percentage of guarantee; (b) equity
evaluation; (c) appraisal evaluations;
(d), collateral evaluation; and (e)
maximum repayment terms for working
capital loans. The Agency evaluated
guarantee fee and annual renewal fee
percentages, components of the credit
subsidy scoring, necessary to achieve a
balance between fee amounts adequate
to decrease default risk and fee amounts
at reasonable levels to applicants facing
financial distress. The Agency intends
fees to be reasonable and in an amount
adequate to support program levels to
make the program available to as many
recipients as possible.
As a result of these considerations
and the funding purposes outlined in
the CARES Act, the Agency decided to
offer the following under the B&I
CARES Act Program: (1) 90 percent
guarantees to all B&I CARES Act
Program funded loans, (2) 2 percent
guarantee fee; (3) acceptance of
appraisals completed within two years
of the date of the application; (4) no

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discounting of collateral for working
capital loans; and (5) extension of the
maximum term for working capital
loans to 10 years.
Changes to the B&I Guaranteed Loan
Program regulations apply only to the
loans funded under the CARES Act and
do not apply to loans funded under the
Appropriations Act of 2020 or any other
appropriations other than the CARES
Act.
Executive Order 12866, Regulatory
Planning and Review
This interim final rule has been
reviewed by the Office of Management
and Budget under Executive Order
12866 and determined to be
economically significant for the
purposes of Executive Orders 12866
and, is considered a major rule under
the Congressional Review Act. The
Executive Order defines an
‘‘economically significant regulatory
action’’ as one that is likely to result in
a rule that may: (1) Have an annual
effect on the economy of $100 million
or more or adversely affect, in a material
way, the economy, a sector of the
economy, productivity, competition,
jobs, the environment, public health or
safety, or State, local, or tribal
governments or communities; (2) create
a serious inconsistency or otherwise
interfere with an action taken or
planned by another agency; (3)
materially alter the budgetary impact of
entitlements, grants, user fees, or loan
programs or the rights and obligations of
recipients thereof; or (4) raise novel
legal or policy issues arising out of legal
mandates, the President’s priorities, or
the principles set forth in this E.O. This
interim rule was determined to be
economically significant because the
changes to the B&I Guaranteed Loan
Program regulations are estimated to
have an impact on the economy of more
than $100 million.
RBCS, however, is proceeding under
the emergency provision of 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. RBCS is publishing this
interim final rule to codify new funding
purposes consistent with the purposes
of the CARES Act—to prevent, prepare
for and respond to the COVID–19
emergency. To the extent practicable
under the circumstances related to the
COVID–19 emergency, RBCS has met, or
attempted to meet the provisions of
Section 6(a)(3)(B) and (C) of the
Executive Order. The Agency has
determined that the most effective use
of these program funds to meet this
purpose is to primarily focus on funding

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working capital loans to support
business operations and facilities in
rural areas. The new provisions of the
regulation will ensure the consistent
and streamlined implementation by the
Agency of these additional flexibilities
to respond to the COVID–19 Emergency.
Administrative Procedure Act
Statement
The CARES Act provides for
additional funds to the Agency under
the B&I Guaranteed Loan Program to
prevent, prepare for and respond to the
coronavirus. The Agency is issuing this
interim rule without advance
rulemaking or public comment. The
Administrative Procedure Act of 1946,
as amended (5 U.S.C. 553) (APA), has
several exemptions to rulemaking
requirements. Section 553(b)(3)(B) of the
APA authorizes agencies to dispense
with rulemaking notice and comment
procedures for rules when the agency,
for ‘‘good cause,’’ finds that those
procedures are ‘‘impracticable,
unnecessary, or contrary to the public
interest’’ Additionally, agencies are
authorized to dispense with the 30-day
delayed effective date requirement as
otherwise provided by the agency for
good cause found and published with
the rule by Section 553(d) of the same
act. Under these sections, USDA has
determined, upon finding good cause,
that making these funds available as
authorized in Division B, Title I of the
CARES Act as expeditiously as possible
is in the public interest in order to
address the national COVID–19 Public
Health Emergency. Therefore, the
Agency has determined that
withholding these funds to provide for
public notice and comment would
unduly delay the provision of benefits
and be contrary to the public interest in
response to the national COVID–19
Public Health Emergency. This rule is
being issued to allow for immediate
implementation of this program.
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 June 22, 2020.
RBCS will consider these comments and
the need for making any revisions to
this rule or to the B&I CARES Act
Program as a result of these comments.
Congressional Review Act
Pursuant to the Congressional Review
Act (5 U.S.C. 801), the Office of
Information and Regulatory Affairs of
the Office of Management and Budget
designated this action as a major rule, as
defined by 5 U.S.C. 804(2) because this
action will result in an annual effect on

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the economy of $100,000,000 or more.
However, notwithstanding 5 U.S.C. 801,
section 808(2) of the Congressional
Review Act (5 U.S.C. 808(2)) permits
that if any rule which an agency for
good cause finds that not issuing the
notice and public procedure thereon
would be impracticable, unnecessary, or
contrary to the public interest, shall take
effect at such in the time that the
Agency determines. USDA has
determined, under section 808(2), that
making these funds available through
the issuance of this interim rule, as
authorized in Division B, Title I of the
CARES Act, supplements existing
authority implemented through
regulatory authority in 7 CFR 4279,
Subpart A and B, and 7 CFR 4287,
Subpart B, and find good cause that
notice and public procedure would be
impracticable and contrary to the public
interest, in light of the national COVID–
19 Public Health Emergency. Such
finding is made because withholding
these funds would unduly delay the
provision of emergency benefits under
the CARES Act, which Congress
intended to provide expeditious relief to
address the current economic
conditions arising from the COVID–19
emergency. This rule is being issued to
allow for immediate implementation of
this program. 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 June 22,
2020. RBCS will consider these
comments and the need for making any
revisions to this rule or the B&I CARES
Act Program as a result of these
comments.
Executive Order 12988, Civil Justice
Reform
This interim rule has been reviewed
under Executive Order 12988, Civil
Justice Reform. The Agency has
determined that this interim rule meets
the applicable standards provided in
section 3 of the Executive Order. In
addition, all state and local laws and
regulations that conflict with this
interim rule will be preempted. No
retroactive effect will be given to this
interim rule and, in accordance with
section 212(e) of the Department of
Agriculture Reorganization Act of 1994
(7 U.S.C. 6912(e)), administrative appeal
procedures must be exhausted before an
action against the Department or its
agencies may be initiated.
Executive Order 12372,
Intergovernmental Review
B&I guaranteed loans are subject to
the Provisions of Executive Order

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12372, which require intergovernmental
consultation with State and local
officials. The Agency will conduct
intergovernmental consultation in
accordance with 2 CFR part 415, subpart
C.
Executive Order 13132, Federalism
The policies contained in this interim
final rule do not have any substantial
direct effect on States, on the
relationship between the National
Government and the States, or on the
distribution of power and
responsibilities among the various
levels of government. Nor does this
interim final rule impose substantial
direct compliance costs on State and
local governments. Therefore, the
Agency has determined that
consultation with the States is not
required.
Executive Order 13175, Consultation
and Coordination With Indian Tribal
Governments
This interim final rule has been
reviewed in accordance with the
requirements of Executive Order 13175,
‘‘Consultation and Coordination with
Indian Tribal Governments.’’ Executive
Order 13175 requires Federal agencies
to consult and coordinate with tribes on
a government-to-government basis on
policies that have tribal implications,
including regulations, legislative
comments or proposed legislation, and
other policy statements or actions that
have substantial direct effects on one or
more Indian tribes, on the relationship
between the Federal Government and
Indian tribes or on the distribution of
power and responsibilities between the
Federal Government and Indian tribes.
Rural Development has assessed the
impact of this interim final rule on
Indian tribes and determined that this
final rule does not, to our knowledge,
have tribal implications that require
tribal consultation under E.O. 13175. If
a tribe would like to engage in
consultation with Rural Development
on this rule, please contact Rural
Development’s Native American
Coordinator at (720) 544–2911 or
[email protected].
Regulatory Flexibility Act Certification
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 APA 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. Specifically,
the RFA normally requires agencies to
describe the impact of a rulemaking on

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small entities by providing a regulatory
impact analysis. Such analysis must
address the consideration of regulatory
options that would lessen the economic
effect of the rule on small entities. The
RFA defines a ‘‘small entity’’ as (1) a
proprietary firm meeting the size
standards of the SBA; (2) a nonprofit
organization that is not dominant in its
field; or (3) a small government
jurisdiction with a population of less
than 50,000. 5 U.S.C. 601(3), Except for
such small government jurisdictions,
neither State nor local governments are
‘‘small entities.’’ Similarly, for purposes
of the RFA, individual persons are not
small entities. 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.
605(b). The agency must, however,
publish the certification in the Federal
Register at the time of publication of the
rule, ‘‘along with a statement providing
the factual basis for such certification.’’
If the agency head has not waived the
requirements for a regulatory flexibility
analysis in accordance with the RFA
waiver provision, and no other RFA
exception applies, the agency must
prepare the regulatory flexibility
analysis and publish it in the Federal
Register at the time of promulgation or,
if the rule is promulgated in response to
an emergency that makes timely
compliance impracticable, within 180
days of publication of the final rule. 5
U.S.C. 604(a), 608(b). 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. Accordingly, as
authorized by Section 553(b)(3)(B) and
Section 553(d) of the APA as well as
supported in the federal agency source
book published by the Small Business
Administration’s Office of Advocacy, ’’
A Guide to for Government Agencies,
How to Comply with the Regulatory
Flexibility, Ch.1. p.9., the Agency is not
required to conduct a regulatory
flexibility analysis.
Information Collection and
Recordkeeping Requirements
In accordance with the Paperwork
Reduction Act of 1995 (44 U.S.C.
chapter 35), the information collection
activities associated with this interim
final rule are covered under the
Business and Industry (B&I) Guaranteed

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31039

Loan Program, OMB Docket Number
0570–0069.
E-Government Act Compliance
The RBCS is committed to the EGovernment Act, which requires
Government agencies in general to
provide the public the option of
submitting information or transacting
business electronically to the maximum
extent possible.
National Environmental Policy Act
Certification
This interim final rule has been
reviewed in accordance with 7 CFR part
1970, ‘‘Environmental Policies and
Procedures.’’ The Agency has
determined that this is not a major
Federal action significantly affecting the
quality of the human environment, and
in accordance with the National
Environmental Policy Act of 1969 (42
U.S.C. 4321 et seq.), an Environmental
Impact Statement is not required.
Catalog of Federal Domestic Assistance
The program described by this interim
final rule is listed in the Catalog of
Federal Domestic Assistance Programs
under number 10.768—Business and
Industry Guaranteed Loan Program.
This catalog is available on a
subscription basis from the
Superintendent of Documents, the
United States Government Printing
Office, Washington, DC, 20402–9325,
telephone number (202) 512–1800 and
at https://www.cfda.gov.
Unfunded Mandates
This interim final rule contains no
Federal mandates (under the regulatory
provision of title II of the Unfunded
Mandates Reform Act of 1995) for State,
local, and Tribal governments or the
private sector. Therefore, this interim
final rule is not subject to the
requirements of section 202 and 205 of
the Unfunded Mandates Reform Act.
Civil Rights Impact Analysis
Rural Development has reviewed this
interim final rule in accordance with
USDA Regulation 4300–4, ‘‘Civil Rights
Impact Analysis,’’ to identify any major
civil rights impacts this interim final
rule might have on program participants
on the basis of age, race, color, national
origin, sex or disability. After review
and analysis of the interim final rule
and available data, it has been
determined that based on the analysis of
the program purpose, application
submission and eligibility criteria,
issuance of this interim final rule will
neither adversely nor disproportionately
impact very low, low and moderateincome populations, minority

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populations, women, Indian tribes or
persons with disability, by virtue of
their race, color, national origin, sex,
age, disability, or marital or familiar
status.

PART 4279—GUARANTEED
LOANMAKING
1. The authority citation for part 4279
is revised to read as follows:

■

USDA Non-Discrimination Policy
In accordance with Federal civil
rights law and U.S. Department of
Agriculture (USDA) civil rights
regulations and policies, the USDA, its
Agencies, offices, and employees, and
institutions participating in or
administering USDA programs are
prohibited from discriminating based on
race, color, national origin, religion, sex,
gender identity (including gender
expression), sexual orientation,
disability, age, marital status, family/
parental status, income derived from a
public assistance program, political
beliefs, or reprisal or retaliation for prior
civil rights activity, in any program or
activity conducted or funded by USDA
(not all bases apply to all programs).
Remedies and complaint filing
deadlines vary by program or incident.
Persons with disabilities who require
alternative means of communication for
program information (e.g., Braille, large
print, audiotape, American Sign
Language, etc.) should contact the
responsible Agency or USDA’s TARGET
Center at (202) 720–2600 (voice and
TTY) or contact USDA through the
Federal Relay Service at (800) 877–8339.
Additionally, program information may
be made available in languages other
than English.
To file a program discrimination
complaint, complete the USDA Program
Discrimination Complaint Form, AD–
3027, found online at http://
www.ascr.usda.gov/complaint_filing_
cust.html and at any USDA office or
write a letter addressed to USDA and
provide in the letter all of the
information requested in the form. To
request a copy of the complaint form,
call (866) 632–9992. Submit your
completed form or letter to USDA by: (1)
Mail: U.S. Department of Agriculture,
Office of the Assistant Secretary for
Civil Rights, 1400 Independence
Avenue SW, Washington, DC 20250–
9410; (2) fax: (202) 690–7442; or (3)
email: [email protected].
USDA is an equal opportunity
provider, employer, and lender.
List of Subjects for 7 CFR Parts 4279
Loan programs-business, Reporting
and recordkeeping requirements, Rural
areas.
Accordingly, for reasons set forth in
the preamble, 7 CFR part 4279 is
amended as set forth below:

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Authority: 5 U.S.C. 301; and 7 U.S.C.
1989: and Public Law 116–136, Division B,
Title I.

2. Amend § 4279.1 by revising
paragraph (a) as follows:

■

Introduction.

(a) This subpart contains general
regulations for making and servicing
Business and Industry (B&I) loans
guaranteed by the Agency and applies to
lenders, holders, borrowers, and other
parties involved in making,
guaranteeing, holding, servicing, or
liquidating such loans. This subpart is
supplemented by subpart B of this part,
which contains loan processing
regulations, and subpart B of part 4287
of this chapter, which contains loan
servicing regulations. This subpart also
contains regulations for Business and
Industry loans under the authority of
the Coronavirus Aid, Relief, and
Economic Security Act (CARES Act)
(Pub. L. 116–136) to provide B&I
guarantees for loans needed as a result
of the Coronavirus Disease 2019
(COVID–19) pandemic for working
capital loan purposes to support
business operations and facilities in
rural areas (B&I CARES Act Program
Loans). Some of the requirements of this
subpart are waived or altered for B&I
CARES Act Program Loans. The waivers
and alterations are provided in
§ 4279.190 of this subpart.
*
*
*
*
*
■ 3. Amend § 4279.101 by revising
paragraph (a) to read as follows:
§ 4279.101

Introduction.

(a) Content. This subpart contains
loan processing regulations for the
Business and Industry (B&I) Guaranteed
Loan Program. It is supplemented by
subpart A of this part, which contains
general guaranteed loan regulations, and
subpart B of part 4287 of this chapter,
which contains loan servicing
regulations. This subpart also contains
regulations for Business and Industry
loans under the authority of the
Coronavirus Aid, Relief, and Economic
Security Act (CARES Act) (Pub. L. 116–
136) to provide B&I guarantees for loans
needed as a result of the Coronavirus
Disease 2019 (COVID–19) pandemic for
working capital loan purposes to
support business operations and
facilities in rural areas (B&I CARES Act
Program Loans). Some of the

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4. Add § 4279.190 to Subpart B to read
as follows:

■

§ 4279.190 Business and Industry national
COVID–19 Public Health Emergency Loans.

Subpart A—General

§ 4279.1

requirements of this subpart are waived
or altered for B&I CARES Act Program
Loans. The waivers and alterations are
provided in § 4279.190 of this subpart.
*
*
*
*
*

Sfmt 4700

(a) Introduction. This section contains
regulations for the Business and
Industry National COVID–19 Public
Health Emergency loan program (B&I
CARES Act Program Loans). The
purpose of the program is to provide
loan guarantees under the authority of
the Coronavirus Aid, Relief, and
Economic Security Act (CARES Act)
(Pub. L. 116–136). These B&I CARES
Act Program Loans cover costs to
prevent, prepare for and respond to the
coronavirus. Consistent with the
purposes of the CARES Act, the Agency
has determined that the most effective
use of these program funds is to support
the cost of guaranteed loans to rural
businesses to respond to the
coronavirus. No B&I CARES Act
Program Loan guarantee will be
approved after September 30, 2021. All
provisions of Subparts A and B of Part
4279 and Subpart A of Part 4287 of this
chapter apply to B&I CARES Act
Program Loans, except as provided in
this section. All forms used in
connection with a B&I CARES Act
Program Loan will be those used with
other Business and Industry (B&I) loans,
except as provided in this section.
(b) Eligible borrowers. Section
4279.108 of this subpart applies to B&I
CARES Act Program Loans. In addition,
borrowers must have been in operation
on February 15, 2020.
(c) Eligible use of funds. (1) The
purpose of any B&I CARES Act Program
Loan must be to cover costs to prevent,
prepare for, and respond to the
coronavirus pandemic in accordance
with paragraph (a) of this section. B&I
CARES Act Program Loans should not
exceed the amount needed to overcome
the financial distress caused by the
COVID–19 National Emergency.
(2) Notwithstanding the provisions of
§ 4279.113, B&I CARES Act Program
guaranteed loans will be limited to
loans for working capital loan purposes
in accordance with paragraph (c)(3) of
this section. Loan proceeds may be used
only to support facilities and business
operations in rural areas and the
Borrower must have been in operation
on February 15, 2020. Loan proceeds
must be disbursed through multiple
draws on an as-needed monthly basis.

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Federal Register / Vol. 85, No. 100 / Friday, May 22, 2020 / Rules and Regulations
(3) Eligible Working Capital uses of
B&I CARES Act Program Loan funds are
limited to:
(i) Wages, salaries, sales commissions
to employees, group healthcare benefits,
and other employee benefits;
(ii) Administrative expenses and
administrative service contracts;
(iii) Property insurance, hazard
insurance, and other business
insurance;
(iv) Principal and interest payments
excluding owner/stockholder debt and
related-party debts;
(v) Rent, payments on leases, and
routine maintenance;
(vi) Utilities;
(vii) Inventory, feed, seed, fertilizer
and chemicals, livestock (excluding
livestock for breeding) and supplies;
(viii) Marketing, shipping, and other
expenses incurred through normal
business operations or such additional
expenses due to the national COVID–19
Public Health Emergency;
(ix) Taxes; and
(x) Loan costs and essential loanrelated expenses.
(4) Ineligible purposes.
Notwithstanding the provisions of
§ 4279.113, the following purposes are
ineligible for B&I CARES Act Program
guaranteed loans:
(i) Purchase and development of land,
buildings, and associated infrastructure
for commercial or industrial properties,
including expansion or modernization;
(ii) Business acquisitions;
(iii) Leasehold improvements;
(iv) Constructing or equipping
facilities;
(v) Purchase of machinery and
equipment; and
(vi) Debt refinancing unless such debt
refinancing is for debts incurred
subsequent to February 15, 2020 for
eligible purposes listed in paragraph
(c)(3) of this section.
(5) Agricultural production. The
provisions of § 4279.113(q) do not apply
to B&I CARES Act Program Loans.
Loans for working capital to support
agricultural production, including
independent agricultural production, is
an eligible use of funds when the
applicant’s loan request exceeds the
maximum loan available through Farm
Service Agency (FSA) guaranteed loan
programs or the applicant’s request is
otherwise ineligible for FSA loans.
(d) Loan amount limits. (1) The
provisions of § 4279.119(a) do not apply
to B&I CARES Act Program Loans. The
total amount of B&I and B&I CARES Act
Program Loans to one borrower
(including the guaranteed and
unguaranteed portions, the outstanding
principal and interest balance of any
existing B&I guaranteed loans, and the

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new loan request) cannot exceed $25
million.
(2) The amount of the B&I CARES Act
Program Loan shall be based on a cash
flow analysis and must not be greater
than the amount needed to cure
problems caused by the COVID–19
emergency so that the business is
reestablished on a successful basis.
Losses and business operating expenses
that were adequately paid by insurance
or by loans or grants from other sources
will not be covered by B&I CARES Act
Program Loans. LB&I CARES Act
Program Loans may be used to
supplement insurance payments or
assistance from other sources when the
insurance coverage or other assistance is
insufficient.
(3) The maximum loan amount of the
B&I CARES Act Program Loan for
working capital purposes may not
exceed 12 times the borrower’s total
average monthly costs of eligible
working capital loan purposes less the
total amount of covered loans received
under the provisions of section 1102
and Section 1110(a)(2) of the CARES
Act and other Federal emergency
assistance received.
(4) Borrowers receiving B&I CARES
Act Program Loans in an amount less
than the maximum loan amount in
accordance with paragraph (d)(3) of this
section, may apply for subsequent loans
under this section up to an
accumulative amount of B&I CARES Act
Program loans not to exceed the
maximum loan amount.
(e) Percentage of guarantee. The
provisions of § 4279.119(b) do not apply
to B&I CARES Act Program Loans. The
percentage of guarantee is 90 percent.
(f) Guarantee fee. The provisions of
§ 4279.120(a) do not apply to B&I
CARES Act Program Loans. The
guarantee fee for the B&I CARES Act
Program Loans shall be two (2) percent.
The guarantee fee is paid at the time the
Loan Note Guarantee is issued and may
be included as an eligible use of
guaranteed loan proceeds. The amount
of the guarantee fee is determined by
multiplying the total loan amount by the
guarantee fee rate by the percentage of
guarantee.
(g) Annual renewal fee.
Notwithstanding the provisions of
§ 4279.120(b), the annual renewal fee for
B&I CARES Act Program Loans shall be
one half of one (0.5) percent (50 basis
points.)
(h) Loan terms. Notwithstanding the
provisions of § 4279.126, the maximum
allowable repayment term of loans for
working capital purposes is 10 years.
Loan repayment may defer principal
payments or principal and interest
payments for a period up to 12 months

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31041

from loan closing and may extend
deferral of principal payments up to a
total of three years with a maximum
repayment term of 10 years from the
date of loan closing.
(i) Credit quality. Notwithstanding the
provisions of § 4279.131(a), the lender’s
evaluation of the borrower’s repayment
ability shall include an emphasis on the
borrower’s successful financial history
and on the borrower’s 2019 financial
performance, present condition, and
future viability.
(j) Collateral. B&I CARES Act Program
loans must be adequately secured.
Notwithstanding the provisions of
§ 4279.131(b), loan-to-value discounting
by the lender is not required for B&I
CARES Act Program Loans for working
capital purposes. The value of the
collateral (fair market value) must be
equal to or greater than the loan amount.
(k) Capital/equity. Notwithstanding
the provisions of § 4279.131(d), the
business must meet one of the following
requirements at loan closing:
(1) A minimum of 10 percent balance
sheet equity (including subordinated
debt when subject to a standstill
agreement), or a maximum debt-tobalance sheet equity ratio of 9 to 1;
(2) A Borrower investment of equity
or other funds into the project equal to
10 percent or more of total eligible
project costs, (such investment may
include grants or subordinated debt
when subject to a standstill agreement);
or
(3) The balance sheet equity includes
owner-contributed capital of 10 percent
or more of total fixed assets (net total
fixed assets plus depreciation).
(l) Appraisals. Notwithstanding the
provisions of § 4279.144, appraisals of
real estate and chattel collateral are
required when the amount of the loan
exceeds $1,000,000, unless the chattel is
newly acquired equipment and the
value is supported by a bill of sale. The
Agency will accept appraisals older
than 1 year but completed within 2
years of the application date. Lenders
may provide an updated appraisal in
lieu of a new complete appraisal when
the original appraisal is more than 2
years old. All appraisals of real estate
must be compliant with Uniform
Standards of Professional Appraisal
Practices (USPAP) requirements and
reflect the current market value of the
collateral as required by § 4279.144(a).
To protect lenders, appraisers and
Agency staff during the COVID–19
pandemic, an interior or on-site
inspection of the collateral is not
required if an assumption can be made
by the appraiser on a reasonable basis or
is based on previous inspections and

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Federal Register / Vol. 85, No. 100 / Friday, May 22, 2020 / Rules and Regulations

condition reports completed by the
lender or third party for the collateral.
(m) Filing preapplications and
applications. (1) B&I CARES Act
Program Loan borrowers with existing
B&I loans do not need to resubmit their
historical financial statements that have
been previously submitted through
routine loan servicing actions.
(2) Loans for working capital are
classified as categorical exclusions for
purposes of the Agency’s environmental
review policies and procedures in
accordance with 7 CFR part 1970. These
actions normally do not require an
applicant to submit environmental
documentation with the application.
However, based on the review of the
project description, the Agency may
request additional environmental
documentation from the applicant at
any time, specifically if the Agency
determines that extraordinary
circumstances may exist.
(3) Notwithstanding the provisions of
§ 4279.161(b), a draft loan agreement is
not required, a business plan or
feasibility study is not required, and
lenders may substitute and rely on the
borrower’s tax returns when financial
statements prepared in accordance with
GAAP are not available from the
borrower. Agricultural producers’
financial records must meet the
industry’s standard accounting
practices.
(4) A lender or borrower may combine
applications for a B&I CARES Act
Program loan for working capital with
an application for B&I appropriated
fiscal year funds. The provisions of this
section do not apply to applications for
B&I appropriated fiscal year funds.
Bette B. Brand,
Deputy Under Secretary, Rural Development.
[FR Doc. 2020–11242 Filed 5–21–20; 8:45 am]
BILLING CODE 3410–XY–P

DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. FAA–2020–0455; Product
Identifier 2019–SW–105–AD; Amendment
39–21130; AD 2020–11–05]
RIN 2120–AA64

Examining the AD Docket

Airworthiness Directives; Airbus
Helicopters
Federal Aviation
Administration (FAA), DOT.
ACTION: Final rule; request for
comments.
AGENCY:

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16:08 May 21, 2020

The FAA is adopting a new
airworthiness directive (AD) for all
Airbus Helicopters Model EC120B
helicopters. This AD was prompted by
a report of recurrent loss of tightening
torque on several attachment bolts of the
tail rotor hub body. This AD requires
repetitive inspections of the tail rotor
hub body for cracks and applicable
corrective actions if necessary, and
repetitive replacement of the attachment
bolts, washers, and nuts of the tail rotor
hub body. The FAA is issuing this AD
to address the unsafe condition on these
products.
DATES: This AD becomes effective June
8, 2020.
The Director of the Federal Register
approved the incorporation by reference
of a certain publication listed in this AD
as of June 8, 2020.
The FAA must receive comments on
this AD by July 6, 2020.
ADDRESSES: You may send comments,
using the procedures found in 14 CFR
11.43 and 11.45, by any of the following
methods:
• Federal eRulemaking Portal: Go to
https://www.regulations.gov. Follow the
instructions for submitting comments.
• Fax: 202–493–2251.
• Mail: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC 20590.
• Hand Delivery: U.S. Department of
Transportation, Docket Operations, M–
30, West Building Ground Floor, Room
W12–140, 1200 New Jersey Avenue SE,
Washington, DC, between 9 a.m. and 5
p.m., Monday through Friday, except
Federal holidays.
For service information identified in
this final rule, contact Airbus
Helicopters, 2701 N Forum Drive, Grand
Prairie, TX 75052; telephone 972–641–
0000 or 800–232–0323; fax 972–641–
3775; or at https://www.airbus.com/
helicopters/services/technicalsupport.html. You may view this service
information at the FAA, Office of the
Regional Counsel, Southwest Region,
10101 Hillwood Pkwy., Room 6N–321,
Fort Worth, TX 76177. It is also
available on the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2020–
0455.
SUMMARY:

Jkt 250001

You may examine the AD docket on
the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2020–
0455; or in person at Docket Operations
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.

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The AD docket contains this AD, the
European Union Aviation Safety Agency
(EASA) AD, any service information
that is incorporated by reference, any
comments received, and other
information. The street address for
Docket Operations is listed above.
Comments will be available in the AD
docket shortly after receipt.
FOR FURTHER INFORMATION CONTACT:
Kathleen Arrigotti, Aerospace Engineer,
Large Aircraft Section, International
Validation Branch, FAA, 2200 South
216th St., Des Moines, WA 98198;
telephone and fax 206–231–3218; email
[email protected].
SUPPLEMENTARY INFORMATION:
Discussion
EASA, which is the Technical Agent
for the Member States of the European
Union, has issued EASA AD 2019–
0272R1, dated November 18, 2019
(referred to after this as the Mandatory
Continuing Airworthiness Information
or ‘‘the MCAI’’), to correct an unsafe
condition for all Airbus Helicopters
EC120B helicopters. EASA advises that
an inspection of the tail rotor hub body
revealed a recurring loss of tightening
torque on several attachment bolts.
EASA advises that this condition, if not
detected and corrected, could lead to
cracking and potential loss of the tail
rotor drive and consequent loss of yaw
control of the helicopter. The MCAI
requires repetitive inspections of the tail
rotor hub body for cracks and applicable
corrective actions if necessary, as well
as repetitive replacement of the
associated attachment bolts, washers,
and nuts.
You may examine the MCAI in the
AD docket on the internet at https://
www.regulations.gov by searching for
and locating Docket No. FAA–2020–
0455.
Related Service Information Under
1 CFR Part 51
Airbus Helicopters has issued
Emergency Alert Service Bulletin
05A020, Revision 1, dated November 8,
2019. This service information describes
procedures for repetitive inspections of
the tail rotor hub body for cracks and
applicable corrective actions if
necessary, and repetitive replacement of
the attachment bolts, washers, and nuts
of the tail rotor hub body. Corrective
actions include replacing the tail rotor
hub body and associated bolts, washers,
and nuts, and an inspection of the
splined flange and the tail rotor hub
body, and, if necessary, replacing the
splined flange.
This service information is reasonably
available because the interested parties

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