Q: SBA regulations require approval by SBA’s Standards of Conduct Committee (SCC) for SBA Assistance, other than disaster assistance, to an entity, if its sole proprietor, partner, officer, director, or stockholder with a 10 percent or more interest is: a current SBA employee; a Member of Congress; an appointed official or employee of the legislative or judicial branch; a member or employee of an SBA Advisory Council or SCORE volunteer; or a household member of any of the preceding individuals. Do these entities need the approval of the SCC in order to be eligible for a PPP loan?
A: The SCC previously authorized a blanket approval for PPP loans to such entities so that further action by the SCC is not necessary in the PPP program. Under the Economic Aid Act, certain borrowers became ineligible and are prohibited from receiving a First Draw PPP Loan or Second Draw PPP Loan made after December 27, 2020. If a controlling interest in the borrower (meaning 20 percent by vote or value of the outstanding amount of any class of equity interest) is held directly or indirectly by the President of the United States, the Vice President of the United States, the head of an Executive Department, or a Member of Congress, or the spouse of such person as determined under applicable common law, the borrower is ineligible for a First Draw PPP Loan and a Second Draw PPP Loan. In addition, for any First Draw PPP Loan made before December 27, 2020, if the President of the United States, Vice President of the United States, the head of an Executive department, or a Member of Congress, or the spouse of any such person as determined under applicable common law, directly or indirectly held a controlling interest in the borrower on the date the loan application was submitted to the PPP lender, the borrower is required to disclose such interests to SBA on SBA Form 3508D and submit the form to the PPP lender following submission of the borrower’s application for loan forgiveness, as specified in subsection 6.c. of the consolidated interim final rule on loan forgiveness requirements and loan review procedures as amended by the Economic Aid Act.