covered mortgage obligation
(37) Paycheck protection program second draw loans.— (A) Definitions .— In this paragraph— (i) the terms “additional covered nonprofit entity”, “eligible self-employed individual”, “housing cooperative”, “nonprofit organization”, “payroll costs”, “seasonal employer”, and “veterans organization” have the meanings given those terms in paragraph (36), except that “eligible entity” shall be substituted for “eligible recipient” each place it appears in the definitions of those terms; (ii) the term “covered loan” means a loan made under this paragraph; (iii) the terms “covered mortgage obligation”, “covered operating expenditure”, “covered property damage cost”, “covered rent obligation”, “covered supplier cost”, “covered utility payment”, and “covered worker protection expenditure” have the meanings given those terms in section 636m(a) of this title ; (iv) the term “eligible entity”— (I) means any business concern, nonprofit organization, housing cooperative, veterans organization, Tribal business concern, eligible self-employed individual, sole proprietor, independent contractor, or small agricultural cooperative that— (aa) employs not more than 300 employees; and (bb) (AA) except as provided in subitems (BB), (CC), and (DD), had gross receipts during the first, second, third, or, only with respect to an application submitted on or after January 1, 2021 , fourth quarter in 2020 that demonstrate not less than a 25 percent reduction from the gross receipts of the entity during the same quarter in 2019; (BB) if the entity was not in business during the first or second quarter of 2019, but was in business during the third and fourth quarter of 2019, had gross receipts during the first, second, third, or, only with respect to an application submitted on or after January 1, 2021 , fourth quarter of 2020 that demonstrate not less than a 25 percent reduction from the gross receipts of the entity during the third or fourth quarter of 2019; (CC) if the entity was not in business during the first, second, or third quarter of 2019, but was in business during the fourth quarter of 2019, had gross receipts during the first, second, third, or, only with respect to an application submitted on or after January 1, 2021 , fourth quarter of 2020 that demonstrate not less than a 25 percent reduction from the gross receipts of the entity during the fourth quarter of 2019; or (DD) if the entity was not in business during 2019, but was in operation on February 15, 2020 , had gross receipts during the second, third, or, only with respect to an application submitted on or after January 1, 2021 , fourth quarter of 2020 that demonstrate not less than a 25 percent reduction from the gross receipts of the entity during the first quarter of 2020; (II) includes a business concern or organization made eligible for a loan under paragraph (36) under subclause (II), (III), or (IV) of clause (iii), subclause (IV) or (V) of clause (iv), clause (vii), or clause (ix) of subparagraph (D) of paragraph (36) and that meets the requirements described in items (aa) and (bb) of subclause (I); and (III) does not include— (aa) any entity that is a type of business concern (or would be, if such entity were a business concern) described in section 120.110 of title 13, Code of Federal Regulations (or in any successor regulation or other related guidance or rule that may be issued by the Administrator) other than a business concern described in subsection (a) or (k) of such section; or (bb) any business concern or entity primarily engaged in political or lobbying activities, which shall include any entity that is organized for research or for engaging in advocacy in areas such as public policy or political strategy or otherwise describes itself as a think tank in any public documents; (cc) any business concern or entity— (AA) for which an entity created in or organized under the laws of the People’s Republic of China or the Special Administrative Region of Hong Kong, or that has significant operations in the People’s Republic of China or the Special Administrative Region of Hong Kong, owns or holds, directly or indirectly, not less than 20 percent of the economic interest of the business concern or entity, including as equity shares or a capital or profit interest in a limited liability company or partnership; or (BB) that retains, as a member of the board of directors of the business concern, a person who is a resident of the People’s Republic of China; (dd) any person required to submit a registration statement under section 612 of title 22 ; or (ee) an eligible person or entity (as defined under section 9009a of this title ) that receives a grant under such section 9009a; and (v) the term “Tribal business concern” means a Tribal business concern described in section 657a(b)(2)(C) of this title . (B) Loans .— Except as otherwise provided in this paragraph, the Administrator may guarantee covered loans to eligible entities under the same terms, conditions, and processes as a loan made under paragraph (36). (C) Maximum loan amount.— (i) In general .— Except as otherwise provided in this subparagraph, the maximum amount of a covered loan made to an eligible entity is the lesser of— (I) the product obtained by multiplying— (aa) at the election of the eligible entity, the average total monthly payment for payroll costs incurred or paid by the eligible entity during— (AA) the 1-year period before the date on which the loan is made; or (BB) calendar year 2019; by (bb) 2.5; or (II) $2,000,000. (ii) Seasonal employers .— The maximum amount of a covered loan made to an eligible entity that is a seasonal employer is the lesser of— (I) the product obtained by multiplying— (aa) at the election of the eligible entity, the average total monthly payments for payroll costs incurred or paid by the eligible entity for any 12-week period between February 15, 2019 and February 15, 2020 ; by (bb) 2.5; or (II) $2,000,000. (iii) New entities .— The maximum amount of a covered loan made to an eligible entity that did not exist during the 1-year period preceding February 15, 2020 is the lesser of— (I) the product obtained by multiplying— (aa) the quotient obtained by dividing— (AA) the sum of the total monthly payments by the eligible entity for payroll costs paid or incurred by the eligible entity as of the date on which the eligible entity applies for the covered loan; by (BB) the number of months in which those payroll costs were paid or incurred; by (bb) 2.5; or (II) $2,000,000. (iv) NAICS 72 entities .— The maximum amount of a covered loan made to an eligible entity that is assigned a North American Industry Classification System code beginning with 72 at the time of disbursal is the lesser of— (I) the product obtained by multiplying— (aa) at the election of the eligible entity, the average total monthly payment for payroll costs incurred or paid by the eligible entity during— (AA) the 1-year period before the date on which the loan is made; or (BB) calendar year 2019; by (bb) 3.5; or (II) $2,000,000. (D) Business concerns with more than 1 physical location.— (i) In general .— For a business concern with more than 1 physical location, the business concern shall be an eligible entity if the business concern would be eligible for a loan under paragraph (36) pursuant to clause (iii) of subparagraph (D) of such paragraph, as applied in accordance with clause (ii) of this subparagraph, and meets the revenue reduction requirements described in item (bb) of subparagraph (A)(iv)(I). (ii) Size limit .— For purposes of applying clause (i), the Administrator shall substitute “not more than 300 employees” for “not more than 500 employees” in paragraph (36)(D)(iii). (E) Waiver of affiliation rules.— (i) In general .— The waiver described in paragraph (36)(D)(iv) shall apply for purposes of determining eligibility under this paragraph. (ii) Size limit .— For purposes of applying clause (i), the Administrator shall substitute “not more than 300 employees” for “not more than 500 employees” in subclause (I) and (IV) of paragraph (36)(D)(iv). (F) Loan number limitation .— An eligible entity may only receive 1 covered loan. (G) Exception from certain certification requirements .— An eligible entity applying for a covered loan shall not be required to make the certification described in clause (iii) or (iv) of paragraph (36)(G). (H) Fee waiver .— With respect to a covered loan— (i) in lieu of the fee otherwise applicable under paragraph (23)(A), the Administrator shall collect no fee; and (ii) in lieu of the fee otherwise applicable under paragraph (18)(A), the Administrator shall collect no fee. (I) Gross receipts and simplified certification of revenue test.— (i) Loans of up to $150,000 .— For a covered loan of not more than $150,000, the eligible entity— (I) may submit a certification attesting that the eligible entity meets the applicable revenue loss requirement under subparagraph (A)(iv)(I)(bb); and (II) if the eligible entity submits a certification under subclause (I), shall, on or before the date on which the eligible entity submits an application for forgiveness under subparagraph (J), produce adequate documentation that the eligible entity met such revenue loss standard. (ii) For nonprofit and veterans organizations .— For purposes of calculating gross receipts under subparagraph (A)(iv)(I)(bb) for an eligible entity that is a nonprofit organization, a veterans organization, or an organization described in subparagraph (A)(iv)(II), gross receipts means gross receipts within the meaning of section 6033 of title 26 . (J) Loan forgiveness.— (i) Definition of covered period .— In this subparagraph, the term “covered period” has the meaning given that term in section 636m(a) of this title . (ii) Forgiveness generally .— Except as otherwise provided in this subparagraph, an eligible entity shall be eligible for forgiveness of indebtedness on a covered loan in the same manner as an eligible recipient with respect to a loan made under paragraph (36) of this section, as described in section 636m of this title . (iii) Forgiveness amount .— An eligible entity shall be eligible for forgiveness of indebtedness on a covered loan in an amount equal to the sum of the following costs incurred or expenditures made during the covered period: (I) Payroll costs, excluding any payroll costs that are— (aa) qualified wages, as defined in subsection (c)(3) of section 2301 of the CARES Act ( 26 U.S.C. 3111 note), taken into account in determining the credit allowed under such section; (bb) qualified wages taken into account in determining the credit allowed under subsection (a) or (d) of section 303 of the Taxpayer Certainty and Disaster Relief Act of 2020; or (cc) premiums taken into account in determining the credit allowed under section 6432 of title 26 . (II) Any payment of interest on any covered mortgage obligation (which shall not include any prepayment of or payment of principal on a covered mortgage obligation). (III) Any covered operations expenditure. (IV) Any covered property damage cost. (V) Any payment on any covered rent obligation. (VI) Any covered utility payment. (VII) Any covered supplier cost. (VIII) Any covered worker protection expenditure. (iv) Limitation on forgiveness for all eligible entities .— Subject to any reductions under section 636m(d) of this title , the forgiveness amount under this subparagraph shall be equal to the lesser of— (I) the amount described in clause (ii); and (II) the amount equal to the quotient obtained by dividing— (aa) the amount of the covered loan used for payroll costs during the covered period; and (bb) 0.60. (v) Submission of materials for forgiveness .— For purposes of applying subsection (l)(1) of section 636m of this title to a covered loan of not more than $150,000 under this paragraph, an eligible entity may be required to provide, at the time of the application for forgiveness, documentation required to substantiate revenue loss in accordance with subparagraph (I). (K) Lender eligibility .— Except as otherwise provided in this paragraph, a lender approved to make loans under paragraph (36) may make covered loans under the same terms and conditions as in paragraph (36). (L) Reimbursement for loan processing and servicing .— The Administrator shall reimburse a lender authorized to make a covered loan— (i) for a covered loan of not more than $50,000, in an amount equal to the lesser of— (I) 50 percent of the balance of the financing outstanding at the time of disbursement of the covered loan; or (II) $2,500; (ii) at a rate, based on the balance of the financing outstanding at the time of disbursement of the covered loan, of— (I) 5 percent for a covered loan of more than $50,000 and not more than $350,000; and (II) 3 percent for a covered loan of more than $350,000. (M) Publication of guidance .— Not later than 10 days after December 27, 2020 , the Administrator shall issue guidance addressing barriers to accessing capital for minority, underserved, veteran, and women-owned business concerns for the purpose of ensuring equitable access to covered loans. (N) Standard operating procedure .— The Administrator shall, to the maximum extent practicable, allow a lender approved to make covered loans to use existing program guidance and standard operating procedures for loans made under this subsection. (O) Supplemental covered loans .— A covered loan under this paragraph may only be made to an eligible entity that— (i) has received a loan under paragraph (36); and (ii) on or before the expected date on which the covered loan under this paragraph is disbursed to the eligible entity, has used, or will use, the full amount of the loan received under paragraph (36). (P) Fraud enforcement harmonization .— Notwithstanding any other provision of law, any criminal charge or civil enforcement action alleging that a borrower engaged in fraud with respect to a covered loan guaranteed under this paragraph shall be filed not later than 10 years after the offense was committed.