In this 5-minute read:
- NEW UPDATE as of 8/2021! SBA PPP Direct Forgiveness Portal announced
- Which PPP forgiveness application should I use?
- How do you know which PPP forgiveness application form to fill out?
- What are the basic requirements of PPP loan forgiveness?
- How do you apply for PPP loan forgiveness?
URGENT PPP FORGIVENESS UPDATE: On July 28, 2021, the SBA announced big news (for most PPP borrowers). The SBA has established an online PPP forgiveness platform called the SBA PPP Direct Forgiveness Portal. If your PPP loan was for $150,000 or less, AND if your lender has opted-in to the use of the platform, you will be able to submit your PPP loan forgiveness application online directly to the SBA, using the electronic equivalent of SBA Form 3508S. For full details, read our post about the new SBA PPP Direct Forgiveness Portal and other recent rule changes.
As businesses are receiving and spending their PPP loans, there’s a crucial part of the PPP loan process you need to participate in if you wish to receive loan forgiveness—you have to apply.
The Small Business Administration has continued to develop the PPP forgiveness process through the duration of the Paycheck Protection Program. There are now three different application forms that a business can fill out, each one with specific rules and some more simplified than others. So, how do you know which form to use?
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How do I know which PPP forgiveness application form to fill out?
At the start of the Paycheck Protection Program, there was only one forgiveness application form that businesses could fill out—Form 3508. Since then, two more variations of this form have been created—Form 3508EZ and Form 3508S—to help simplify the process for business owners that don’t have employees or that took out smaller loans. We’ll walk you through the purpose of each and who should fill out which form.
Form 3508
The SBA and U.S. Department of the Treasury released Form 3508 on May 15, 2020. It’s the most complex of the forgiveness application forms, and as such, other forms were created to help simplify the process for businesses that meet specific requirements. This is essentially the parent form from which the other two forms were developed.
If you don’t meet the specific requirements of the other two forms, then this is the form that you’ll need to use to apply for PPP loan forgiveness.
The biggest difference between Form 3508 and the other two application forms is that this one has a more involved process in calculating your loan forgiveness.
Form 3508 consists of 5 pages broken up into the following sections:
- Business information and PPP loan information
- Schedule A (this is used to calculate your forgiveness amount)
- Schedule A worksheet
- Signatures
- Demographic information
If you’re filling out this form, you may likely only be receiving partial loan forgiveness and this will help you calculate that the most accurately.
Check out our instruction guide: PPP forgiveness application instructions for loans over $150,000 (Forms 3508 and 3508EZ)
Form 3508EZ
If you borrowed more than $150,000, you will be filling out either Form 3508 or Form 3508EZ. Which form you fill out is determined by the specific requirements for Form 3508EZ. This is a more simplified version of Form 3508 as it has fewer calculations that you’ll need to do to determine your loan forgiveness amount.
In order to fill out this form, you’ll need to meet one of the following requirements:
- You are self-employed and don’t have employees
- You have employees but did not reduce your employee count or hours, and did not reduce employee wages by more than 25%
- You have employees but did not reduce their wages by more than 25% and could not operate as normal due to decreased business operations from COVID-19 health guidelines (business closures/limitations)
If you don’t meet one of these eligibility requirements and your loan was over $150,000, then you’ll fill out Form 3508.
This form contains similar sections to 3508 but doesn’t have an extra worksheet to help calculate your forgiveness amount:
- Business information and PPP loan information
- Forgiveness amount calculation
- Signatures
- Demographic information
Check out our instruction guide: PPP forgiveness application instructions for loans over $150,000 (forms 3508 and 3508EZ)
Form 3508S
Form 3508S is for businesses and individuals that received a PPP loan of $150,000 or less. Because of the smaller loan amount, this form is much simpler than the other two forms and doesn’t require as much calculation to determine the forgiveness amount. This form consists of the following sections:
- Business information and PPP loan information
- Signatures
- Demographic information
Check out our instruction guide for PPP loan forgiveness Form 3508S (loans under $150K)
What are the basic requirements of PPP loan forgiveness?
It’s helpful to know what the basic requirements of PPP loan forgiveness are before you spend your funds (and ideally this was laid out for you by your lender so you understood this from the start). This will also be helpful in understanding how your loan forgiveness process will go and how much you should expect to be forgiven.
Those basic requirements that you must fulfill in order to receive full loan forgiveness are:
- Maintain your employee counts and compensation levels (with certain exceptions)
- Spend at least 60% of your loan on payroll costs
- Spend any funds outside of payroll costs on other approved expenses
How do I apply for PPP loan forgiveness?
IMPORTANT UPDATE: as of August 4, 2021, If your PPP loan was for $150,000 or less, AND if your lender has opted-in to the use of the platform, you will be able to submit your PPP loan forgiveness application online directly to the SBA, using the electronic equivalent of SBA Form 3508S, via the SBA’s new online PPP forgiveness platform called the SBA PPP Direct Forgiveness Portal. For full details, read our post about the new SBA PPP Direct Forgiveness Portal and other recent rule changes.
When you’re ready to apply for PPP loan forgiveness (you can do so at the end of your covered loan period after your funds have been spent), then you just need to reach out to your lender to begin the process.
Your lender should help provide you with the appropriate forgiveness application form and can answer any questions that you may have and guide you through the process. You may need to provide specific documentation to help verify your expenditures, like bank statements, invoices, cancelled checks, lease agreements, etc. If you’re unsure what to include, just ask your lender.
Please note: different SBA lenders may have different processes, internal/online procedures, and even different forms. Be sure to check with your lender and follow their instructions.
Once you’ve filled out your application and gathered your documentation, you’ll turn everything back into your lender (OR if they have opted-in to the new new SBA PPP Direct Forgiveness Portal and your loan was for $150K or less, you will be able to submit your application directly via the SBA portal).
For a deeper look at PPP loan forgiveness, check out this article: What does the PPP loan forgiveness process look like?
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