Updated July 28, 2021 to include the new SBA PPP Direct Forgiveness Portal

If you have taken out a Paycheck Protection Program loan of $ 150,000 or less, the SBA asks you to use the PPP forgiveness application. Form 3508S when asking for forgiveness. This form was originally intended for loans of $ 50,000 or less, but the Economic Assistance Act, or “stimulus bill,” raised the limit to $ 150,000. Be sure to check out the latest updated version on January 19, 2021.

This app does not make forgiveness automatic. It sounds simple enough, but it still requires you to calculate your rebate amount, which may require you to consult other forms.

In the past, the SBA has required all borrowers to request a rebate from the lender who gave them their PPP loan, or the loan manager, if applicable. (The lender can use an online form to request a rebate.)

Even if you are using the SBA’s online portal, we recommend that you familiarize yourself with this form to understand the current pardon requirements.

3508S application step by step

First fill out the basic information about your business. Unless your business address has changed, it should be the same as the information you used when you applied for PPP:

If this is your first PPP loan, check the box that says First PPP Loan Drawdown. If this is your second PPP loan, check the box that says Second Draw PPP Loan.

Note: You must submit a rebate request for your first P3 loan before or at the same time as the second draw rebate request is submitted.

PPP SBA loan number: ________________________

This is the number assigned by the SBA to your loan. If you don’t have it, ask your lender.

Lender’s PPP loan number: __________________________

Enter the loan number assigned to the PPP loan by the lender. Again, if you don’t know, ask your lender.

PPP loan amount: _____________________________

This is the amount you received.

PPP loan disbursement date: _______________________

Again, this is when the funds were deposited into your bank account. If you received more than one payment, use the date of the first one.

Employees at the time of the loan application: ___________

Enter the total number of employees at the time of the borrower’s PPP loan application.

Employees at the time of the pardon request: ___________

Enter the total number of employees at the time the borrower requests a loan forgiveness.

Period covered: ________________________ to ________________________

What is the period covered?

The period covered is the time you have to spend the funds in order to qualify for the rebate. It begins when the loan is disbursed (to your bank account). Economic Aid Act PPP Flexibility Act has changed the period covered for the purposes of the above calculations.

Originally it was 8 weeks, then the PPP Flexibility Act changed it to 8 Where 24 weeks, and now with the Economic Aid Act the borrower can choose a period of 8-24 weeks.

As the request explains… “It ends on a date chosen by the Borrower which is at least 8 weeks after the date of disbursement of the loan and at most 24 weeks after the date of disbursement of the loan. For example, if the Borrower received the proceeds of its PPP loan on Monday April 20, 2020, the first day of the Covered Period is Monday April 20, 2020 and the last day of the Covered Period is any date chosen by the Borrower. between Sunday, June 14, 2020 and Sunday, October 4, 2020. »

The choice of the period covered can make a significant difference in terms of the amount of your loan eligible for a discount. You’ll want to choose carefully to maximize forgiveness, and get advice from a legal or accounting professional if you’re unsure. We will discuss this in more detail in a moment.

If the borrower (along with its affiliates, if applicable) has received PPP loans over $ 2 million, check here:

Check the box if the borrower, as well as its affiliates (to the extent required by the SBA’s Interim Final Rule on Affiliates (85 FR 20817 (April 15, 2020)) and not waived under 15 USC 636 (a) (36) (D) (iv)), has received PPP loans with an initial principal amount greater than $ 2 million of dollars. If you’ve received more than $ 2 million (with affiliates), be sure to review it with your advisors.

Loan amount spent on salary costs: _______________

On page two of the application, you will see a description of the eligible salary costs. It’s pretty straightforward if you have no or few employees and you haven’t downsized, but you still need to make sure you pick the right period of coverage to maximize forgiveness. Review the other forms we suggest for calculating forgiveness.

Amount of loan cancellation requested: _________________

The application instructions say here: “Enter the total amount of your PPP loan that is eligible for loan forgiveness.” This amount is the “Loan amount spent on salary costs” plus any amount spent on eligible non-salary costs (described below) minus any required reductions (described below), up to the principal amount of the PPP loan. . He then details the acceptable non-salary expenses. He later reminds the borrower that “eligible non-salary costs cannot exceed 40% of the total amount of the rebate. “

This form has been greatly simplified. But what is likely to be confusing is that you still need to calculate your loan amount that is repayable, but it is not presented step by step like with the other forms. The ease of calculating the rebate depends on your loan amount and other factors, such as reduction in wages and / or employee headcount. We will provide what we believe is a better approach.

First of all, an observation:

Loan amounts of $ 50,000 or less

If your loan amount is less than $ 50,000 (and affiliates have received first-draw PPP loans or second-draw loans less than $ 2 million), you do not have to calculate a discount reduction. for a reduction in wages or salaries of employees. The SBA, in the original provisional final rule the announcement of this form notes that this change is likely to have a minimal impact on the overall forgiveness:

“There are about 3.57 million PPP loans outstanding of $ 50,000 or less, for a total of about $ 62 billion of the 525 billion PPP loans. About 1.71 million PPP loans of $ 50,000 or less went to companies that reported having no employees (probably not counting the owner as an employee) or an employee. As these companies have no employees other than the owner… they are not affected by these exemptions. “

Loan amounts of $ 50,001 to $ 150,000

On page 3 of the application form, you will see a notice stating that “Borrowers who have received a P3 loan from more … than $ 50,000 and borrowers of $ 50,000 or less who, along with their affiliates, have received first or second draw PPP loans totaling $ 2 million or more must adjust their “requested loan forgiveness” due to legal requirements regarding reductions of full-time equivalent employees or employee wages and salaries. If you read it carefully, it basically tells you whether you should follow the calculations on Form 3508EZ or Form 3508, which we describe next.

All loans of $ 150,000 or less

As we mentioned earlier, even with this simplified form, you still need to calculate how much of your loan is eligible for forgiveness. On page 3 of the application, it is stated:

“The borrower should accurately calculate the loan forgiveness amount requested and verify payments for eligible costs included therein. “

If you try to do this while reading this form but are not familiar with calculating forgiveness, you might find it confusing. There is a better way.

Ignore your loan amount for a moment and choose which of the following would apply to you:

You can use these forms to calculate your forgiveness amount, and then keep those calculations for your records in case the SBA verifies your loan in the future.

The request states that “the borrower must comply with all requirements of the Paycheck Protection Program Rules (Sections 7 (a) (36), 7 (a) (37) and 7A of the Small Business Act, Interim Final PPP Rules and SBA Guidelines issued up to the date of this request) and must certify compliance on the loan forgiveness request.

That’s a lot of information to review! January 2021 Interim final rule on loan forgiveness summarizes and contains a comprehensive Q&A section that may be helpful if you have any questions. It’s 62 pages, too, so be prepared to sit down and read it.


On page four, you will see a list of documents that you must keep to verify your eligibility for a pardon. This includes payroll documents and non-salary documents (if you are using non-salary expenses to get a discount.)

If you get a second PPP loan, you must provide documentation of the 25% reduction in gross receipts.

Record retention requirement: Be careful here. You need to keep records in case the SBA checks your loan. It is said:

“The borrower must keep all employment records / payroll documents on file for four years and all other documents for three years after the date the loan forgiveness request is submitted to the lender, and authorize the representatives Authorized SBA, including representatives of its Inspector General’s office, to access these files on request. The borrower must independently provide documentation to a lender to meet federal, state, local, or other legal or regulatory requirements or as part of an SBA loan review or audit.

This article was originally written on October 9, 2020 and updated on July 29, 2021.

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