How to apply for forgiveness for PPP loans $50,000 and less

By Bill Cunningham

This is a blog on how to apply for Paycheck Protection Program (PPP) loan forgiveness for loans $50,000 and less using Form 3508S.

For PPP loans of $50,000 and less, you will need to calculate your forgiveness amount based on the eligible payroll and non-payroll costs that you paid or incurred during your Covered Period. You do not need to calculate any FTE or pay rate reduction adjustments.

This blog includes changes made to PPP by the Economic Aid Act signed into law on December 27, 2020 including forgiveness filing deadlines, changes to the deductibility of expenses for income tax purposes, the repeal of the EIDL Advance Deduction, and allowing certain small businesses the ability to apply for a Second Draw PPP Loan.

Excel Forgiveness Calculator

This post uses Excel Forgiveness Calculator for Form 3508S, which is a Microsoft Excel workbook, to help you calculate your forgiveness amount. You should input data only in grey cells with blue fonts. The other cells that contain formulas are protected. If you would like a copy of the Excel Forgiveness Calculator, click on the link.

Score Restaurant Example

We will use a mock company called Score Restaurant as an example to help you better understand how to complete this application. We will also use the Excel Forgiveness Calculator to calculate the Score Restaurant forgiveness amount.

Let’s get started! After entering the business and loan information, Score Restaurant will enter the PPP loan amount of $42,938, the loan disbursement date of April 24, 2020 and select the number of weeks they will use for their Covered Period, which will be 9 weeks. Nine weeks is how long Olivia, the owner, believes that it will take for the restaurant to use 100% of loan proceeds.

Olivia knows that the restaurant has experienced FTE changes during the Covered Period as compared to the Reference Period, however, her PPP loan is less than $50,000 so she is exempt from any of the FTE and pay rate reduction adjustments. She only needs to run a payroll report that includes payroll costs paid or incurred during her Covered Period.

Now Olivia is ready to begin calculating her forgiveness amount that will include both payroll and non-payroll costs. She knows that she must be mindful of the sixty-forty rule, the no double dipping rule and the paid or incurred rule as she inputs her data.

(Note that an explanation of each of the above rules can be found by clicking on the blue text. The same is true for any other term in the post in blue text.)

Payroll Costs

The first step in calculating the forgiveness amount is to calculate covered payroll costs. This includes five components:

  • Employee cash compensation
  • Employer-paid employee benefits
  • Employer-paid employee retirement benefits
  • Employer-paid state/local payroll taxes
  • Owner-employees or owner replacement compensation

Eligible payroll costs consist only payroll costs paid or incurred during the Covered Period and for those employees whose principal place of residence is the United States.

Employee Cash Compensation

Olivia will start entering her payroll data into the Excel Forgiveness Calculator. She’ll enter each employee’s total payroll cash compensation during the Covered Period. The Excel Forgiveness Calculator will automatically apply the employee cash compensation cap of $100,000 to all employees.

Employer-Paid Insurance Benefits

Next, Olivia will enter the employer-paid insurance benefits that were paid or incurred during the covered period. This includes group healthcare premiums of $6,000. The restaurant is required to exclude the premiums paid on behalf of Olivia of $1,500, because she is an owner-employee, as well as the portion of the insurance premiums paid by employees.

Employer-Paid Retirement Benefits

Olivia will enter any employer-paid retirement contributions. SCORE Restaurant paid or incurred a 401K employer match of $993 during the Covered Period. She will exclude any employer-paid retirement contributions paid on her behalf as an owner-employee.

Employer-Paid State and Local Payroll Taxes

Next, Olivia will enter any employer-paid state and local payroll taxes. The restaurant paid state unemployment insurance taxes of $100 and Job Development Fund taxes of $40 during the Covered Period.

Owner-Employee Compensation

The last payroll section is owner employee compensation.

Score Restaurant is a C-Corp, so Olivia will use her 2019 W-2 wages to calculate her compensation eligible for forgiveness. She’ll enter total wages into the Excel Forgiveness Calculator and it will make the calculate for her.

Olivia can also include employer-paid insurance benefits and employer-paid retirement contributions on her behalf because the legal entity is a C-Corp. However, her eligible retirement costs is capped based on her 2019 employer-paid insurance benefits and employer-paid retirement contribution.

Eligible Non-Payroll Costs

Now that Olivia has entered her eligible payroll costs, she is ready to enter her eligible non-payroll costs, including:

Mortgage Interest

Score Restaurant has no mortgage interest costs, so Olivia will skip to the next section.

Rent Payments

She records $4,000 for rent payments for her restaurant space paid or incurred during the Covered Period. Olivia doesn’t own the building and doesn’t sublet any of the space so she can take the full rent deduction.

Utility Expenses

Next, Olivia will record utility payments including electricity costs of $1,600, telephone costs of $1,400, and Internet connection costs of $200 that were paid or incurred during the Covered Period. Each of these utilities were in service before February 15, 2020.

Covered Operations Costs

Next, Olivia enters her covered operations costs including the costs of their POS system as well as the subscription fees for their accounting software.

Covered Property Damage Costs

Olivia remembers that she incurred damages to the restaurant in June of 2020 during one of the protests, however the insurance company covered 100% of the repair costs so she realized that she cannot include any covered property damage costs.

Covered Supplier Costs

Because Score Restaurant purchases perishable goods, Olivia can deduct their purchase orders for food supplies signed before and during their Covered Period. The payments of $2,500 related to the covered supplier costs are eligible for forgiveness.

Covered Worker Protection Costs

Olivia paid $1,500 to upgrade her ventilation system. She will include those costs as covered worker protection costs. Her other worker and customer COVID-related health protection costs were paid using a Restore RI grant so she will not include those costs.

Forgiveness Amount

Olivia has entered all of the restaurant’s eligible forgiveness costs totaling $43,812 or $874 more than the PPP loan of $42,938. The Excel Forgiveness Calculator checks that payroll costs are at least 60% of the forgiveness amount and that the forgiveness amount does not exceed the amount of PPP loan. SCORE Restaurant should be able to apply for 100% forgiveness of $42,938.

SBA Form 3508S

The Excel Forgiveness Calculator will create a draft of Form 3508S. Before Olivia submits her forgiveness application to her lender, she should collect all of the required documentation that must be maintain in a paper or electronic file. If the lender does not have an online version of the form, Olivia will need to transfer the data from the Excel Forgiveness Application to Form 3508S, then initial each certification, decide whether to submit the optional Demographic Information Form, and sign and date the application.

PPP Forgiveness Application Process

Follow these steps to submit your forgiveness application to your lender for SBA approval.

Step 1


Ask your lender if they use the SBA forgiveness forms or an online version of those forms. Your lender may use their own portal to process your PPP loan and forgiveness applications that requires credentials, including company identification, username and password. Keep those credentials in a secure place.

Step 2


Complete the Excel Forgiveness Calculator or your own worksheet to calculate your Forgiveness Amount. For self-employed individuals with no employees, use your PPP loan amount.

Step 3


Complete SBA forgiveness form, if the lender doesn't have an online form. Create an electronic or paper file of your documentation supporting the calculation of the Forgiveness Amount.

Step 4


Sign into the bank PPP portal and complete their online form or import your signed SBA forgiveness application. Upload all documentations required by your lender. For PPP loans over $150,000, the borrower must submit the forgiveness application for a Second Draw PPP Loan after or simultaneously with the forgiveness application of the First Draw PPP Loan.

Step 5


Download a copy of your application submission for your records if your lender uses their own online form.

Step 6


The lender will review your application for completeness. They may request additional documents or have a final approval process that requires you to sign electronically the forgiveness application. The lender has two months to send your application to the SBA, however, this process generally takes a few days to complete.

Step 7


After your forgiveness application is complete and approved by the lender, the lender will then submit your application to the SBA loan portal for approval.

Step 8


The SBA will approve or deny your forgiveness application. If the SBA approves your application, the SBA will notify your lender and transfer funds to the lender to pay down your loan equal to the forgiveness amount plus accrued interest related to the forgiveness amount. The SBA has 3 months by law to review, approve or deny your application, however, this process generally takes a few days to complete. As we mentioned before, the SBA will no longer deduct the amount of your EIDL Advance from your forgiveness amount.

Step 9


Your lender will inform you when the SBA has approved your application. If your forgiveness amount was less than your PPP loan, you will be responsible for paying your PPP loan balance in monthly installments until your loan maturity date.


REMEMBER: Even if the SBA approves your forgiveness amount and submits the payment to your bank, the SBA retains the right to audit your loan and forgiveness amounts. If you PPP loan or forgiveness application is audited, the SBA will request to copies of your documentation.


For some small business owners, filing for a PPP loan or forgiveness may still seem overwhelming. If you feel that way, request assistance from a SCORE Rhode Island Mentor. SCORE Rhode Island is a chapter of SCORE, a national organization and a SBA’s resource provider. SCORE Rhode Island is a volunteer organization providing free mentoring and educational services to small businesses in Rhode Island and South Coast Massachusetts.


The information provided in this post does not constitute legal, tax or accounting advice, but is designed to provide a current understanding of the Paycheck Protection Program. You should rely on the guidance provided by the SBA and US Treasury Department, advice from your CPA or attorney, and instructions from your bank. This content has not been approved by SCORE or the SBA.

For more than 50 years, SCORE has helped more than 11 million aspiring entrepreneurs and small business owners through mentoring and business workshops. More than 11,000 volunteer business mentors in more than 300 chapters serve their communities.  

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About the Author(s)

 Bill  Cunningham

Bill Cunningham is a SCORE Rhode Island mentor and workshop instructor, focusing on business models, business planning, and QuickBooks Online. He is a CPA with more than 30 years of working in the television industry.