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Which PPP Forgiveness Form Should I Use?

 

PPP loan forgiveness forms were revised on January 19, 2021 to conform to the Economic Aid Act signed into law in December 2020. This post will explain which form you should use to apply for forgiveness and the material revisions to the forms.

Which form should I use?

Step One: If your First Draw PPP Loan or Second Draw PPP Loan is $150,000 or less, you should use Form 3508S.

Step Two: If your First Draw PPP Loan and your Second Draw PPP Loan are both more than $150,000, and you can check either one of the two boxes below, you can use Form 3508EZ:

 You (the Borrower) did not:

  1. reduce your employees' salary or hourly pay rates more than 25% during the Covered Period. Employees who received an annualized pay rate during 2019 of more than $100,000 are excluded.
  2. reduce the number of employees or the average paid hours between January 1, 2020 and the end of the Covered Period. You can exclude employee reductions that arose from your inability to rehire individuals who were employees on February 15, 2020 if you were unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020. If your PPP Loan was made after December 27, 2020, the December 31 date is changed to the last date of your Covered Period.

You can also ignore reductions in an employee's hours that you offered to restore, and the employee refused.

 You (the Borrower) did not:

  1. reduce your employees' salary or hourly pay rates more than 25% during the Covered Period. Employees who received an annualized pay rate during 2019 of more than $100,000 are excluded.
  2. operate during the Covered Period at the same level of business activity prior to February 15, 2020 due to COVID-19 health compliance regulations issued by the HHS, CDC or OSHA.

Step Three: If you are unable to use Form 3508S or Form 3508EZ, then you should use Form 3508 to apply for forgiveness.

What changed on the revised forms?

The big news is that borrowers with PPP loan amounts of $150,000 or less can now use Form 3508S. While this simplifies the process of submitting your forgiveness application, it doesn't simplify the forgiveness calculation. If your loan is between $50,001 and $150,000, you must still calculate the FTE Reduction adjustment, if any, and the Salary/Hourly Wage Reduction adjustment, if any, as described in Form 3508EZ or Form 3508.

Form 3508 and Form 3508EZ now have new lines for Covered Operation Expenditures, Covered Property Damage Costs, Covered Supplier Costs, and Covered Worker Protection Equipment.

The following table lists the major changes in the three forms.

1.  Form 3508S now has two certifications: 1) the Borrower has complied with all requirements of the Paycheck Protection Program and 2) the Borrower confirms that all information provided is true and correct in all material aspects. Form 3508 and Form 3508EZ have a new certification that if you are submitting forgiveness for a Second Draw PPP Loan, you have used all First Draw PPP Loan amounts on eligible expenses prior to disbursement of the Second Draw PPP Loan.

2.  Borrower must submit Form 3508D Borrower’s Disclosure of Certain Controlling Interests no later than 30 days after submitting your forgiveness application. This is a new form. If you are submitting a forgiveness application for the Second Draw PPP Loan, you must submit Form 3508D with your revenue reduction documentation.

Can I resubmit my forgiveness application if I used the wrong form?

If a borrower has applied for forgiveness using Form 3508 or Form 3508EZ and the SBA has not notified the lender of the final SBA loan review decision or hasn't remitted the forgiveness payment to the lender, the borrower can notify their lender that they would like to resubmit their forgiveness application using Form 3508S.

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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.

PPP Forgiveness Form