The Small Business Administration (SBA) and U.S. Treasury Department recently released a new, streamlined form for applying for forgiveness under the Paycheck Protection Program (PPP) for borrowers with loans of $50,000 or less. While not quite the automatic forgiveness that most borrowers have been hoping for, Form 3508S has several advantages over the previous forms.
Form 3508S Form 3508S Instructions
Eligibility
A borrower who received a PPP loan of $50,000 or less is eligible to use Form 3508S. However, a borrower that, together with its affiliates, received PPP loans totaling $2 million or greater cannot use Form 3508S. The affiliation rules may be found here.
No FTE/Wage Reduction
One major advantage of Form 3508S is that it exempts the borrower from the burdensome employee requirements of the PPP. A borrower who uses Form 3508S is exempt from any reductions to forgiveness based on reductions in full-time employees or reductions in employee salaries/wages. The SBA and Treasury have stated that this is a de minimis exemption for small borrowers.
Streamlined Form
Form 3508S is much simpler than the normal Form 3508 and the Form 3508EZ.
Form 3508S does not require the borrower to calculate payroll and non-payroll costs. Instead, the borrower must certify the PPP funds were used for eligible costs, that the 60% payroll requirement has been met, and that the owner-employee did not receive compensation in excess of the applicable limit.
The borrower is still required to submit relevant documentation to the SBA/lender for verification of loan expenses.
For more information on PPP forgiveness and other COVID-19 resources, visit nfib.com/coronavirus.
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October 15, 2020
