If your business received a PPP loan of $50,000 or less, you can use a new, one-page application to apply for forgiveness of your loan. This new simplified form, Form 3508S, requires fewer calculations and less documentation than the other two forgiveness applications.
If your PPP loan was $50,000 or less, you can use the new Form 3508S even if you had to lay off employees or reduce your employees’ wages during the pandemic.
Form 3508S only requires small businesses to confirm that their PPP loan was used for eligible costs (payroll including health insurance and retirement benefits paid by the company, business utilities, and business rent) and to provide supporting documentation showing payment of these expenses.
For payroll costs, you’ll need to provide documentation that shows the cash compensation (wages) and non-cash benefits (health insurance and retirement) you paid employees during the covered period (the 8 weeks or 24 weeks after you received your loan). Each of the following is required:
- Bank statements (or reports from your company’s payroll service) that show the amount of compensation paid to employees;
- Payroll tax filings with the IRS (941s); and
- Receipts, cancelled checks, or bank statements showing the amount of employer contributions to employee health insurance and retirement plans that you included in your forgiveness amount (this is only required if you are including these expenses in your forgiveness amount).
For non-payroll costs like rent and utilities, you’ll need to provide documentation verifying eligible payments during the covered period:
- Rent: Provide a copy of the current lease agreement and receipts or cancelled checks showing payments during the covered period.
- Utilities: Provide copies of invoices from February 2020 and those paid during the covered period plus receipts, cancelled checks, or bank accounts showing these payments.
The only calculation required on this new form is the amount of forgiveness you are applying for. Please note: the amount of forgiveness you enter on this form cannot exceed the amount of your original PPP loan.
Under the extended 24-week covered period, businesses will probably have used their entire PPP loan on payroll costs and may not have to include any nonpayroll costs like rent and utilities. If your small business used its entire PPP loan to pay payroll to employees, you can simply submit bank statements or cancelled checks and the 941s you filed during the covered period as documentation to prove you spent the loan on payroll.
Click here for the new simplified Form 3508S and here for the instructions on how to fill it out.
If your PPP loan was more than $50,000, Congress has still not approved automatic forgiveness for PPP loans under $150,000. Many businesses are choosing to wait and see if this will happen after the election. And since you have 10 months after your covered period to apply for forgiveness, there is no rush to file your forgiveness application. Click here for more information and to access the other two forgiveness applications.