Government Releases Simplified PPP Forgiveness Application

Running a small business during a pandemic is confusing enough without complicated forms. This month, the Small Business Administration (SBA) released a simplified Paycheck Protection Program (PPP) loan forgiveness program application.

The new application, Form 3508S, is two pages long and requires less documentation and simpler calculations than the previous forms 3508 and 3508EZ, Kiplinger reports. Businesses that borrowed US$50,000 or less can use this form.

Borrowers need to certify that 60% of the loan forgiveness amount was used for payroll costs and that owners’ and employees’ limitations and caps were met. Additionally, borrowers need to submit any documentation that supports eligible payroll and nonpayroll expenses for the covered period including: bank statements, tax forms, payment receipts, cancelled checks, copies of lender amounts, lease or rent payments, and utility payments. The supporting documentation must be retained for six years after the date the loan is forgiven or repaid in full in case SBA representatives ask for it.

PPP loans offered small businesses the opportunity to borrow up to $10 million from private lenders without collateral, personal guarantees, or fees as part of the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. The loans distributed $525 billion to five million small businesses from April to early August. However, the PPP program has had problems with its rollout and with loans being forgiven. SBA began processing loan forgiveness applications on October 2. It estimates that 96,000 applications have been submitted as of late September, representing 2% of all PPP loans.