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SBA Issues New Forgiveness Application Form for Loans Less Than $50,000

On Wednesday, October 7, the Small Business Administration (SBA) issued a revised simplified forgiveness application for those with loans of less than $50,000. The new application will be music to the ears of those who are about to take advantage of the new form, but it also raises questions about the loan forgiveness process for everyone else. Without further ado, let’s get to the details of the new PPP Loan Forgiveness Application Form 3508S.

What Has Changed?

If you didn’t like all of the calculations involved with the 3508 and 3508EZ Forms, you are in luck. The new 3508S Form is streamlined to the point that there are no calculations to perform on the application at all. The confusing and time-consuming process of completing the calculations of payroll and other eligible expenses, completion of Schedule A and the Schedule A Worksheet, and the FTE quotient calculation on Form 3508 have been eliminated.

On top of that, there is further good news for those with loans of less than $50,000 which will raise the ire of those with loans exceeding $50,000. Specifically, a borrower of a PPP loan of less than $50,000 is no longer required to reduce the amount eligible for forgiveness if the borrower:

  1. Reduces the salary or hourly wage of an employee (who earned less than $100,000 in 2019) during the “covered period” following the borrowing relative to the first quarter of 2020, or
  2. Reduces full-time equivalent employees (FTEs) during the covered period relative to a base period.

What Has Not Changed?

While the changes noted above are huge to those with loans of less than $50,000, the instructions on Form 3508S are still explicit that forgiveness is not automatic, and that certain documentation relating to payroll and nonpayroll costs must still be submitted with the loan forgiveness application. Items such as bank statements, payroll reports and payroll tax filings, utility, rent and mortgage interest payments and invoices will still need to be submitted to support the forgiveness of any loan balance.

Finally, while there are no calculations on the application to prepare itself, the fact is you will still need to do the calculations in order to determine loan forgiveness, just not on the application.

What Does All This Mean?

What is interesting and rather contradictory to the entire PPP process and purpose of the program is the fact that those that can file the Form 3508S are now not subject and exempt from reductions in loan forgiveness amounts based on reductions in FTE’s or salaries and wages. Basically what this has allowed for is employers to terminate employees and reduce salary and wages without any ramifications. While this new reality may run completely counter to the initial purpose of the PPP, it’s clearly a win for those with smaller loans that can fly under this $50,000 threshold.

Another item of interest is on the standard Form 3508, the instructions provide that the final forgiveness amount is to be reduced by any Economic Injury Disaster Loan (EIDL) advance received by the taxpayer (up to $10,000). The instructions to Form 3508S, however, contain no such requirement. Whether this is an administrative oversight or not is uncertain and further clarity on this is certainly expected as those with loans greater than $50,000 who received an EIDL advance of $10,000 still have to show this and reduce their forgiveness amount for this advance.

This new streamlined application is consistent with what politicians on both sides of the aisle have been asking for. More importantly, while not assured, it probably does signal that potential changes to the 3508 and 3508 EZ will be coming as well in order to simplify those forms for the larger loan amounts. Again, this is speculation in a time period of great political turmoil but revisions in the program before Election Day would make more sense as it would benefit politicians running for reelection in November. Only time will tell.

For more information on the Paycheck Protection Program or CARES Act legislation, please visit McKonly & Asbury’s COVID-19 Resource Center at Also, keep your eye out for a new McKonly & Asbury podcast – The Interim Final Rule – that will cover this new application and other matters and updates to the Paycheck Protection Program and CARES Act. Our first episode will launch next week!

If you have any questions on the contents of this article, please contact David Blain, CPA, CVA – Partner and Director of Entrepreneurial Services at or Mark Heath, CPA – Partner and Director of Tax Services at

Questions on submitting your PPP loan application or the forgiveness process?

Our team stands ready to assist you through the PPP loan application and forgiveness process. Do not go at it alone. Ensure you are submitting the right information and receiving the highest forgiveness amount possible. Visit our PPP Loan Consulting webpage by clicking here to request assistance or support.

About the Author

David Blain

David is a Partner with McKonly & Asbury. He has a diverse background with experience in both private industry and public accounting, having worked for five years for an international public accounting firm and five years in private i… Read more

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