Simplified PPP Forgiveness Application for PPP Loans Under $150K

by Benjamin Bostic

The Economic Aid Act, signed into law on December 27, 2020, promised a simpler forgiveness application process for loans of $150,000 or less.  On Tuesday, January 19, 2021, the SBA delivered on that promise.

The SBA revamped the existing Form 3508S application (originally for borrowers that received a PPP loan of $50,000 or less) to meet the requirements outlined in the Economic Aid Act. 

The application form requires borrowers to provide the following information:

• Basic information about the business (name, address, NAICS code, EIN, phone, etc.)
• Information about the original PPP loan (SBA loan number, loan amount, loan disbursement date)
• Number of employees (at the time of loan application and forgiveness application)
• Covered period
• Amount of loan spend on payroll costs
• Requested loan forgiveness amount

The application requires certification that the borrower complied with all requirements set forth in the PPP rules. Borrowers using this application for a second draw PPP loan will also need to certify the accuracy of the calculation and documentation related to the revenue reduction.

Borrowers submitting Form 3508S are not required to provide supporting documentation relating to the forgiveness amounts to their lender.  Borrowers are required to retain all records necessary to prove compliance with PPP rules for four years for employment records and for three years for all other records.

The fine print

Within the four pages of instructions is a section dedicated to FTE and Salary/Wage Reductions.  Borrowers that received a PPP loan of more than $50,000 must reduce their requested loan forgiveness amount by any FTE and Salary/Wage reductions, if applicable. Borrowers eligible to file Form 3508S should prepare a Form 3508 to determine any necessary reductions in their requested loan forgiveness amount.  Ultimately, Form 3508S will be submitted to their lender, but they will have a drafted Form 3508 to support all figures reported on the Form.

Coordinating PPP with ERTC

The Economic Aid Act amended language in the CARES Act and now allows PPP borrowers to also claim employee retention tax credits (ERTC).  Some borrowers may have payroll costs the qualify for the ERTC during their covered period, however the same payroll costs cannot be used for both programs.  Before submitting their PPP forgiveness application to their lender, borrowers should evaluate all payroll costs to determine if they are maximizing both programs.

Boyer & Ritter’s Business Relief Services Team can help.

Boyer & Ritter understands there are many difficult decisions businesses must make during these stressful times. Our team is here to assist you throughout this process: from understanding complex rules to helping identify opportunities and strategies to minimize the COVID-19 impact. To learn more about engaging us for Business Relief Services, please contact us HERE.

Benjamin R. Bostic, CPA, is a director at Boyer & Ritter with experience providing tax and accounting services for closely-held businesses, individuals, and not-for-profit organizations. Reach Ben at 717-264-7456 or bbostic@cpabr.com