PPP Loan Forgiveness Just Got Easier

The new COVID relief package promised to make PPP loan forgiveness easier. The question is: Did it deliver? 

The answer seems to be yes. On January 19th, the SBA released a simplified version of the loan forgiveness application for loans of $150k or less. It requires less documentation and makes the process way easier. 

And, let’s be real, after a year like this last one, easy is something to celebrate.

So if you have questions about the PPP loan forgiveness under $150k update, you’re in the right spot. Below, we’ll break down the most recent updates to the application form 3508S so you know what it takes to be forgiven (...at least from a loan standpoint).

5 Things to Know About SBA PPP Loan Forgiveness Under $150,000 Using the 3508S Form 

First up, the SBA first released the PPP loan forgiveness application form 3508S in October of 2020 as a way to simplify the process for those with smaller loans (less than $50,000 at the time).

The most recent version is now available for loans less than $150,000 and is an evolution of that form, simplified even further so it’s easier to get your loan forgiven. 

Sounds good, right? It is, and with the latest updates, it’s even better. Here’s what you need to know and how to fill out the PPP loan forgiveness application.

1. You have less to fill out  

Here’s the best part: The application form is just one page. And if you take a look at the portion you’re filling out, it only takes up about half of that space. 

So what information do you need to provide? 

Here’s what you’ll fill out before submitting your PPP loan forgiveness application for loans under $150k:

• Whether you’re requesting forgiveness for a first or second draw loan
• Your loan amount, lender number, and disbursement date
• Number of employees you had when you applied for the loan
• Number of employees you currently have, when you’re applying for forgiveness
• Covered period of the loan: This begins the date the loan was originally disbursed and is selected by the borrower. It must be at least 8 weeks following that date and no more than 24 weeks after that.
• Total amount you spent on payroll costs
• Total amount you're requesting forgiveness for

In addition to that, you need to check the box stating you:

• Complied with all of the Paycheck Protection Program Rules including using the funds on eligible expenses, allocating the appropriate amount for payroll costs, calculating and documenting how much your revenue dropped by, and calculating your forgiveness amount.
• Provided accurate information.

Sign and date, and you’re on your way.

2. You don’t need to show your calculations 

To make this even simpler, the latest PPP loan forgiveness update doesn’t require you to show your calculations for any of the sections. This reduces the amount of time and effort you have to put in to request forgiveness. Big win.

However, based on the statements you need to sign, you do have to confirm that you ran those calculations. And the SBA might request to see them should they audit your loan. So you’ll want to keep them readily available just in case you need to provide them in the future.

3. You don’t have to submit additional documentation 

To further simplify things, you don’t need to submit any additional documents with your forgiveness application either. 

But your lender might ask you for them anyway when you apply, so it’s a good idea to check with them first.

Additionally, you need to retain those records for a few years after your application is submitted. For example, you need to keep payroll and employment records for four years and other related documentation for three. 

There’s also a chance that the SBA will request that information when reviewing your application to make sure you’re eligible. So keep it on hand.

4. You still need to hit the eligibility requirements 

Despite not needing to show calculations or documentation, you still need to use your loan according to the PPP terms. So make sure you’re tracking what you’ve spent, spending your loan on eligible expenses, and keeping your employees and their pay relatively flat.

Solopreneur? You do qualify for PPP and forgiveness. Learn more in this Guide to PPP Loan Forgiveness for the Self-Employed.

Find out more about the most recent relief package and updates to PPP: COVID-19 Relief Package: 8 Ways to Access Funding

5. You can submit this form for a second draw loan too

Now that you can apply for a second draw loan, you can request forgiveness for both your first and second loan amounts.

To apply for forgiveness for your second draw loan using the 3508S form, you need to:

• Provide documentation about your reduction in revenue: You need to be able to show a 25% drop in your revenue to qualify for a second-draw loan. You can provide those documents as part of your loan application or as part of your forgiveness application.
• Have spent your first loan in full on eligible expenses before the second loan hits your account.

What is the PPP loan forgiveness deadline? 

Now that you know more about the process and simplified form, applying for forgiveness should feel less overwhelming. But you might be wondering: What is the deadline for PPP loan forgiveness? 

According to the SBA’s PPP loan forgiveness FAQs, there is no set deadline. You can apply for forgiveness at any point before the loan fully matures—either two or five years. 

However, you’ll need to start making payments 10 months after the end of your covered period. So it’s probably a good idea to apply before that window closes. 

Forgiveness made easy

We hope this helps demystify the forgiveness process. There are likely to be more changes in the coming months, and we’ll keep you updated as soon as we hear of them. 

Are you applying for forgiveness for a first or second draw PPP loan? What questions do you have? 

Continue the conversation in the comments or join the Covid-19 Relief Support Group to talk with your peers about their experience, questions, and more.