Understanding PPP Loan Application Form 3508S

Understanding PPP Loan Application Form 3508S

Deskera Content Team
Deskera Content Team
Table of Contents
Table of Contents

Doing business is not an easy thing. Moreover, a sudden and unanticipated pandemic like Covid-19 can falter any entrepreneur’s ideas and he could face severe financial damage. The unexpected Coronavirus bought a major halt to businesses worldwide, reducing the footfall of customers in almost every industry. While the hotels were close to shutdown, some employers had to alter their business and switch to a new product or field.

To run a good business, you require good money when you have just stepped in the market.  It not only requires an entrepreneurial mind but also needs the right funds. With the right funds and a good marketing mind to counter the competitors in the market, one can easily establish his brand.

The only condition of setting up a business is that he should have a marketing mind and set S.M.A.R.T goals with fixed deadlines. Here, SMART stands for specific, measurable, attainable, relevant and timely. If you are an entrepreneur who wants to make it big and carve a niche in the industry but have no monetary backup, you should check out the option, Form 3508S  provided by the government of America.

The Paycheck Protection Program (PPP) was established by the federal government in America in response to the Coronavirus Aid, Relief and Economic Security (CARES Act) of small business owners. It assists them to apply for loans for payroll and other costs at a very low-interest rate.

What is Form 3508S?

Businesses have no fixed income as uncertain times like the ongoing pandemic or change in customer strategies can bring a huge impact on it. At this time, the business owner often has to undergo a huge amount of loss. The Paycheck Protection Program allows small businesses to forgive the loans of these entrepreneurs with Form 3508S. With this form, the entire process of forgiveness of business loans has gotten much simpler and easier for the borrowers.  

The businessman can apply on the loan as well as loan forgiveness on the government site of SBA which is https://www.sba.gov/

Forgiveness amount under Paycheck Protection Program

If the entrepreneur has taken out a business loan under Paycheck Protection Program loan for 1,50,000 dollars or even less the Small Business Administration (SBA) permits forgiveness of loan with the use of Form 3508S. As per the records, originally this form was allowed for the forgiveness of loans of 50,000$ or less for the entrepreneurs. However, the Economic Aid Act of the US, popular as the ‘stimulus bill’ has raised this limit to 1,50,000$. This form can be filled only by borrowers who have taken a loan of 1,50,000$ or even less for business setup or other commercial reasons.

Who can use Form 3508S?

Small business owners must know that Form 3508S is the simplest PPP loan application form available. It is available for the application for a loan of one lakh and fifty thousand dollars or less. Another important point to note with respect to this form is affiliate businessman which means businesses that have a common management team, identity of interest and stock ownership that have applied for a combined total loan of 2 million dollars or even greater than that cannot use this form 3508S.

The form can be divided into 2 parts, namely,

  1. Signature/ authorization form
  2. Demographic information form - optional

The advantage of this form is it requires fewer calculations as compared to the other forms; Form 3508 and Form 3508EZ. Also, the employer must note that if he has taken out the loan of 50,000 dollars or less, his forgiveness amount will not be lessened even if he has decreased the paystub of his employees.

What does this Form 3508S ask for?

According to available data, even if all these 3 forms can be used by an employer for the forgiveness of business loans, Form 3508EZ and Form 3508 require multiple calculations and have a lengthy procedure. These forms require various documents to support the request for forgiveness of the loan. In contrast to this, Form 3508S has made this process much easier for the businessman. It just asks him to do the following for forgiveness request -

  1. The employer must mention the total amount spent on payroll.
  2. He should specify the forgiveness amount requested in the application.
  3. He must make the certification valid by writing the initials of his name and signature as required in the form to authenticate it.

The above 3 steps make Form 3508S the simplest forgiveness application form. When you have applied concerning the forgiveness of a loan it is reviewed by both the lender (mostly bank or other loan providers) and an SBA official. Moreover, they can also send requests for supporting documents for your form to check the accuracy of your application. If the entrepreneur makes a false application for forgiveness, he could face hefty penalties which include a fine of up to 1 million dollars and even jail up to 30 years.

How to fill out Form 3508S?

If you have just opened a first business or faced a great loss because the product did not work out, you as an employer must have proper information about how to fill the Form 3508S for waiving of loan. A proper application can help you in the forgiveness of the loan faster. The steps to fill out this form are -

  1. The industrialist should fill out the correct information of his business in the form along with the right address. He should mention the same address that he has given in the Paycheck Protection Program (PPP) application.

In case this is the employer’s first PPP, he should check the box which says First Drawt PPP application. If the businessman is taking PPP for the second time, he should check the box that says Second Draw PPP Loan

An important point here to be followed by the employer is he must submit a forgiveness application for the first PPP loan or when the second draw application is submitted to SBA.

  1. SBA PPP Loan Number: He must mention the SBA PPP Loan Application Number in the application. If the businessman has misplaced the loan file or lost the number, he can request the same from the lender over email.
  2. Lender PPP Loan Number: The next step is to mention the loan number assigned to the PPP loan as given by the lender. If you don’t know this number, you can ask the lender regarding it.
  3. PPP Loan Amount: On the next line, he should mention the PPP amount he has received through this loan.
  4. Date of PPP Loan Disbursement: The employer must mention the date when the funds were deposited in his business account. It has applied for the forgiveness of the loan more than once, he should still mention the date when he first received the disbursement in the account.
  5. Employees during the time of Loan Application: In the next step, he should give the number of employees in the office while applying for business loans.
  6. Employees at the time of Form 3508S: The entrepreneur then should mention an exact count of employees in the workplace when he has applied for forgiveness
  7. In the last line, he should include Covered Period

What is the covered period in Form 3508S?

When an employer applies for forgiveness for the first time, it is possible he might not have heard the term “Covered Period”. It is the time the loan applicant will spend the funds for him to qualify for forgiveness. This time starts on the day when there is the disbursement of the loan into the applicant’s bank account. After the implementation of the Economic Aid Act PPP Flexibility Act, the covered period has been changed for error-free calculations. Hence, with the Economics Aid Act, the covered period has been changed to 8 to 24 weeks from the earlier 8 weeks.

According to the application, the term of the covered period ends on a date selected by the borrower which is 8 weeks after the loan disbursement date. This can be extended till 24 weeks after the disbursement date. For instance, check the following instance -

Suppose a loan applicant receives his first PPP on Tuesday, 20 April 2021 then the first day of the covered period would be considered as Tuesday, 20 April 2021 whereas his final day of the covered period would be any date selected by the applicant between Tuesday, 21 June 2021 and Tuesday, 5 October 2021.

By choosing the covered period, the industrialist can get a huge difference on how much of his loan would be considered eligible for forgiveness. If the employer wants to claim the maximum amount in Form 3508S.

How to Calculate the Forgiveness Amount?

When an entrepreneur is filling out this form, he needs to mention how much amount he wants to claim as forgiveness to SBA. If he has no idea about how to do that, he needs to do the steps given below to get an accurate amount for form 3508S -

  1. If he is the sole proprietor of a business and has no W-2 employees, then he must ask for forgiveness for the whole amount he has to put in the business. This is called the owner's compensation replacement.
  2. If the employer has employed W-2 employees at his workplace, he must check the PPP Forgiveness Application Form 3508EZ and check if he qualifies to fill it. If he has satisfied all the conditions, he must use the concerned form to calculate the amount of forgiveness.
  3. If both the above conditions are not met, then the industrialist must simply fill the PPP form 3508 and calculate his forgiveness.

The list of documents to be attached while filing for the forgiveness of the loan can be seen on page number 4 of the form. It includes both, payroll documents and non-payroll documents If the employer is applying for forgiveness for the second time then a document that shows a 25% reduction in the gross receipts.


The employer must have a clear idea about the forgiveness amount he needs to claim. Deskera can assist you in the correct maintenance of your payroll and even proper accounting when you want to file form 3508S for forgiveness. We are the one-stop solution for all your financial queries and can assist you with various government forms through our blogs.

Key Takeaways

  1. An employer can raise a request for forgiveness of the bank loan through form 3508, form 3508EZ and form 3509S if he has suffered major financial loss in the business due to the covid pandemic or any other problem.
  2. These forms can be found on the SBA website. While filling the Form 3508S, the businessman is expected to enter his correct details of the office address along with initial and signature as necessary.
  3. In the form of forgiveness, he must mention accurate details of the amount expected to be forgiven, the loan amount taken, when the loan application was filed, the first disbursement date, number of employees working in the office at the time of forgiveness application and the covered period and check the correct box of application number.
  4. If the employer is requesting the forgiveness application for the second time through this form, he must mention the first date of disbursement received in the bank account.
  5. By mentioning an accurate covered period, the employer can get a substantial forgiveness amount after the verification process is completed by the SBA officials
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