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Understanding the 3 PPP forgiveness applications: Which one to use

The Paycheck Protection Program (PPP) from the Small Business Administration (SBA) and Treasury has had many updates over the past few months including changes to timelines and forgiveness applications. Among these changes was the introduction of three different types of forgiveness applications:

1. FORM 3508 – The Standard Application

2. FORM 3508EZ – The EZ Application

3. FORM 3508S – The Simplified Application

Knowing which forgiveness application form to use can mean the difference between delays and headaches and receiving your forgiveness in a timely fashion from your lender and the SBA. It’s important to work with your CPA to understand which PPP loan forgiveness application is right for you. Below are the key differences and guidelines to help you understand the three different applications.

Use FORM 3508 if:

  • Your loan was greater than $50,000, and
  • You reduced the annual salary or hourly wages of any employee by more than 25% during the covered period compared to Q1 2020, OR
  • You did not reduce annual salary or hourly wages, and you were able to operate during the covered period at the same level of business activity as prior to Feb. Feb 15, 2020, OR
  • You did not reduce annual salary or hourly wages, but you did reduce the number of employees or the average paid hours of employees between Jan. 1, 2020, and the end of the covered period.

Use FORM 3508EZ if:

  • Your loan was greater than $50,000, and
  • You did not reduce the annual salary or hourly wages of any employee by more than 25% during the covered period compared to Q1 2020, but you were unable to operate during the covered period at the same level of business activity as prior to Feb. Feb 15, 2020, due to safety recommendations, OR
  • You did not reduce the annual salary or hourly wages of any employee by more than 25% during the covered period compared to Q1 2020, and you did not reduce the number of employees or average paid hours between Jan. 1, 2020, and the end of the covered period.

Use FORM 3508S if:

  • Your PPP loan was for $50,000 or less.

Using the right form will save you time, energy and frustration. If you’re unsure about the calculations needed for employee salary/wage reduction or business activity level determinations, check out our previous article. For questions and assistance with your PPP loan forgiveness application, contact us today.