SBA Releases Revised Form 3508 and New Form 3508EZ for PPP Loan Forgiveness
On June 16, 2020, the U.S. Small Business Administration (SBA) released a highly anticipated revision to its Form 3508 Paycheck Protection Program (PPP) Loan Forgiveness Application. The new form reflects changes enacted by the PPP Flexibility Act of 2020, including:
- 60 percent payroll cost requirement
- Optional covered periods of either eight or 24 weeks, not to extend beyond December 31, 2020
- Compensation for owners is capped at 2.5x monthly payroll for the 24-week covered period, or similar compensation from 2019, whichever is smaller
- Employee compensation is now adjusted to $46,154 over the 24-week covered period
- Additional certification for FTE Reduction Safe Harbor 1 on PPP Schedule A
- Revision of June 30, 2020, date to be December 31, 2020
- Safe harbor date for restoring payroll and/or headcount is now the earlier of December 31, 2020, or the date of the forgiveness application
The SBA has also released a new Form 3508EZ. A borrower is eligible to use Form 3508EZ if the borrower can satisfy at least one of the following:
- Are self-employed and have no employees
- Did not reduce the salaries or wages of their employees by more than 25 percent, and did not reduce the number or hours of their employees
- Experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25 percent.
Form 3508EZ eliminates the need to complete Schedule A as well as Schedule A Worksheet and is intended to be a simplified method for borrowers that can meet the above criteria.
Our CARES Act Loan Consulting team will be reviewing and digesting this new information and continuing to send updates with further guidance.
Three Steps to Loan Forgiveness
The PPP loan forgiveness process is likely to be time consuming and complicated, more so than the PPP application process itself. Calculations are complex and supporting documentation needs to be thorough and succinctly compiled. The Brown Smith Wallace CARES Act Loan Consulting team has customized services to fit your needs. Our full-service approach means you send us all the necessary information and we take care of the rest. Click here to get started.