{"id":11416,"date":"2020-10-13T09:32:35","date_gmt":"2020-10-13T16:32:35","guid":{"rendered":"http:\/\/evergreensmallbusiness.com\/?p=11416"},"modified":"2020-10-13T09:43:21","modified_gmt":"2020-10-13T16:43:21","slug":"applying-for-ppp-forgiveness-with-3508s-form","status":"publish","type":"post","link":"https:\/\/evergreensmallbusiness.com\/applying-for-ppp-forgiveness-with-3508s-form\/","title":{"rendered":"Applying for PPP Forgiveness with 3508S Form"},"content":{"rendered":"

\"\"<\/a>On October 7, 2020, the Small Business Administration issued a new rule for PPP loan borrowers who received $50,000 or less in proceeds.<\/p>\n

That new rule says borrowers can receive full forgiveness of their loan regardless of changes in employee headcounts or pay rates. The only real requirements? Borrowers must make representations about how they handled their PPP loans. And borrowers must back up their spending with documentation.<\/p>\n

Most PPP borrowers get to use the new simplified approach. And if you can use the simplified approach, because your loan amount equals $50,000 or less, you want to use it. And apply now.<\/p>\n

We blogged about this last week. But then got lots of email questions asking about how one completes the form. Accordingly, this blog post provides a copy of the Appendix in our “Maximizing PPP Loan Forgiveness” ebook which steps readers through completing the application.<\/p>\n

Completing the 3508S Application<\/h2>\n

The one-page 3508S forgiveness application (downloadable as a pdf here<\/a>) requires about a minute to complete. You only need the original PPP loan paperwork (since it provides the loan date, number and amount.)<\/p>\n

The figure below shows an example of the top part of the form which you use to provide contact information:<\/p>\n

\"Form<\/a>
\nTo complete this part of 3508S loan application, a borrower takes the following steps:<\/p>\n

1. Identify the borrower.<\/strong><\/h3>\n

Provide the business\u2019 legal name, any \u201cDoing Business As\u201d or trade name, and then the address, the taxpayer identification number, and the contact information including a phone number, contact name, and email address.<\/p>\n

2. Identify and describe the loan.<\/strong><\/h3>\n

Provide the SBA PPP loan number (this number appears on the loan documents), and Lender PPP loan number, as well as the PPP loan amount and the PPP loan disbursement date.<\/p>\n

3. Provide the number of employees at the time of the loan application and at the time of the forgiveness application.<\/strong><\/h3>\n

Count employees as workers receiving W-2s. And note that a sole proprietor without employees enters zeros in both fields.<\/p>\n

4.\u00a0 Describe any EIDL Advance.<\/strong><\/h3>\n

If the borrower obtained an EIDL advance, provide the amount and the EIDL application number.<\/p>\n

5.\u00a0 Specify the forgiveness amount requested.<\/strong><\/h3>\n

If you correctly calculated the original PPP loan amount and spent those funds on forgivable costs, you should get full forgiveness.<\/p>\n

Representations and Certifications<\/h3>\n

You also need to make a series of representations and certifications. In a nutshell? You indicate you used the PPP loan proceeds correctly. So at least 60 percent for payroll costs. No more than $20,833 for each owner\u2019s payroll. And then for any nonpayroll spending? Legitimate categories including rent on space or equipment, interest on business loans, and then utilities.<\/p>\n

Tip:<\/strong> For nonpayroll spending, the borrower also needed to be obligated for the interest, rent or utilities prior to February 15, 2020.<\/p>\n

The next image shows the part of the application that asks the borrower to make these representations and certifications: But note that all you need to do to complete this part of the PPP loan forgiveness application is initial each representation and certification.<\/p>\n

For example, to indicate that you\u2019re requesting the appropriate forgiveness amount, initial the first box. Then read and initial each of the other boxes. In the figure below, each representation and certification is initialed with the letters \u201cHT.\u201d<\/p>\n

\"3508<\/a><\/p>\n

After initializing the representations and certifications, only two steps remain.<\/p>\n

Signatures<\/h3>\n

The borrower needs to sign the forgiveness application using the signature block at the bottom of the form (see image below).<\/p>\n

\"PPP<\/a><\/p>\n

And then, second, the borrower assembles the documentation that proves the PPP loan money went for forgivable spending.<\/p>\n

Note:<\/strong> The 3508Sform includes a second page (not shown) which asks a borrower to indicate whether the owner is a veteran and to report on the gender, race, and ethnicity of the owner. You don\u2019t have to provide this information.<\/p>\n

Documentation for Single Worker Sole Proprietor Situations<\/h2>\n

For roughly half of 3508S applications filed\u2014those with just a working owner and no one else\u2014the forgiveness application documentation should be incredibly easy to supply.<\/p>\n

If a borrower operated a sole proprietorship and employed no W-2 workers, the forgiveness application only needs to include documentation showing the borrower paid out the loan to the proprietor.<\/strong><\/p>\n

For example, say a borrower\u2019s 2019 Schedule C tax form shows the borrower earned $48,000 in 2019. This profit amount equates to monthly equivalent payroll of $4,000 because $48,000 divided by 12 months equals $4,000.<\/p>\n

This borrower should have received a $10,000 PPP loan. The PPP loan formula multiplies the average monthly payroll by 2.5 to calculate the loan amount.<\/p>\n

In this case, the borrower only needs to provide documentation showing that over the 24 weeks following receipt of the loan, it paid out $10,000 to the owner. For example, ten $1,000 checks paid to the proprietor work. So do ten $1,000 electronic remittances.<\/p>\n

You get the idea. To document the $10,000 of spending, the forgiveness application includes cancelled checks or bank remittances or other documentation that shows $10,000 of payments.<\/p>\n

Documentation in Complicated Situations<\/h2>\n

In more complicated situations, a borrower goes to more work to assemble the documentation.<\/p>\n

But you want to keep four simplifying principles in mind. You want to<\/p>\n