H2R CPA Blog

PPP forgiveness application simplified for loans $50K and under

by Jeff Wolstoncroft, CPA

A new Paycheck Protection Program (PPP) Alternative Loan Forgiveness Application Form 3508S was released on Thursday, October 8, 2020, along with guidance granting a simplified application for loans of $50K and under. This new application represents a change in the calculation of forgiveness in the PPP program. The new application will impact up to two-thirds of PPP loans made.

The shift comes as the new application exempts borrowers of $50K or less from the full-time equivalent (FTE) and salary reduction rules. This means if you received a loan of $50K or less and were not able to maintain your workforce or had to reduce wages or hours in your covered period, you will not have to calculate a reduction in forgiveness for doing so. This is not blanket forgiveness; you still need to use the loan funds for qualified expenses including a minimum of 60% on payroll costs.

Additionally, borrowers are not required to show the calculation of forgiveness on the application. The calculation is still required to be performed and documented, and documentation of expenses will still be required to be submitted to your bank for review. But these documents are not required to be provided to the SBA as part of the forgiveness process. The SBA continues to reserve the right to review the files for a period of six years after the loan is forgiven or paid in full. Also note that some affiliation rules apply that could exempt loans of $50K and under from using the new Alternative Loan Forgiveness Application.

Links to the alternative loan application and instructions are provided below; however, the application must be submitted through the lending bank.

Loan Forgiveness Application Form 3508S

Loan Forgiveness Application Form 3508S Instructions

Forgiveness applications must be filed by the maturity date of the loan, but the deferral period on repayment ends 10 months + 24 weeks after the inception of the PPP loan.

As always, if you need assistance with this matter, feel free to contact your H2R CPA liaison and they will be happy to assist you.

Application Comparison

Simplified Application (PPP Loan was $50,000 or less)

  • A Borrower that, together with its affiliates, received PPP loans totaling $2 million or more cannot use the Simplified Application.


  • In both scenarios below, a Borrower that, together with its affiliates, received PPP loans totaling $2 million or more cannot use the EZ Application.
  • Scenario A
    • The Borrower did not have a reduction in headcount since January 1, 2020, and did not have reduction in wages greater than 25% during the businesses covered period.
    • Wage reductions made by the Borrower in the covered period are compared to the wages paid in the period January 1, 2020, to March 30, 2020.
    • The Borrower can ignore reductions due to inability to rehire individuals who were employees on February 15, 2020, if the borrower is unable to hire similarly qualified employees for unfilled positions on or before December 31, 2020.
    • The Borrower can disregard reductions in an employee’s hours that the Borrower offered to restore, and the employee refused.
  • Scenario B
    • The Borrower did not have reductions in headcount since January 1, 2020, and was unable to operate during their Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020, and December 31, 2020.

Full Application

  • Anyone who does not meet the qualifications for a Simplified or EZ application.