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Discover the SBA PPP Loan Forgiveness

Simplifying SBA PPP Loan Forgiveness for Small Borrowers

SBA payment protection

If your bank participates, borrowers can apply directly for loan forgiveness.

If you owe less than $150,000 on a Paycheck Protection Program loan, the process of forgiveness has just gotten a whole lot easier. The Small Business Administration (SBA) issued an updated PPP Loan Forgiveness Application Form 3508S on January 19, 2021, which requires borrowers to perform fewer calculations and submit less documentation.

What is the deadline for PPP loan forgiveness 2021?

PPP borrowers should know the following information about this simplified forgiveness application.

What is the intent behind Form 3508S?

Borrowers can submit an application for forgiveness in one of three ways. Both Form 3508 and Form 3508EZ have multiple calculations. You will need supporting paperwork to show the forgiveness amount you’ve requested.

On the other hand, Form 3508S asks you to:

  • Calculate the amount you spent on payroll.
  • Provide the amount of forgiveness you’ve requested, along with initials and signatures to certify the terms.


As a result, Form 3508S is the most basic form for requesting forgiveness.

While your documents are in the review process, your lender and the SBA may request supporting documentation to ensure accuracy. Making a false statement to obtain forgiveness carries a sentence of up to 30 years in prison and a penalty of up to $1 million.

Who can fill out Form 3508S?


If your PPP loan was less than $150,000, you could request forgiveness using Form 3508S. You cannot use Form 3508S if your business has a contract or affiliation agreement with other companies, and the total PPP loan amount across all affiliates is more than $2 million.

Form 3508S can be used by any business, from contractors to corporations.

What exactly will I certify?

SBA PPP Loan Forgiveness

When filling out this new application form, the borrower must verify seven total representations and certifications:

The requested amount was used to cover eligible forgiveness costs, including payroll costs of at least 60% of the loan forgiveness amount, and used within the covered period. The government would seek repayment if using loan funds for purposes not previously authorized. The business owner who took the funds accurately documented all payroll and non-payroll costs that make up the forgiveness amount requested.

Before February 15, 2020, the borrower will provide all required documents, including proof of all costs and the existence of any rent, lease, mortgage, or utilities.

The details provided in the application and supporting paperwork are correct in every way.

Any tax documents provided are correct and correspond to what the IRS has or will receive.

The borrower is aware that the SBA may request additional information and that failure to provide the requested information results in a denial for forgiveness.

What documents will I have to give?

You do not need to give any paperwork if you use form 3508S to apply for forgiveness. The SBA has the authority to ask for any of the following to confirm the amount of forgiveness you’ve requested:

  • It requires bank account statements or a report from your payroll provider that documents payments to employees to verify payroll expenses.
  • The following information should be included on tax forms (or equivalent payroll provider reports):
  • Returns on payroll taxes have been filed (typically Form 941)
  • The state requires businesses and individual employees to submit quarterly wage reports.
  • U.S. Unemployment Insurance Taxes Forms
  • Employer contributions to group employee benefit plans, as evidenced by receipts, canceled checks, or bank account statements.


Maintaining a record of your non-payroll expenditures:

A copy of the amortization schedule with receipts OR mortgage statements from February 2020 and the months covered for interest payments on a business mortgage.

You’ll need a copy of the current rent/lease agreement with receipts documenting payments OR lease statements from 2020 through one month after the end of the covered period for a business.

Payments for business utilities: a copy of all invoices dating back to February 2020, as well as those paid during the period covered, as well as receipts or account statements.

Expenses for covered operations: a copy of paid invoices, orders, or purchase orders, as well as receipts or account statements for the covered period.

For covered property damage costs, a copy of invoices, orders, or purchase orders paid during the covered period, as well as corresponding receipts or account statements, is required. 

Documentation will be required to show that costs incurred in 2020 due to property damage, vandalism, or looting due to public disturbances that are not covered by insurance or other compensation.

Covered supplier costs include a copy of contracts, orders, or purchase orders in effect before the covered period (except for perishable goods) and a copy of invoices, orders, or purchase orders paid during the period covered with corresponding receipts or account statements.

Covered worker protection expenditures include a copy of invoices, orders, or purchase orders paid during the covered period, as well as corresponding receipts or account statements. 

Documentation demonstrating that the borrower used the expenditures to comply with applicable COVID-19 guidance will be required for the period in question.

If you are a sole proprietor, self-employed person, contractor, you may be eligible for owner compensation replacement (OCR). You’ll need your Schedule C from 2019 or 2020 if you’re taking OCR. 

This is the case because your forgiveness amount is based on Schedule C for 2019 or 2020. Take 8/52 or 24/52 of your net income reported on line 31 of your Schedule C to calculate your OCR (depending on the length of your covered period).

How long must I keep my documents in order to be eligible for PPP loan forgiveness?

You must keep all records relating to a borrower’s PPP loan for at least six years after the loan is forgiven or paid off. You should keep any payroll reports, non-payroll expense receipts, and tax documents you used to apply for forgiveness and a PPP loan.

You grant the SBA permission to request any of these documents at any time during the six years by submitting a forgiveness application.

When will I be able to apply for PPP loan forgiveness?

There’s no reason to hurry! The SBA has not set a deadline for filing a debt forgiveness application. Before you start making monthly payments on your loan, you have ten months after the end of your covered period.

PPP loan recipients have been contacted in waves by lenders. Keep checking your inbox for updates on when they’ll be ready to accept your forgiveness application and look through any PPP resources they have.

When will I receive notification of the amount of my forgiven loan?

The lender has 60 days to review your forgiveness application, regardless of the form. Your lender may forgive your PPP loan in full, in part, or not at all. 

After that, the lenders send your application to the Small Business Administration (SBA) for a final review and confirmation of the amount of debt forgiveness. The SBA will review your application for up to 90 days and may contact you for additional information. Following that, your lender will notify you of the application’s outcome.

If your loan is partially forgiven—or not forgiven at all—interest will begin to accrue, and payments must begin ten months after the end of the covered period.

If your bank participates in the PPP forgiveness process, borrowers with debts under $150,000 can apply directly for loan forgiveness using the SBA form sent to borrowers. PPP forgiveness is through the loan forgiveness application. For business owners, a loan disbursement of $150,000 can use the PPP SBA form 3508S or form 3508ez. The initial form does not require any loan documents, and for those forgiven, they do not make a loan payment.

You can request if the money (cash compensation) from the SBA:

• was used to pay for expenses that are forgiven (e.g., payroll costs to keep employees, business mortgage interest payments, business rent or lease payments, or business utility payments);

• at least 60% of the forgiveness amount is covered by payroll costs;

• for any owner-employee or self-employed individual/general partner, does not exceed 2.5 months’ worth of 2019 compensation, capped at $20,833 per individual, if a 24-week Covered Period applies; and

• For any owner-employee or self-employed individual/general partner does not exceed eight weeks’ worth of 2019 compensation, capped at $15,385 per individual if the borrower has elected an 8-week Covered Period. What is the deadline for PPP loan forgiveness 2021?

The SBA said it would provide a benefit to smaller businesses that used the Paycheck Protection Program (PPP borrower) to obtain loans to stop funding the Covid-19 rescue program. Small business owners (PPP loan borrower) with PPP loans of up to $150,000 can apply for loan forgiveness directly through the SBA. 

Approximately 7.1 million PPP loans have an outstanding balance of $150,000 or less. The second draw PPP loan covers payroll cost plus other eligible expenses beyond the payroll expenses. 

What are the rules for PPP loan forgiveness?

According to Patrick Kelley, who’s an administrator for the SBA, the Small Business Administration will send borrowers an email with a link to the online capital access portal. Borrowers claim the application takes ten minutes to complete, and the SBA has set up a dedicated support line for borrowers.

Before borrowers can use the SBA’s online platform, banks must participate in direct forgiveness.

Is SBA accepting PPP loan forgiveness applications?

Customers Bank was the only bank to participate in the program and offer PPP loans worth more than $9.6 billion. According to Customers Bank, “The SBA portal can expedite small PPP loans.”

JPMorgan Chase has not yet decided whether to participate in the program. They are currently evaluating the platform and constantly encourage their customers to apply for forgiveness on their platform. The bank revealed that 75% of loans made in 2020 have already been forgiven.

Forgivable loans were granted to individuals under the $2 trillion Cares Act, allowing them to use the funds for allowable expenses like keeping employees and running existing businesses. Coronavirus relief aided US small businesses by over $798 billion dollars.

Under the Trump administration’s loan transfer policy, banks act as intermediaries between borrowers and the SBA.

PPP benefited thousands of small businesses, but it was also accused of fraud and omission.

The SBA uses data analytics to identify suspect loans, which are then evaluated individually for fraud.

The Consumer Banker Association says the new forgiveness platform will allow lenders to retain control over customer relationships.

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Mark J. Kane, Founder & CEO of Sunwise Capital, is a distinguished entrepreneur with over 16 years in business financing. Beginning as a psychologist, he quickly became a trailblazing Hospital Administrator. Mark has built multiple ventures, notably accelerating a startup to $18M within months. His transition to Sunwise Capital stems from a deep-seated desire to empower business owners with strategic financial solutions. Recognized for his expertise, Mark's leadership at Sunwise Capital reflects his commitment to fostering business growth and success. about the author.

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