SBA Form 3508 Inst Form 3508 Instructions

Paycheck Protection Program

Loan Forgiveness Application Revised June 16, 2020

OMB Control Number 3245-0407
Expiration Date: 10/31/2020

LOAN FORGIVENESS APPLICATION INSTRUCTIONS FOR BORROWERS
To apply for forgiveness of your Paycheck Protection Program (PPP) loan, you (the Borrower) may use the Form 3508EZ
application or complete this application as directed in these instructions, and submit it to your Lender (or the Lender that is
servicing your loan). Borrowers may also complete their application electronically through their Lender.
This application has the following components: (1) the PPP Loan Forgiveness Calculation Form; (2) PPP Schedule A; (3) the PPP
Schedule A Worksheet; and (4) the (optional) PPP Borrower Demographic Information Form. All Borrowers must submit (1) and
(2) to their Lender.
Instructions for PPP Loan Forgiveness Calculation Form
Business Legal Name (“Borrower”)/DBA or Tradename (if applicable)/Business TIN (EIN, SSN): Enter the same information as
on your Borrower Application Form (SBA Form 2483 or lender’s equivalent).
Business Address/Business Phone/Primary Contact/E-mail Address: Enter the same information as on your Borrower Application
Form, unless there has been a change in address or contact information.
SBA PPP Loan Number: Enter the loan number assigned by SBA at the time of loan approval. Request this number from the Lender
if necessary.
Lender PPP Loan Number: Enter the loan number assigned to the PPP loan by the Lender.
PPP Loan Amount: Enter the disbursed principal amount of the PPP loan (the total loan amount you received from the Lender).
Employees at Time of Loan Application: Enter the total number of employees at the time of the Borrower’s PPP Loan Application.
Employees at Time of Forgiveness Application: Enter the total number of employees at the time the Borrower is applying for loan
forgiveness.
PPP Loan Disbursement Date: Enter the date that you received the PPP loan proceeds from the Lender. If loan proceeds were
received on more than one date, enter the first date on which you received PPP loan proceeds.
EIDL Advance Amount: If the Borrower received an Economic Injury Disaster Loan (EIDL) advance, enter the amount.
EIDL Application Number: If the Borrower applied for an EIDL, enter the Borrower’s EIDL Application Number.
Payroll Schedule: Select the box that corresponds to your payroll schedule.
Covered Period: The Covered Period is either (1) the 24-week (168-day) period beginning on the PPP Loan Disbursement Date, or
(2) if the Borrower received its PPP loan before June 5, 2020, the Borrower may elect to use an eight-week (56-day) Covered Period.
For example, if the Borrower is using a 24-week Covered Period and received its PPP loan proceeds on Monday, April 20, the first
day of the Covered Period is April 20 and the last day of the Covered Period is Sunday, October 4. In no event may the Covered
Period extend beyond December 31, 2020.
Alternative Payroll Covered Period: For administrative convenience, Borrowers with a biweekly (or more frequent) payroll
schedule may elect to calculate eligible payroll costs using the 24-week (168-day) period (or for loans received before June 5, 2020 at
the election of the borrower, the eight-week (56-day) period) that begins on the first day of their first pay period following their PPP
Loan Disbursement Date. For example, if the Borrower is using a 24-week Alternative Payroll Covered Period and received its PPP
loan proceeds on Monday, April 20, and the first day of its first pay period following its PPP loan disbursement is Sunday, April 26,
the first day of the Alternative Payroll Covered Period is April 26 and the last day of the Alternative Payroll Covered Period is
Saturday, October 10. Borrowers that elect to use the Alternative Payroll Covered Period must apply the Alternative Payroll Covered
Period wherever there is a reference in this application to “the Covered Period or the Alternative Payroll Covered Period.” However,
Borrowers must apply the Covered Period (not the Alternative Payroll Covered Period) wherever there is a reference in this
application to “the Covered Period” only. In no event may the Alternative Payroll Covered Period extend beyond December 31,
2020.
If Borrower Received PPP Loans in Excess of $2 Million: Check the box if the Borrower, together with its affiliates (to the extent
required under SBA’s interim final rule on affiliates (85 FR 20817 (April 15, 2020)) and not waived under 15 U.S.C.
636(a)(36)(D)(iv)), received PPP loans with an original principal amount in excess of $2 million.
SBA Form 3508 (06/20)
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Paycheck Protection Program

Loan Forgiveness Application Revised June 16, 2020

OMB Control Number 3245-0407
Expiration Date: 10/31/2020

Forgiveness Amount Calculation (see Summary of Costs Eligible for Forgiveness below):
Line 1: Enter total eligible payroll costs incurred or paid during the Covered Period or the Alternative Payroll Covered Period. To
calculate these costs, complete PPP Schedule A. Enter the amount from PPP Schedule A, line 10.
Line 2: Enter the amount of business mortgage interest payments paid or incurred during the Covered Period for any business
mortgage obligation on real or personal property incurred before February 15, 2020. Do not include prepayments.
Line 3: Enter the amount of business rent or lease payments paid or incurred for real or personal property during the Covered Period,
pursuant to lease agreements in force before February 15, 2020.
Line 4: Enter the amount of business utility payments paid or incurred during the Covered Period, for business utilities for which
service began before February 15, 2020.
NOTE: For lines 2-4, you are not required to report payments that you do not want to include in the forgiveness amount.
Line 5: Enter the number from PPP Schedule A, line 3. This amount reflects the loan forgiveness reduction required for salary/hourly
wage reductions in excess of 25% for certain employees as described in PPP Schedule A.
Line 6: Add lines 1 through 4, subtract line 5, enter the total. If this amount is less than zero, enter a zero.
Line 7: Enter the number from PPP Schedule A, line 13.
Line 8: Enter the amount on line 6 multiplied by the amount on line 7. This calculation incorporates the loan forgiveness reduction
required for any full-time equivalency (FTE) employee reductions as described in PPP Schedule A.
Line 9: Enter the PPP Loan Amount.
Line 10: Divide the amount on line 1 by 0.60, and enter the amount. This determines whether at least 60% of the potential forgiveness
amount was used for payroll costs.
Line 11: Enter the smallest of lines 8, 9, or 10. Note: If applicable, SBA will deduct EIDL Advance Amounts from the forgiveness
amount remitted to the Lender.
Summary of Costs Eligible for Forgiveness:
Borrowers are eligible for loan forgiveness for the following costs:
1. Eligible payroll costs. Borrowers are generally eligible for forgiveness for the payroll costs paid and payroll costs incurred
during the 24-week (168-day) or 8-week (56-day) Covered Period (or Alternative Payroll Covered Period) (“payroll costs”).
Payroll costs are considered paid on the day that paychecks are distributed or the Borrower originates an ACH credit
transaction. Payroll costs are considered incurred on the day that the employee’s pay is earned. Payroll costs incurred but not
paid during the Borrower’s last pay period of the Covered Period (or Alternative Payroll Covered Period) are eligible for
forgiveness if paid on or before the next regular payroll date. Otherwise, payroll costs must be paid during the Covered Period
(or Alternative Payroll Covered Period). For each individual employee, the total amount of cash compensation eligible for
forgiveness may not exceed an annual salary of $100,000, as prorated for the Covered Period. Count payroll costs that were
both paid and incurred only once. For information on what qualifies as payroll costs, see Interim Final Rule on Paycheck
Protection Program posted on April 2, 2020 (85 FR 20811) (as amended by the Revisions to First Interim Final Rule, posted on
June 11, 2020). Include only payroll costs for employees whose principal place of residence is in the United States.
2.

Eligible nonpayroll costs. Nonpayroll costs eligible for forgiveness consist of:
(a) covered mortgage obligations: payments of mortgage interest (not including any prepayment or payment of principal)
on any business mortgage obligation on real or personal property incurred before February 15, 2020 (“business
mortgage interest payments”);
(b) covered rent obligations: business rent or lease payments pursuant to lease agreements for real or personal property in
force before February 15, 2020 (“business rent or lease payments”); and
(c) covered utility payments: business payments for a service for the distribution of electricity, gas, water,
telephone, transportation, or internet access for which service began before February 15, 2020 (“business utility
payments”).
An eligible nonpayroll cost must be paid during the Covered Period or incurred during the Covered Period and paid on or
before the next regular billing date, even if the billing date is after the Covered Period. Eligible nonpayroll costs cannot
exceed 40% of the total forgiveness amount. Count nonpayroll costs that were both paid and incurred only once.

The amount of loan forgiveness the Borrower applies for may be subject to reductions as explained in PPP Schedule A.

SBA Form 3508 (06/20)
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Paycheck Protection Program

Loan Forgiveness Application Revised June 16, 2020

OMB Control Number 3245-0407
Expiration Date: 10/31/2020

Instructions for PPP Schedule A
Lines 1 through 5: Enter the amounts from PPP Schedule A Worksheet Tables as directed.
Enter the amount from line 3 of PPP Schedule A on line 5 of the Loan Forgiveness Application Form.
For lines 6 through 9, during the Covered Period or the Alternative Payroll Covered Period:
Line 6: Enter the total amount paid by the Borrower for employer contributions for employee health insurance, including
employer contributions to a self-insured, employer-sponsored group health plan, but excluding any pre-tax or after tax
contributions by employees. Do not add employer health insurance contributions made on behalf of a self-employed individual,
general partners, or owner-employees of an S-corporation, because such payments are already included in their compensation.
Line 7: Enter the total amount paid by the Borrower for employer contributions to employee retirement plans, excluding
any pre-tax or after-tax contributions by employees. Do not add employer retirement contributions made on behalf of a
self-employed individual or general partners, because such payments are already included in their compensation.
Line 8: Enter the total amount paid by the Borrower for employer state and local taxes assessed on employee compensation
(e.g., state unemployment insurance tax); do not list any taxes withheld from employee earnings.
Line 9: Enter any amounts paid to owners (owner-employees, a self-employed individual, or general partners). For
Borrowers using a 24-week Covered Period, this amount is capped at $20,833 (the 2.5-month equivalent of $100,000 per
year) for each individual or the 2.5-month equivalent of their applicable compensation in 2019, whichever is lower. For
Borrowers using an 8-week Covered Period, this amount is capped at $15,385 (the eight-week equivalent of $100,000 per
year) for each individual or the eight-week equivalent of their applicable compensation in 2019, whichever is lower.
Line 10: Add lines 1, 4, 6, 7, 8, and 9. Enter this amount on line 1 on the PPP Loan Forgiveness Calculation Form.
Line 11: Enter the Borrower’s total average weekly full-time equivalency (FTE) during the chosen reference period. For purposes
of this calculation, the reference period is, at the Borrower’s election, either (i) February 15, 2019 to June 30, 2019; (ii) January 1,
2020 to February 29, 2020; or (iii) in the case of seasonal employers, either of the preceding periods or any consecutive 12-week
period between May 1, 2019 and September 15, 2019. For each employee, follow the same method that was used to calculate
Average FTE on the PPP Schedule A Worksheet. Sum across all employees during the reference period and enter that total on this
line.
The calculations on lines 11, 12, and 13 will be used to determine whether the Borrower’s loan forgiveness amount must be reduced
based on reductions in full-time equivalent employees, as required by the statute. Specifically, the actual loan forgiveness amount that
the Borrower will receive may be reduced if the Borrower’s average weekly FTE employees during the Covered Period (or the
Alternative Payroll Covered Period) was less than during the Borrower’s chosen reference period. The Borrower is exempt from such
a reduction, and should skip lines 11 and 12, if any of the three criteria listed on PPP Schedule A under Full-Time Equivalency (FTE)
Reduction Calculation has been met.
Line 12: Add lines 2 and 5.
Line 13: Divide line 12 by line 11 (or enter 1.0 if any of the three criteria listed on PPP Schedule A under Full-Time Equivalency (FTE)
Reduction Calculation has been met). If more than 1.0, enter 1.0. Enter this amount on line 7 of the Loan Forgiveness Calculation Form.

SBA Form 3508 (06/20)
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Paycheck Protection Program

Loan Forgiveness Application Revised June 16, 2020

OMB Control Number 3245-0407
Expiration Date: 10/31/2020

Instructions for PPP Schedule A Worksheet
Complete the PPP Schedule A Worksheet or obtain an equivalent report from the Borrower’s payroll system or payroll processor.
Table Instructions
Employee’s Name: Separately list each employee. Do not include any independent contractors, owner-employees, self-employed
individuals, or partners.
Employee Identifier: Enter the last four digits of each employee’s Social Security Number.
Cash Compensation: Enter the sum of gross salary, gross wages, gross tips, gross commissions, paid leave (vacation, family,
medical or sick leave, not including leave covered by the Families First Coronavirus Response Act), and allowances for dismissal or
separation paid or incurred during the Covered Period or the Alternative Payroll Covered Period. For each individual employee, the
total amount of cash compensation eligible for forgiveness may not exceed an annual salary of $100,000, as prorated for the Covered
Period. For an 8-week Covered Period, that total is $15,385. For a 24-week Covered Period, that total is $46,154.
Average FTE: This calculates the average full-time equivalency (FTE) during the Covered Period or the Alternative Payroll Covered
Period. For each employee, enter the average number of hours paid per week, divide by 40, and round the total to the nearest tenth.
The maximum for each employee is capped at 1.0. A simplified method that assigns a 1.0 for employees who work 40 hours or more
per week and 0.5 for employees who work fewer hours may be used at the election of the Borrower.
This calculation will be used to determine whether the Borrower’s loan forgiveness amount must be reduced due to a statutory
requirement concerning reductions in full-time equivalent employees. Borrowers are eligible for loan forgiveness for certain
expenditures during the Covered Period or the Alternative Payroll Covered Period. However, the actual loan forgiveness amount that
the Borrower will receive may be less, depending on whether the Borrower’s average weekly number of FTE employees during the
Covered Period or the Alternative Payroll Covered Period was less than during the Borrower’s chosen reference period (see
Instructions to PPP Schedule A, Line 11). The Borrower is exempt from such a reduction if either of the FTE Reduction Safe Harbors
applies. See the FTE Reduction Safe Harbor instructions below.
Salary/Hourly Wage Reduction: This calculation will be used to determine whether the Borrower’s loan forgiveness amount must
be reduced due to a statutory requirement concerning reductions in employee salary and wages. Borrowers are eligible for loan
forgiveness for certain expenditures during the Covered Period or the Alternative Payroll Covered Period. However, the actual
amount of loan forgiveness the Borrower will receive may be less, depending on whether the salary or hourly wages of certain
employees during the Covered Period or the Alternative Payroll Covered Period was less than during the period from January 1, 2020
to March 31, 2020. If the Borrower restored salary/hourly wage levels, the Borrower may be eligible for elimination of the
Salary/Hourly Wage Reduction amount. Borrowers must complete this worksheet to determine whether to reduce the amount of loan
forgiveness for which they are eligible. Complete the Salary/Hour Wage Reduction column only for employees whose salaries or
hourly wages were reduced by more than 25% during the Covered Period or the Alternative Payroll Covered Period as compared to
the period of January 1, 2020 through March 31, 2020. For each employee listed in Table 1, complete the following (using salary for
salaried employees and hourly wage for hourly employees):
Step 1. Determine if pay was reduced more than 25%.
a. Enter average annual salary or hourly wage during Covered Period or Alternative Payroll Covered Period:
.
b. Enter average annual salary or hourly wage between January 1, 2020 and March 31, 2020:
.
c. Divide the value entered in 1.a. by 1.b.:
.
If 1.c. is 0.75 or more, enter zero in the column above box 3 for that employee; otherwise proceed to Step 2.
Step 2. Determine if the Salary/Hourly Wage Reduction Safe Harbor is met.
a. Enter the annual salary or hourly wage as of February 15, 2020:
.
b. Enter the average annual salary or hourly wage between February 15, 2020 and April 26, 2020:
.
If 2.b. is equal to or greater than 2.a., skip to Step 3. Otherwise, proceed to 2.c.
c. Enter the average annual salary or hourly wage as of the earlier of December 31, 2020 and the date this application
is submitted: _________________.
If 2.c. is equal to or greater than 2.a., the Salary/Hourly Wage Reduction Safe Harbor has been met – enter
zero in the column above box 3 for that employee. Otherwise proceed to Step 3.
Step 3. Determine the Salary/Hourly Wage Reduction.
a. Multiply the amount entered in 1.b. by 0.75:
.
b. Subtract the amount entered in 1.a. from 3.a.:
.
If the employee is an hourly worker, compute the total dollar amount of the reduction that exceeds 25% as follows:

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Paycheck Protection Program

Loan Forgiveness Application Revised June 16, 2020
c.

OMB Control Number 3245-0407
Expiration Date: 10/31/2020

Enter the average number of hours worked per week between January 1, 2020 and March 31, 2020:
.

d.

Multiply the amount entered in 3.b. by the amount entered in 3.c.
. Multiply this amount by
24 (if Borrower is using a 24-week Covered Period) or 8 (if Borrower is using an 8-week Covered
Period):_______________. Enter this value in the column above box 3 for that employee.
If the employee is a salaried worker, compute the total dollar amount of the reduction that exceeds 25% as follows:
e. Multiply the amount entered in 3.b. by 24 (if Borrower is using a 24-week Covered Period) or 8 (if
Borrower is using an 8-week Covered Period):
. Divide this amount by 52:
.
Enter this value in the column above box 3 for that employee.
FTE Reduction Exceptions: Indicate the FTE of (1) any positions for which the Borrower made a good-faith, written offer to rehire
an individual who was an employee on February 15, 2020 and the Borrower was unable to hire similarly qualified employees for
unfilled positions on or before December 31, 2020; (2) any positions for which the Borrower made a good-faith, written offer to
restore any reduction in hours, at the same salary or wages, during the Covered Period or the Alternative Covered Period and the
employee rejected the offer, and (3) any employees who during the Covered Period or the Alternative Payroll Covered Period (a) were
fired for cause, (b) voluntarily resigned, or (c) voluntarily requested and received a reduction of their hours. In all of these cases,
include these FTEs on this line only if the position was not filled by a new employee. Any FTE reductions in these cases do not
reduce the Borrower’s loan forgiveness.
Boxes 1 through 5: Enter the sums of the amounts in each of the columns.
FTE Reduction Safe Harbors
Two separate safe harbors exempt certain borrowers from any loan forgiveness reduction based on a reduction in FTE employee levels:
1.

The Borrower is exempt from the reduction in loan forgiveness based on a reduction in FTE employees described above if the
Borrower, in good faith, is able to document that it was unable to operate between February 15, 2020, and the end of the 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, by the Secretary of Health and Human Services, the Director of the
Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of
standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19.

2.

The Borrower is exempt from the reduction in loan forgiveness based on a reduction in FTE employees described above if both of
the following conditions are met: (a) the Borrower reduced its FTE employee levels in the period beginning February 15, 2020, and
ending April 26, 2020; and (b) the Borrower then restored its FTE employee levels by not later than December 31, 2020 to its FTE
employee levels in the Borrower’s pay period that included February 15, 2020.

SBA Form 3508 (06/20)
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Paycheck Protection Program

Loan Forgiveness Application Revised June 16, 2020

OMB Control Number 3245-0407
Expiration Date: 10/31/2020

Documents that Each Borrower Must Submit with its PPP Loan Forgiveness Application
PPP Loan Forgiveness Calculation Form
PPP Schedule A
Payroll: Documentation verifying the eligible cash compensation and non-cash benefit payments from the Covered Period or the
Alternative Payroll Covered Period consisting of each of the following:
a. Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid
to employees.
b. Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period
or the Alternative Payroll Covered Period:
i. Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941); and
ii. State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported,
or that will be reported, to the relevant state.
c. Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to
employee health insurance and retirement plans that the Borrower included in the forgiveness amount (PPP Schedule A,
lines (6) and (7)).
FTE: Documentation showing (at the election of the Borrower):
a. the average number of FTE employees on payroll per week employed by the Borrower between February 15, 2019 and
June 30, 2019;
b. the average number of FTE employees on payroll per week employed by the Borrower between January 1, 2020 and
February 29, 2020; or
c. in the case of a seasonal employer, the average number of FTE employees on payroll per week employed by the Borrower
between February 15, 2019 and June 30, 2019; between January 1, 2020 and February 29, 2020; or any consecutive 12-week
period between May 1, 2019 and September 15, 2019.
The selected time period must be the same time period selected for purposes of completing PPP Schedule A, line 11. Documents
may include payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941) and state quarterly business and
individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state.
Documents submitted may cover periods longer than the specific time period.
Nonpayroll: Documentation verifying existence of the obligations/services prior to February 15, 2020 and eligible payments from
the Covered Period.
a. Business mortgage interest payments: Copy of lender amortization schedule and receipts or cancelled checks verifying
eligible payments from the Covered Period; or lender account statements from February 2020 and the months of the Covered
Period through one month after the end of the Covered Period verifying interest amounts and eligible payments.
b. Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible
payments from the Covered Period; or lessor account statements from February 2020 and from the Covered Period through
one month after the end of the Covered Period verifying eligible payments.
c. Business utility payments: Copy of invoices from February 2020 and those paid during the Covered Period and receipts,
cancelled checks, or account statements verifying those eligible payments.
Documents that Each Borrower Must Maintain but is Not Required to Submit
PPP Schedule A Worksheet or its equivalent and the following:
a. Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 1, including the
“Salary/Hourly Wage Reduction” calculation, if necessary.
b. Documentation supporting the listing of each individual employee in PPP Schedule A Worksheet Table 2; specifically, that
each listed employee received during any single pay period in 2019 compensation at an annualized rate of more than
$100,000.
c. Documentation regarding any employee job offers and refusals, refusals to accept restoration of reductions in hours,
firings for cause, voluntary resignations, written requests by any employee for reductions in work schedule, and any
inability to hire similarly qualified employees for unfilled positions on or before December 31, 2020.
d. Documentation supporting the certification, if applicable, that the Borrower was unable to operate between February 15, 2020,
and the end of the 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 by the Secretary of Health and
Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health
Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety
requirement related to COVID-19. This documentation must include copies of the applicable requirements for each borrower
location and relevant borrower financial records.
e. Documentation supporting the PPP Schedule A Worksheet “FTE Reduction Safe Harbor 2.”
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Paycheck Protection Program

Loan Forgiveness Application Revised June 16, 2020

OMB Control Number 3245-0407
Expiration Date: 10/31/2020

All records relating to the Borrower’s PPP loan, including documentation submitted with its PPP loan application, documentation
supporting the Borrower’s certifications as to the necessity of the loan request and its eligibility for a PPP loan, documentation
necessary to support the Borrower’s loan forgiveness application, and documentation demonstrating the Borrower’s material
compliance with PPP requirements. The Borrower must retain all such documentation in its files for six years after the date the loan
is forgiven or repaid in full, and permit authorized representatives of SBA, including representatives of its Office of Inspector
General, to access such files upon request.

SBA Form 3508 (06/20)
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