PPP Loan Forgiveness Form 3508S: The Simplified Application Small Businesses Need

If your business received a PPP loan of $150,000 or less, you may be stressing about what it takes to get that loan forgiven. Here's the good news: the SBA created Form 3508S specifically for borrowers like you, and it requires far less documentation and almost no complex calculations compared to the standard forgiveness forms.

This guide walks you through everything you need to know about Form 3508S—who qualifies, how to complete it, what records to keep, and how to submit your application.

What Is SBA Form 3508S?

SBA Form 3508S is a simplified Paycheck Protection Program (PPP) loan forgiveness application released by the U.S. Small Business Administration in January 2021. It was designed to dramatically reduce the paperwork burden for small borrowers who make up the overwhelming majority of PPP participants.

In fact, over 4.5 million borrowers—representing roughly 85% of initial PPP loans—qualify to use this streamlined form. Instead of complex calculations, lengthy schedules, and extensive documentation, Form 3508S requires only a handful of certifications and basic financial figures.

Who Qualifies for Form 3508S?

The eligibility rule is straightforward: you received a PPP loan of $150,000 or less.

There is one important exception. If your business has an affiliation agreement with other companies and the combined PPP loans across all affiliated entities exceed $2 million, you cannot use Form 3508S.

Beyond the loan amount threshold, all business types qualify—sole proprietors, LLCs, S corporations, partnerships, nonprofits, and more. Both first-draw and second-draw PPP loans are eligible.

Form 3508S vs. Form 3508EZ vs. Form 3508: Which One Is Right for You?

Understanding how the three forgiveness forms differ helps ensure you file the correct one.

Form 3508S (Simplified)

• For: Borrowers with PPP loans of $150,000 or less
• Documentation required at submission: None
• Calculations required: Minimal (just your payroll amount and requested forgiveness amount)
• Employee FTE/wage reduction rules: Relaxed for loans of $50,000 or less

Form 3508EZ (Easier)

• For: Borrowers with loans over $150,000 who meet specific criteria
• Who qualifies: Self-employed individuals with no employees; OR businesses that did not reduce employee wages by more than 25% AND did not reduce employee headcount; OR businesses that could not operate normally due to COVID-19 health directives (and did not reduce wages by more than 25%)
• Documentation: Required at submission
• Calculations: Moderate

Form 3508 (Standard)

• For: Anyone who received a PPP loan
• Best for: Borrowers who don't qualify for 3508EZ or 3508S
• Documentation: Extensive
• Calculations: Most complex, including FTE calculations and wage reduction schedules

Bottom line: If your loan was $150,000 or less and you don't have complicated affiliate relationships, use Form 3508S. It's the simplest path to forgiveness.

What Information Does Form 3508S Require?

The form itself is short. Here's what you'll need to provide:

1. Loan amount – The original PPP loan amount you received
2. Disbursement date – When the funds were deposited into your account
3. Covered period – The 8-week or 24-week period during which you spent the funds
4. Amount of loan spent on payroll costs – The dollar amount you used for eligible payroll expenses
5. Requested forgiveness amount – The total amount you're asking to have forgiven
6. EIDL advance amount (if applicable) – If you received an Economic Injury Disaster Loan advance, this may affect your forgiveness calculation

The form also includes seven certifications you must sign. These confirm that:

• The loan was used for eligible costs (payroll, rent, utilities, mortgage interest, covered operations expenditures, etc.)
• At least 60% of the forgiveness amount was used for payroll costs
• You have not misrepresented any information
• You understand the SBA may request additional documentation at any time

Documents You Need to Keep (Even Though You Don't Submit Them)

One of the biggest advantages of Form 3508S is that you do not need to attach supporting documents when you submit the application. However, the SBA can request these records at any time during the loan review or audit process. You must retain them for:

• 4 years for employment-related records
• 3 years for all other records

Keep the following organized and accessible:

Payroll Documentation

• Bank account statements showing payroll deposits
• Payroll processor reports covering the covered period
• IRS Form 941 (Employer's Quarterly Federal Tax Return) for the relevant quarters
• State quarterly business and individual employee wage reporting and unemployment insurance tax filings
• Records of employer contributions to health insurance premiums and retirement plans

Non-Payroll Documentation

• Mortgage interest: Lender amortization schedule and receipts
• Business rent or lease: Copy of current lease agreement and rent receipts or cancelled checks
• Utilities: Copies of invoices and receipts, cancelled checks, or account statements
• Covered operations expenditures (if applicable): Invoices and receipts for business software, cloud services, etc.
• Covered property damage costs: Invoices and insurance documentation
• Supplier costs: Contracts, purchase orders, and receipts
• Worker protection expenditures: Invoices and receipts for PPE, barriers, ventilation equipment, etc.

How to Apply: Using the SBA Direct Forgiveness Portal

As of March 13, 2024, all borrowers—regardless of loan size—can submit their forgiveness application through the SBA PPP Direct Forgiveness Portal at forgiveness.sba.gov.

Here's the general process:

Step 1: Gather Your Information

Before logging in, collect your PPP loan number, EIN or Social Security Number, and the financial figures described above (payroll amount, covered period dates, forgiveness amount).

Step 2: Log In to the SBA Portal

Visit the direct forgiveness portal and create or log into your account. You'll need to verify your identity and locate your loan.

Step 3: Complete Form 3508S Electronically

The portal guides you through the form fields. Enter your covered period dates, payroll costs, and requested forgiveness amount. Review and sign the seven certifications electronically.

Step 4: Submit and Track Your Application

Once submitted, your lender has 60 days to review the application and issue a decision. The SBA then has up to 90 days to confirm the forgiveness amount and pay out to your lender.

Step 5: Receive Confirmation

If approved, the SBA will forgive your loan in full or in part. If denied or partially denied, you have the right to appeal through the SBA's Office of Hearings and Appeals.

Important Deadlines to Know

There is technically no hard deadline to submit a PPP forgiveness application. However, there are financial consequences for waiting too long:

• 10-month deferral window: Borrowers who do not apply for forgiveness within 10 months after the last day of their covered period must begin making loan payments to their lender. These payments are not refunded if the loan is later forgiven.
• Loan maturity: PPP loans issued on or after June 5, 2020 have a 5-year term. Many of these loans are maturing in 2025 or 2026. If you still have an outstanding PPP loan balance, you should apply for forgiveness as soon as possible.

If you already missed the deferral window and started making payments, apply anyway. Payments made on a loan that is later forgiven may be refunded, depending on your situation.

Common Mistakes to Avoid

Mixing Covered Period Dates

Your covered period is either 8 or 24 weeks starting from the date your PPP loan was disbursed. Confirm the exact dates before submitting—getting these wrong can affect your forgiveness amount.

Under-reporting Payroll Costs

Many small business owners miss eligible payroll components. Eligible payroll costs include salaries and wages, vacation and sick pay, parental and family leave, health insurance premiums, retirement plan contributions, and state and local payroll taxes. Don't leave money on the table.

Forgetting Owner Compensation

Sole proprietors, independent contractors, and self-employed individuals can count their own compensation during the covered period as eligible payroll costs—up to the annualized cap.

Not Retaining Records

Even though Form 3508S requires no documentation at submission, keep everything. SBA audits can occur years after your loan is forgiven, particularly for larger loans, but small borrowers are not exempt.

Applying Through the Wrong Channel

Some lenders no longer process forgiveness applications directly. If your lender is no longer handling applications, you must use the SBA Direct Forgiveness Portal. Check with your lender first.

What Happens After Forgiveness Is Approved?

Once your PPP loan is forgiven, you will receive written confirmation. Here are a few post-forgiveness considerations:

• Tax treatment: Forgiven PPP loan amounts are not taxable federal income. The expenses paid with PPP funds remain fully deductible—a significant change from earlier IRS guidance.
• Record retention: Continue keeping your loan and forgiveness records for 4 years (employment records) and 3 years (other records) from the date of forgiveness approval.
• Impact on financial statements: The forgiven loan amount may appear as other income or as a reduction of expenses, depending on how your accountant categorizes it.

Keep Your Financial Records Ready for PPP and Beyond

Whether you're applying for PPP forgiveness now or preparing for a potential SBA audit, clear financial records are essential. Knowing exactly what you spent during your covered period—and being able to prove it—makes the difference between full forgiveness and a partial denial.

Beancount.io provides plain-text accounting that gives you complete transparency and control over your financial data. With version-controlled, human-readable records, you'll always know where your money went and have audit-ready documentation at your fingertips. Get started for free and take the stress out of financial record-keeping.