This article continues the series on PPP loans but relates to the forgiveness of the SBA PPP Loan.  Starting in October 2020, a recipient of a PPP Loan has ten months to report to its lender the disposition of the loan proceeds. The reporting can be done on Form 3508, 3508EZ, or 3508S. Click to see forms.  Regardless of the version of the form used, supporting documentation to justify the forgiveness of the loan must be available and presented to the lender. The specific form to use depends on the amount borrowed and whether the borrower reduced employee levels, wages, or hours.  As of December 31, 2020, the expenditure of PPP during the "covered period" expires. 

Form 3508 is more complicated, considered the long-form, and must be used if the loan is greater than $50,000.  The form may require assistance to complete.  

To qualify for Form 3508EZ, the recipient must be self-employed and have no employees or have employees. They did not reduce their wages by more than 25%, did not reduce the number of employees by more than 25%, and could not operate normally because of reduced business activity due to compliance with the COVID-19 health guidance.

To qualify for Form 3508S, considered the simple form, the borrowers had to have received a loan of $50,000 or less. Businesses that received PPP loans of $2,000,000 or more and are "affiliated" as defined in the Federal Registered Volume 85, No. 73 as common management and identity of interest cannot use the Form 3508S. Click to see Federal Registered Volume 85, No. 73. Also, the SBA has sole discretion on audits of any PPP loans.  Borrowers should keep their records for six years, and the more documentation, the better. 

In April 2020, IRS issued Notice 2020-32 addressing ... Read More