Game Changer for SBA PPP $150K Loans — 3508S Forgiveness Application


By Christine Hall and Christine DiMenna of CliftonLarsonAllen LLP
Published January 22, 2021

Key Insights

  • The SBA released Form 3508S on January 19, 2021.
  • The one-page form greatly simplifies the loan forgiveness application.
  • Form 3508S is for PPP borrowers with first or second draw loan amounts of $150,000 or less.


Over 4.5 million borrowers representing 85% of initial Paycheck Protection Program (PPP) loans now are eligible to request forgiveness under a much more streamlined application using the updated Small Business Administration (SBA) Form 3508S.

Who can use the updated Form 3508S?
As a borrower, you can apply for forgiveness on first or second draw PPP loan(s) using Form 3508S only if the loan amount received was $150,000 or less.

What if I already requested forgiveness?
You may submit a Form 3508S loan forgiveness application to your lender any time up until the SBA notifies your lender of a final loan review decision or remits a PPP loan forgiveness payment to your lender.

Inside the Form 3508S forgiveness application
The one-page forgiveness application asks for:

  • Employees at the time of loan application and forgiveness application
  • Amount of the loan amount spent on payroll costs
  • Requested loan forgiveness amount
  • Attestations that the eligible recipient:
    • Provided information in the application that is true and correct in all material respects
    • Complied with requirements under sections 7(a)(36), 7(a)(37) and 7A of the Small Business Act, the PPP interim final rules, and guidance issued by SBA through the date of the forgiveness application related to:
      • Eligible use of PPP loan proceeds
      • The amount of PPP loan proceeds that must be used for payroll costs
      • The calculation and documentation of the borrower’s revenue reduction (if applicable)
      • The calculation of the borrower’s requested loan forgiveness amount

Form 3508S does not require borrowers to show the calculations used to determine their loan forgiveness amount. However, the SBA may request information and documents to review those calculations as part of its loan review or audit processes.

Loans greater than $50,000 and loans totaling $2 million or more across affiliates
Borrowers who received a loan of more than $50,000 and borrowers who received $50,000 or less but together with their affiliates receved $2 million or more may be required to adjust the requested loan forgiveness amount for reductions in full-time equivalent employee calculations and salary or wage reductions in excess of 25%. These reductions could be waived if the borrower is able to meet a safe harbor.

Second draw PPP loans
If the loan forgiveness application is being submitted for a second draw PPP loan, the borrower:

  • must submit or have already submitted all required revenue reduction documentation, and,
  • must have used all first draw PPP loan amounts on eligible expenses prior to disbursement of the second draw PPP loan.

Loan forgiveness documentation and eligibility
No additional records are required to be submitted with the Form 3508S simplified forgiveness application and demographic information remains optional. However, your lender may request that supporting information be submitted at the time of application for forgiveness — contact your lender before applying to understand their documentation requirements. Borrowers must retain all employment records and payroll documentation for four years and all other documentation for three years after the date the loan forgiveness application is submitted to the lender. In addition, the borrower must permit authorized representatives of the SBA to access such files upon request.

The SBA may request additional information for the purposes of evaluating a borrower’s eligibility for a PPP loan and for loan forgiveness. If the borrower fails to provide information requested by the SBA, the SBA could determine that the borrower was ineligible for the PPP loan or deny the borrower’s loan forgiveness application.

Eligibility for loan forgiveness will be evaluated in accordance with the PPP rules. The SBA may direct a lender to disapprove a borrower’s loan forgiveness application if the SBA determines that the borrower was ineligible for the PPP loan.

The SBA also released updated versions of the 3508 and 3508EZ with the January 19, 2021 revision date. These revisions include additional eligible costs as defined in the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act).

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, [investment] or tax advice or opinion provided by CliftonLarsonAllen LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader’s specific circumstances or needs, and may require consideration of nontax and other tax factors if any action is to be contemplated. The reader should contact his or her CliftonLarsonAllen LLP or other tax professional prior to taking any action based upon this information. CliftonLarsonAllen LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.



Julian XavierFor more information contact, Julian Xavier, Managing Principal of CLA's Construction Industry and an active participant on the NASBP CPA Advisory Council. Julian also serves on CLA's National Construction Strategic Leadership Team. He works with both general contractors and specialty contractors and handles the relationships on some of the larger contractor clients in the San Francisco Bay Area. He can be reached at or 925.407.2025.