PPP Forgiveness – Form 3508EZ Eligibility

October 12, 2020

One of the common misconceptions concerning The Paycheck Protection Program (PPP) involves whether companies can use Form 3508EZ for their PPP loan forgiveness application. Form 3508 is an SBA Form used to apply for the PPP loan forgiveness. The 3508EZ form is a shorter version. Business owners believe that they are eligible to use the EZ version, rather than the full version, if their PPP loan is less than $150,000. Unfortunately, Form 3508EZ eligibility has nothing to do with the loan amount, and therefore can only be used in specific situations.

Pursuant to the Form 3508EZ, PPP Loan Forgiveness Application instructions, borrowers who meet one of the following conditions can use Form 3508EZ for its business forgiveness application:

• The business is self-employed and have no employees; OR
• The business did not reduce the wages or salaries of their employees by more than 25% and did not reduce the number of hours of their employees; OR
• The business did not reduce the wages or salaries of their employees by more than 25% and experienced reductions in business activity as a result of health directives related to COVID-19.

The instructions specifically state that only one condition must be met in order to use Form 3508EZ for PPP forgiveness. For example, if a self-employed business owner with no employees received $300,000 from the PPP program, the business owner could use Form 3508EZ because it meets one of the aforementioned conditions. If the borrower doesn’t meet one of the conditions, then the full PPP loan forgiveness application must be submitted with the required documentation

In conclusion, the loan amount does not determine whether a borrower can use the EZ version. In order to use the EZ version, one of the above conditions must be met.

Links to the SBA Form 3508 and Form 3508EZ are below.

SBA Form 3508 (Full Version): Fillable SBA Form 3508 Link

SBA Form 3508EZ (EZ Version): Fillable SBA Form 3508EZ Link

For questions related to the PPP forgiveness, please feel free to contact Barbee Tax at (708) 405-2112.