PPP Forms Explained: EZ Form vs Full Application

With the introduction of the Paycheck Protection Program (PPP), small businesses can apply for a loan allowing you to keep your workers on your payroll. If you meet all employee retention criteria, and you use the funds for eligible expenses you should be eligible for the loan. The PPP form, or SBA (Small Business Association) Form 3508, can be completed and submitted to your PPP lender.

The form makes it easier to understand what expenses are “forgivable” and how you can apply the loan to meet the needs of your business. Here we explain PPP forms, and how you can complete them to qualify for funding.

EZ Form vs Full Application

The difference between the two forms is mostly based on business size. To qualify for the EZ form (Form 3508 EZ) you must be either a self-employed individual, independent contractor or sole proprietor meeting at least one of the following:

• Be self-employed with no employees
• You didn’t reduce the pay of your employees by more than 25%, or their hours
• You suffered business reductions due to COVID-19, but did not reduce the salaries or wages of your employees by more than 25%

All other businesses must use the standard form.  

Where Can I find the PPP Forgiveness Application?

The form is located on the SBA website, but many PPP lenders also have digital copies for their applicants. By reviewing the form now, you will know what you need so you can complete the form quickly and get the loan you need sooner.

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Steps to Complete SBA Form 3508

This 11-page document includes four sections that might seem overwhelming at first. However, if you follow these steps, it will be a little easier to complete.

Step 1/Page 1:

• Basic Information: Fill in your basic business and loan information
• Payroll schedule: Choose which payroll schedule you use based on the frequency of pay.
• Covered period: Indicate your covered period based on the day you receive your loan and the following eight weeks you have to use the funds. If you have Alternative Payroll Covered Period, it applies to those who run payroll on a biweekly or more frequent basis. In this case, start your covered period for payroll on the day of your first pay period. However, remember you then have to use this period throughout the application. Also, the Alternative Payroll Covered Period can’t pass December 31, 2020.
• Loans over $2 million: Check this box only if you received a loan over $2 million.

Step 2/Page 4

It’s easier to skip to page 4 when filling out the form and get back to the calculations on page 3 later. There are several tables to contend with at this stage including:

Table 1

List employees with your company during the Covered Period, not including people not living in the U.S., partners, yourself, contractors or people who received an annualized pay rate of more than $100,000 in 2019. Fill out each section, for every employee. For cash compensation this includes:

• Gross Salary
• Gross Wages
• Gross Tips
• Gross Commissions
• Paid Leave including leave covered by The Families First Coronavirus Response Act
• Allowances for Dismissal, Separation Paid, Incurred During The Covered Period or The Alternative Payroll Covered Period

An employee’s compensation can’t be over an annualized salary of $100,000.

Average FTE: The easiest way to do this is to use 1.0 for those working 40 hours or more, and 0.5 for everybody else.

Salary/Hourly Wage Reduction: You must calculate the following for each employee:

• Determine if pay was reduced more than 25%
• Determine if the Salary/Hourly Wage Reduction Safe Harbor is met
• Determine the Salary/Hourly Wage Reduction

FTE Reduction Exceptions: This is the employees you could not hire back and were not replaced under the following criteria:

• They rejected your rehire offer at the same pay rate/hours as before
• They were fired for cause
• They resigned
• They were granted reduced hours at their own request

Table 2

This is for employees paid an annualized rate of more than $100,000 for any pay period in 2019, and requires the same information as Table 1.

FTE Reduction Safe Harbor

Calculate the following FTEs (the rest of the calculations are in the next step):

• Total average FTE between February 15 and April 26
• Total FTE in your pay period including February 15
• Total FTE on June 30

Step 3/Page 6

This is schedule A. For lines 1 through 5 you can generally use the same number boxes from your worksheet. However, for Line 3, if all your employees received at least 75% of their original pay from January 1 to March 31 you have to check the box and enter 0. Here is what to enter for the rest of the lines:

• Lines 6 to 8: Employer-paid expenses for health insurance, retirement plans, and state and local taxes on payroll.
• Line 9: The compensation paid to yourself and your partner(s).
• Line 10: Add up lines 1, 4, 6, 7, 8, and 9
• If you had no reduction in employees or average paid hours OR didn’t reduce your employee amount or the average number of paid hours of your employees between January 1 and the end of your Covered Period check the Safe Harbor box that applies to you. Skip lines 11 and 12. Then enter 1.0 for line 13. Otherwise, proceed to Line 11.
• Line 11: Enter your average FTE for a suitable period.
• Line 12: Total of Box 2 and 5 from the worksheet.
• Line 13: If it turns out you don’t satisfy the FTE reduction exemptions, you have to divide line 12 by line 11 and enter the result. When it is over 1.0, enter 1.0.

Step 4/Page 3

Forgiveness amount calculations

This is a line by line account for calculations that will add up to your forgiveness amount. There is a Schedule A form to assist with this step and calculations include:

1. Payroll costs (the amount from PPP Schedule A, Line 10)
2. Business mortgage interest payments
3. Business rent or lease payments
4. Business utility payments
5. Total salary/hourly wage reduction (the amount from PPP Schedule A, Line 3)
6. The sum of Lines 1-4, minus Line 5
7. FTE Reduction Quotient (the amount from PPP Schedule A, Line 13)
8. Your modified total (multiply Line 6 by Line 7)
9. Your PPP Loan amount
10. Payroll cost 75% requirement (divide Line 1 by 0.75)
11. Your forgiveness amount (the smallest of Lines 8, 9, and 10)

Step 5: Certification

Here you sign to certify all information is correct and you used your PPP loan as per the required guidelines.  

While it will take some time to complete, these steps should make it a little easier.

About the Author

Kayla is the Marketing Manager at Paypro Corporation overseeing all inbound and outbound marketing and sales efforts. She has 7+ years of experience working within the B2B and SaaS based solutions space and thrives on creating messaging and campaigns that introduce products and services to those who need them most.