Can I use the 3508EZ form to apply for PPP loan forgiveness?

The Treasury Department updated the PPP loan application to account for the new reals established by the Flexibility Act. They also introduced a new form the EZ form which is significantly simpler then the full form.

You can use the EZ form if you meet two criteria. First, you have not have reduced compensation for any employee by more than 25%. Second you either restored all FTE’s OR could not restore FTE’s due to COVID-19 restrictions.

Most of the complexity in the standard form comes from calculating forgiveness adjustments due to FTE and salary reductions. Also, the Flexibility Act loosened the restrictions on FTE’s and payroll reduction – so this new form addresses that.

Download the 3508EZ form here.
Download the 3508EZ form Instructions here.

More Detail on who can use the PPP Loan Forgiveness Application 3508EZ

You can use the form if

You are a self-employed individual, an independent contractor, or a sole proprietor who had no employees when you applied for the PPP loan and did not include any employee salaries in calculating average monthly payroll.

Or you are a corporation, you did not reduce salary by more than 25% for any employee earning less than $100,000 and you either:

• Returned to full employment by December 31, 2020.
• Tried to return to full employment by December 31, 2020, but could not find qualified people who would accept your offer.
• Could not return to full employment because your business could not operate at full capacity due to COVID-19 restrictions.

That final point is extremely broad and important. I know a few businesses that have not been impacted by the COVID restrictions. However, they also haven’t had to reduce employees. The businesses that I know of who have reduced headcount have done so due to the COVID restrictions. The restrictions seem to be an acceptable reason not to rehire as well.

The exact wording from the PPP 3508EZ application is:

“The Borrower was unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration, related to the maintenance of standards of sanitation, social distancing, or any other work or customer safety requirement related to COVID-19.”

3508EZ Application

If you did reduce employee headcount despite not being impacted or if you did reduce salaries by more than 25% use the full forgiveness application.

Download the 3508EZ form here.

If you are looking for more information on the terms of the PPP loan check outy our other poses. You can read more about the PPP loan here and we have more information on how the Flexibility Act Changed the PPP terms here.