As noted above, in addition to the SBA Form 3508S form, regulators issued updated instructions and SBA Form 3508EZ, and updated instructions and SBA Form 3508. As with the changes to guidance, most of the changes to forms were to incorporate the changes related to the newly allowed non-payroll expenses, new dates, second draw loans, etc. In addition, the updated forms clarify that:
Form 3508 and Form 3508EZ both noted that for a second draw PPP Loan in excess of $150,000, borrowers must submit a loan forgiveness application for the first draw PPP Loan before or simultaneously with the loan forgiveness application for the second draw PPP Loan, even if the calculated amount of forgiveness on the first draw PPP loan is zero.
Here are the main differences between each type of form:
Form 3508: The longest form, updated Form 3508, includes the Schedule A, which is used to adjust forgiveness amounts for FTE and salary/wage reductions, and the Schedule A Worksheet. At 13 pages, including instructions (and the optional demographic one-pager), it is used for borrowers with many employees who need to work through, employee by employee, the calculation of payroll costs and show itemized non-payroll costs and adjustments for reductions in workers or wages.
Form 3508 EZ: At nine pages, including instructions, Form 3508EZ form is intended for borrowers of more than $150,000 via first or second draw PPP loans who fall into at least one of the following two categories:
- Borrowers who didn’t reduce salary or wages of employees by more than 25% and didn’t cut the number of employees or paid hours; or
- Borrowers who didn’t reduce salary or wages of employees by more than 25% but were unable to operate at the same level of business activity as before Feb. 15 due to compliance with specific health and safety requirements as outlined in the PPP Flexibility Act.
In general, documentation requirements are the same for borrowers preparing to file forgiveness applications using either Form 3508 or Form 3508EZ. Borrowers are required to submit supporting documentation for payroll-related expense payments and for non-payroll obligations and expenses. The chief difference between the EZ form and the longer Form 3508 is that 3508EZ doesn’t require submission of a Schedule A, so it doesn’t include that form or the Schedule A worksheet.
The major difference in documentation requirements for users of the EZ form and the longer Form 3508 is related to borrowers who only fall into category #2 above (they didn’t reduce salary or wages of employees by more than 25% and didn’t cut the number of employees or paid hours). For those borrowers, the Form 3508EZ Instructions say they must include documentation of “the average number of full-time equivalent employees on payroll employed by the Borrower on January 1, 2020 and at the end of the Covered Period.” Otherwise, EZ form filers don’t have to file information on FTEs.