How to Complete Form 3508S for PPP Loan Forgiveness

To complete Form 3508S for PPP loan forgiveness, confirm your loan was $150,000 or less, gather your SBA loan number and a few payroll and headcount figures, choose a covered period, certify that at least 60% of the proceeds went to payroll, and submit either through the SBA’s direct forgiveness portal or your lender. The form itself is short. The work is in getting the numbers right and keeping records to back them up if the SBA asks later.

Confirm You Can Use Form 3508S

Form 3508S is available for any individual First Draw or Second Draw PPP loan of $150,000 or less.¹ Each loan is evaluated on its own. If you took both a First Draw and a Second Draw and each was under the threshold, you can file a 3508S for each. Loans above $150,000 need Form 3508 or 3508EZ instead.

The main reason 3508S exists is to spare small borrowers the full-time equivalent and wage-reduction math the longer forms require. Most 3508S filers are exempt from those reductions entirely. The exception: if your loan was over $50,000 and your affiliated businesses collectively received $2 million or more in PPP loans, the reduction calculations may still apply to you.¹

The Five Fields the Form Asks For

Before opening the form, put these in front of you:²

Your business legal name and taxpayer identification number (EIN or SSN), matching your original PPP application.
Your SBA PPP loan number. This is the number the SBA assigned when the loan was approved, not the internal number your lender uses.
The PPP loan amount, meaning the principal actually disbursed to you.
The forgiveness amount you’re requesting, which is the total eligible payroll and non-payroll costs you’re claiming. It cannot exceed the loan principal.
Employee counts at two moments: when you applied for the loan, and when you’re applying for forgiveness.

The form is a single page of entries plus certifications. If any of those numbers are wrong, the SBA’s review is where the problem will surface.

Pick Your Covered Period

You have to tell the SBA which covered period you’re using. That’s the window during which the loan proceeds were spent on eligible costs. The default is 24 weeks (168 days) starting the day you received the loan funds. Borrowers who received their PPP loan before June 5, 2020, may instead use an 8-week (56-day) covered period.² Those are the only two options. You can’t pick a custom length in between.

Meet the 60% Payroll Rule

At least 60% of the loan proceeds must have gone to payroll costs for full forgiveness.³ Fall short and forgiveness is reduced proportionally rather than lost outright. Up to 40% can be non-payroll.

Payroll costs include salary, wages, tips, commissions, paid leave, health insurance premiums, retirement contributions, and state and local payroll taxes. For sole proprietors and self-employed borrowers, owner compensation replacement counts as payroll, capped at $20,833 for a 24-week covered period and $15,385 for an 8-week period.⁴

Eligible non-payroll costs include business mortgage interest, rent or lease payments, utilities, covered operations expenditures such as business software and cloud computing, supplier costs for goods essential to operations, property damage costs from 2020 public disturbances, and worker protection expenditures for COVID-19 safety compliance.⁵

One boundary worth knowing: an Economic Injury Disaster Loan advance you may have received no longer reduces your PPP forgiveness. The Economic Aid Act repealed the original CARES Act requirement to deduct it.⁶

Keep Documentation, Don’t Attach It

Form 3508S does not require you to submit payroll reports, bank statements, lease agreements, or utility bills. You do have to keep them. The SBA can audit any forgiven loan, and a borrower who can’t produce records when asked can have forgiveness reversed. Keep payroll records, receipts for rent and utilities, and documentation for any other eligible costs somewhere you can find them. SBA guidance has generally pointed to retaining employment records for four years after submission and other records for three years, though the agency’s retention guidance has shifted over the life of the program.

Read the Certifications Before You Sign

Signing 3508S is a legal certification, not paperwork. You are certifying that loan proceeds went only to eligible expenses, that you met the 60% payroll threshold, and that everything on the form is accurate.¹ A knowingly false statement on a federal loan application can be punished by up to five years in prison and fines under federal law.⁷ The short form doesn’t lower the stakes of the signature.

Where to Submit It

Since March 13, 2024, PPP borrowers of any loan size can submit through the SBA’s direct forgiveness portal at directforgiveness.sba.gov.⁵ You look up your loan by SBA PPP loan number, enter the required information, and electronically sign.

Lenders can still accept applications directly as well.⁵ Some run their own portals that mirror the 3508S questions. If you want to go that route, check with your lender first; some smaller lenders have transferred their PPP portfolios and no longer process forgiveness in-house.

The Deadline You Cannot Miss

You can apply for forgiveness up to five years from the date the SBA issued your loan number.⁵ PPP loans were issued from April 2020 through May 2021, so those absolute deadlines fall between roughly April 2025 and May 2026. After yours passes, forgiveness is gone and the remaining balance is a loan you owe. Check your SBA loan assignment date to see how much time is left.

A separate 10-month deadline governs payment deferral: submitting within 10 months of the end of your covered period kept payments deferred.⁵ That window has closed for essentially every borrower. If you’re still paying on a loan you believe should be forgiven, you can still apply, but payments already made won’t stop retroactively.

After You Submit

Your lender has up to 60 days from receiving a complete application to issue a decision and pass it to the SBA. The SBA then has up to 90 days to review and remit the forgiveness payment to the lender.⁸ Small, clean 3508S filings often move faster than those maximums.

You’ll be notified of full forgiveness, partial forgiveness, or denial. If you filed through the SBA portal, you can check status there.⁵ Any unforgiven balance stays as a loan at 1% interest. Maturity is five years for loans with an SBA loan number assigned on or after June 5, 2020, and two years for earlier loans (many of which were mutually extended to five).

If the SBA issues a final loan review decision denying forgiveness, you have 30 calendar days from receiving it to file an appeal with the SBA’s Office of Hearings and Appeals through appeals.sba.gov. To keep payments deferred during the appeal, give your lender a copy of the filed appeal.⁹

Tax Treatment

Forgiven PPP amounts are not federal taxable income, and business expenses paid with those funds remain deductible under Section 276 of the COVID-related Tax Relief Act of 2020. State treatment is not uniform. Most states conformed to the federal approach, but a few initially taxed forgiven amounts or disallowed the deductions before resolving it legislatively. If you haven’t filed state returns for the year of forgiveness, confirm current state treatment with a tax professional or your state tax agency.

1
U.S. Small Business Administration. Form 3508S – Paycheck Protection Program Loan Forgiveness Application
2
U.S. Department of the Treasury. Form 3508S PPP Loan Forgiveness Application Instructions
3
U.S. Department of the Treasury. PPP FAQ for Borrowers and Lenders
4
U.S. Small Business Administration. PPP Loan Forgiveness Application Form 3508S
5
U.S. Small Business Administration. PPP Loan Forgiveness
6
Federal Register. Paycheck Protection Program as Amended by Economic Aid Act
7
Office of the Law Revision Counsel. 18 U.S.C. 1001 – Statements or Entries Generally
8
Federal Register. Business Loan Program Temporary Changes – Paycheck Protection Program – Revisions to Loan Forgiveness
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U.S. Small Business Administration. PPP Appeals