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How to complete Form 3508S for Self-Employed Individuals with no Employees
by Bill Cunningham
May 1, 2024

How to complete Form 3508S for Self-Employed Individuals with no Employees

By Bill Cunningham

This is a blog on how to apply for Program Protection Program (PPP) loan forgiveness Form 3508S for self-employed individuals with no employees. The blog will help you calculate owner replacement compensation or the amount that you paid yourself. If you want to include other eligible costs, you may want to read the post for loans under $50,000.

This blog includes changes made to PPP by the Economic Aid Act signed into law on December 27, 2020 including forgiveness filing deadlines, changes to the deductibility of expenses for income tax purposes, the repeal of the EIDL Advance Deduction, and allowing certain small businesses the ability to apply for a Second Draw PPP Loan.

Owner Replacement Compensation

As a self-employed individual with no employees your PPP loan was based on your Schedule C Net Income (Line 31). That is the amount that you will also use for forgiveness.

We will use a self-employed individual, Jason, as an example to help you better understand how to complete this application. Jason’s Schedule C Net Income for 2019 was $85,000. His loan amount was $17,708 ($85,000 divided by 12 months times 2.5). Since Jason applied for a PPP loan solely based on his income, the principal purpose of that PPP loan is to pay Jason. Jason will apply for forgiveness using Form 3508S or his lender’s online form.

While there isn’t specific language on how a self-employed individual should disburse PPP proceeds to oneself, Jason transfers $1,635 from his business account to his personal account each week for ten weeks and the remaining balance of $1,358 during the last week of his Covered Period. He maintains a copy of his bank statements during that period to document his use of the PPP loan proceeds.

When calculating the amount of forgiveness, the cash compensation per employee is capped at an annualized salary $100,000 prorated based on the number of weeks in Covered Period. For example, for an 8-week Covered Period the maximum forgiveness is calculated as $100,000 / 52 * 8 = $15,385. For a 24-week Covered Period the maximum forgiveness is calculated as $100,000 / 52 * 24 = $46,154.

Covered Period

The Covered Period starts on the date the PPP loan proceeds are deposited in your bank account and ends, based on your selection, between 8 and 24 weeks. The Covered Period is the period when you can use your PPP loan proceeds on eligible expenses for forgiveness.

All of the proceeds for the First Draw PPP Loan must be used for eligible costs prior to the disbursement of the Second Draw PPP Loan. Therefore, the Covered Period for the First Draw PPP Loan cannot overlap with the Second Draw PPP Loan.

Jason will select a 11-week Covered Period that will start on April 24, the date he received his loan proceeds, and end on July 9. Since the Covered Period is the period of time that it will take Jason to use his loan proceeds, he will calculate the number of weeks (rounded up) by dividing the loan proceeds of $17,708 by his weekly net income ($85,000 divided by 52).

SBA Form 3508S

Before you submit your forgiveness application to your lender, you should collect all of the required documentation including:

  • If you are filing your Second Draw PPP Loan forgiveness application and you have not provided your lender with documentation showing a reduction of revenue in 2020 compared to 2019, the lender will require you to submit the documentation showing the reduction in revenue.
  • You should maintain a paper or electronic file that includes your PPP loan application, the Schedule C that you used to calculate your PPP loan, your forgiveness application, and copies of your cancelled checks or bank statements supporting the transfer of funds from your business account to your personal bank account.

If the lender does not have an online version of the forgiveness form, you will need to complete Form 3508S, initial the two Form 3508S certifications, decide whether to submit the optional Demographic Information Form, and sign and date the application.

PPP Forgiveness Application Process

Follow these steps to submit your forgiveness application to your lender for SBA approval.

Step 1


Ask your lender if they use the SBA forgiveness forms or an online version of those forms. Your lender may use their own portal to process your PPP loan and forgiveness applications that requires credentials, including company identification, username and password. Keep those credentials in a secure place.

Step 2


Complete the Excel Forgiveness Calculator or your own worksheet to calculate your Forgiveness Amount. For self-employed individuals with no employees, use your PPP loan amount.

Step 3


Complete SBA forgiveness form, if the lender doesn't have an online form. Create an electronic or paper file of your documentation supporting the calculation of the Forgiveness Amount.

Step 4


Sign into the bank PPP portal and complete their online form or import your signed SBA forgiveness application. Upload all documentations required by your lender. For PPP loans over $150,000, the borrower must submit the forgiveness application for a Second Draw PPP Loan after or simultaneously with the forgiveness application of the First Draw PPP Loan.

Step 5


Download a copy of your application submission for your records if your lender uses their own online form.

Step 6


The lender will review your application for completeness. They may request additional documents or have a final approval process that requires you to sign electronically the forgiveness application. The lender has two months to send your application to the SBA, however, this process generally takes a few days to complete.

Step 7


After your forgiveness application is complete and approved by the lender, the lender will then submit your application to the SBA loan portal for approval.

Step 8


The SBA will approve or deny your forgiveness application. If the SBA approves your application, the SBA will notify your lender and transfer funds to the lender to pay down your loan equal to the forgiveness amount plus accrued interest related to the forgiveness amount. The SBA has 3 months by law to review, approve or deny your application, however, this process generally takes a few days to complete. As we mentioned before, the SBA will no longer deduct the amount of your EIDL Advance from your forgiveness amount.

Step 9


Your lender will inform you when the SBA has approved your application. If your forgiveness amount was less than your PPP loan, you will be responsible for paying your PPP loan balance in monthly installments until your loan maturity date.

REMEMBER: Even if the SBA approves your forgiveness amount and submits the payment to your bank, the SBA retains the right to audit your loan and forgiveness amounts. If you PPP loan or forgiveness application is audited, the SBA will request to copies of your documentation.


For some small business owners, filing for a PPP loan or forgiveness may still seem overwhelming. If you feel that way, request assistance from a SCORE Rhode Island Mentor. SCORE Rhode Island is a chapter of SCORE, a national organization and a SBA’s resource provider. SCORE Rhode Island is a volunteer organization providing free mentoring and educational services to small businesses in Rhode Island and South Coast Massachusetts.


The information provided in this post does not constitute legal, tax or accounting advice, but is designed to provide a current understanding of the Paycheck Protection Program. You should rely on the guidance provided by the SBA and US Treasury Department, advice from your CPA or attorney, and instructions from your bank. This content has not been approved by SCORE or the SBA.
For more than 50 years, SCORE has helped more than 17 million aspiring entrepreneurs and small business owners through mentoring and business workshops. More than 11,000 volunteer business mentors in more than 300 chapters serve their communities.  
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About the author
Bill Cunningham
Bill Cunningham is a SCORE Rhode Island mentor and workshop instructor, focusing on business models, business planning, and QuickBooks Online. He is a CPA with more than 30 years of working in the television industry.
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Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.

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