Many thought these two programs were obsolete or no longer active. However, the rules have changed and you may very well be eligible for them. Yes even if you received PPP in the past, you may still be able to receive the ERC. It only takes a phone call to find out. So let's take a look at them both and see how they can assist you and your business.
The Paycheck Protection Program (PPP) and the Employee Retention Credit (ERC) are two government programs that were created to support businesses affected by the COVID-19 pandemic. Here is a brief overview of how they differ and how they can help your business:
PPP:
Purpose: To provide forgivable loans to small businesses to cover payroll and certain other expenses.
Eligibility: Small businesses with 500 or fewer employees, including self-employed individuals and independent contractors.
Loan Amount: Up to 2.5 times your average monthly payroll costs, with a maximum loan amount of $10 million.
Forgiveness: The loan can be partially or fully forgiven if certain conditions are met, such as using the funds for payroll, rent, and utilities.
Repayment: Any portion of the loan not forgiven must be repaid over a 2-5 year term with a 1% interest rate.
ERC:
Purpose: To provide a tax credit for employers who retain their employees and continue to pay them during periods of economic hardship.
Eligibility: Employers with less than 100 full-time employees whose operations were fully or partially suspended due to a COVID-19 related shut-down order, or whose gross receipts declined by more than 50% compared to the same quarter in the prior year.
Credit Amount: 50% of up to $10,000 in wages per employee per quarter.
Use: The credit can be used to offset payroll tax liability, and any excess can be refunded.
Availability: The credit is available for wages paid between March 12, 2020 and December 31, 2021.
Both the PPP and the ERC can provide valuable support for businesses impacted by the pandemic, but it is important to understand the differences and determine which program is best for your business. It is also advisable to seek guidance from a professional to maximize the benefits of these programs and ensure compliance with all applicable regulations. One company we recommend is Bottom Line Concepts. They specialize in this area and have no upfront cost.
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