11062b_f0cd2b56e86443d68d21b6bc12fe055c_

Paycheck Protection Program ("PPP") & Employee Retention Credit ("ERC")

Suffice it to say there are outstanding government benefits available to companies who qualify for PPP Loans and Employee Retention Credits. Initially, these two programs were mutually exclusive and a company could only seek relief under one of the programs. Subsequently, the use of both programs by the same company was permitted under the new rules (based, in part, upon companies not being able to seek relief under both programs for the exact same employee wages).

Unfortunately, the rules and regulations surrounding these two programs are complex and confusing as the programs were initially established and subsequently revised through multiple legislations and related rules and regulations.

CALL US FOR A FREE CONSULTATION AND ASSESSMENT OF YOUR ELIGIBILITY

CALL US TO MAXIMIZE YOUR BENEFITS UNDER BOTH THE PPP & ERC PROGRAMS

CALL US TO ENSURE YOUR APPLICCATION OF THE LEGISLATIVE RULES AND YOUR DOCUMENTATION WILL BE “AUDIT READY”

Book Now

Paycheck Protection Program

The PPP loan Program was initiated under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act). The PPP Loan Program was designed to provide a direct incentive for small businesses to keep their workers on payroll. Key aspects of the PPP Loan Program are identified below.

PPP First Draw

First Draw PPP loans were to be used, over an 8-week to 24-week “covered period”, to help fund payroll costs, including benefits, and could also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations. Loans issued prior to June 5, 2020, have a maturity of two years. Loans issued after June 5, 2020, have a maturity of five years. Maximum loan amounts were based upon a multi-step calculation process and by business type. The First Draw program for application ended on May 31, 2021. Borrowers may be eligible for PPP loan forgiveness. These loans will be forgiven if all employee retention criteria are met, and the funds were used for eligible expenses.

PPP Second Draw

Subsequently, the PPP Program allowed certain eligible borrowers that previously received a PPP loan to apply for a Second Draw PPP loan with the same general loan terms as their First Draw PPP loan. Second Draw PPP loans were to be used to help fund payroll costs, including benefits, and mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020 and certain supplier costs and expenses for operations. For most borrowers, the maximum loan amount of a Second Draw PPP loan is 2.5x the average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector, the maximum loan amount for a Second Draw PPP loan is 3.5x the average monthly 2019 or 2020 payroll costs up to $2 million. A borrower is generally eligible for a Second Draw PPP loan if the borrower:

Previously received a First Draw PPP loan and will or has used the full amount only for authorized uses;

Has no more than 300 employees; and

Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

It is unclear when the Second Draw PPP loan program will end.

PPP Loan Forgiveness

The SBA will forgive loans if all employee retention criteria are met, and the funds are used for eligible expenses. Note that the manner in which PPP is utilized and in which forgiveness is requested can have a very significant impact on the amount of ERC credits available to a business.

Employee Retention Credit

The Employee Retention Credit (“ERC”) is controlled by the following legislation:

Cares Act § 2301

Consolidated Appropriations Act 2021

American Rescue Plan Act Of 2021

Note that in certain, but not all, cases the newer legislation superseded prior legislation.

The ERC is a refundable tax credit against certain employment taxes equal to 50% or 70% (depending on time period) of the qualified wages an eligible employer pays to employees after March 12, 2020, and through December 31, 2021. Negatively impacted businesses may be able to receive up to $33,000 per employee.

Eligible employers can get immediate access to the credit by reducing employment tax deposits they are otherwise required to make. Also, if the employer's employment tax deposits are not sufficient to cover the credit, the employer may get an advance payment from the IRS. Because this credit can apply to wages already paid after March 12, 2020, many struggling employers can get access to this credit by reducing upcoming payroll tax deposits or requesting an advance credit. Employers, including tax-exempt organizations, are eligible for the credit if they operate a trade or business during calendar year 2020 and 2021 and experience either:

A significant decline in gross receipts; or

The full or partial suspension of the operation of their trade or business during any calendar quarter because of governmental orders limiting commerce, travel or group meetings due to COVID-19.

Additionally, companies which opened after February 15, 2021 may be eligible for assistance under the ERC Program.

Prequalify Now and Determine Your Eligibility

To begin the process of determining whether, and how much, assistance you might qualify for, call us for a free consultation or click this button

Book Now