PPP and ERC: How ERC Can Benefit Your Business

By 2024, it’s estimated that the COVID-19 pandemic will cost the global economy a staggering $12.5 trillion. Small business owners have been struggling to keep their businesses afloat in the wake of a weak economy and labor market. Thankfully, the U.S. government has programs available to help companies in the wake of the pandemic. 

PPP and ERC are two of the programs the government establised to help businesses stay in good financial shape after the pandemic. Curious whether these business programs could benefit you? Read on to find out!

What Is the Employee Retention Credit?

The Employee Retention Credit (ERC) was created with the CARES Act to help enable businesses to keep employees on their payroll during the COVID-19 pandemic. At the time, many businesses could not operate at their fullest capacity due to quarantines. 

The ERC is a tax credit that gives employers a tax credit of 50 percent of their qualified wages between March 12, 2020 and December 31, 2020 and 70% of qualified wages from January 1 2021 to September 31, 2021. The maximum amount of qualified wages per employee is $10,000. This means that each business could receive a maximum tax credit of $5,000 per employee for all of 2020 and up to $7,000 per employee for each quater of 2021. For a total potential benefit of up to $26,000 per employee.  

How PPP and ERC Benefit Your Business

The Paycheck Protection Program (PPP) and ERC work in two different ways. The PPP is a loan program that helped businesses make ends meet during the pandemic. It ended on May 31, 2021, however, and the ERC is the only program remaining.

The PPP provided an immediate influx of cash into your business and was later forgivable under certain circumstances. The ERC provides an added boost to your business and can be claimed up to 3 years after each quaterly 941 filing. The PPP was intended to be primarily used for payroll related expenses, where the ERC has more flexibility in its use. Both programs ensure that your business has a better ability to thrive post-COVID. 

How to Take Advantage of the ERC

First things first, in order to take advantage of the ERC, you need to be an Eligible Employer. The IRS defines Eligible Employers as businesses that either suspended or significantly adjustment to their operations dues to government madate or experienced a significant decline in gross receipts. 

Curious about what a significant decline in gross receipts looks like? The IRS actually has a specific way of looking at it. If your receipts for any quater in 2020 were less than 50 percent of your 2019 receipts at the same quater, then you may qualify. Also, if your receipts for Q1, Q2, or Q3 for 2021 were less than 80% of the same quater in 2019, you may also qualify. 

This might all sound quite complicated, but thankfully, there’s help out there for you. The professionals at ERC Opportunities are here to help you navigate the qualification process, so you can successfully claim the ERC credit. 

Are You Looking for Business Help?

PPP and ERC are both great business programs from the U.S. government that help small businesses recoup losses from the pandemic. However, since the paycheck protection program is no longer in force, the employee retention program is the best path forward. If you haven’t already started exploring your ERC options, then now is the time to do so!

Do you need assistance navigating the employee retention program? We’re here to help you do just that. Check out ERC Opportunities today to learn if your business qualifies for the ERC program!

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