How PPP Loans Differ From ERC Funding

The impact of the COVID-19 pandemic was staggering, with 34% of small businesses in the United States forced to close last year. To help offset this tremendous loss, Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act which featured two main programs: The Paycheck Protection Program (PPP) Loans and Employee Retention Credit (ERC).?

What distinguishes these qualifying loan options from each other? Within this article we provide an overview on PPP loans vs ERCs so you can make a more informed decision when deciding what's best for your business.

What Is the Payment Protection Program?

Launched in March 2020, the Small Business Administration's Paycheck Protection Program (PPP) seeks to help small businesses keep their employees on payroll during the uncertain economic times of COVID-19. The PPP legislation allows for a second loan or "second draw" which acts as an incentive for organizations to continue paying wages despite any financial hardships they may encounter.

The second PPP loan draw is available to those who:?

• Previously received the first PPP loan?
• Have no more than 300 employees?
• Can prove at least a 25% reduction in gross receipts between quarters in 2019 & 2020

PPP loans can be used for:?

• PPP Loans can be used for mortgage, rent, and lease payments
• ?PPP Loans can be used for utilities
• ?PPP Loans can be used for operations expenditures?
• ?PPP Loans can cover property damage costs not covered by insurance due to public disturbances??
• PPP Loan funds may also be used for worker protection expenditures in order to comply with COVID-19 guidelines

What Is the Employee Retention Credit (ERC)?

Amid the pandemic, ERC has stepped up to protect businesses affected by COVID-19 with a refundable tax credit initiative. Employers can take advantage of this opportunity, and receive an immediate benefit; reducing their employment taxes or even getting a refund if credits happen to exceed payroll taxes. With quick access to these funds through loan options, employers have been granted invaluable support during turbulent times.

Qualifications for ERC are as follows:

• Businesses may be eligible for a payroll tax credit if they experience a full or partial suspension of operations due to COVID-19 related actions.
• ?Businesses that experienced a decline in gross receipts during the calendar quarter of 2020 may also be eligible for the payroll tax credit.

ERC can be used for:?

• The Payment Protection Program offers loans to small businesses that can be forgiven if certain criteria are met, while the Employee Retention Credit is a payroll tax credit for employers who keep workers on their payroll.
• Health insurance costs are not eligible for forgiveness under the Payment Protection Program, but they may be eligible for the Employee Retention Credit.

The Differences Between PPP and ERC

PPP

• This form of aid is a forgivable loan.
• The payments are processed through banks and through the Small Business Administration (SBA).
• Employers do not have to pay back the loans (unless there is an amount that was taken out and not used).

ERC

• This form of aid is a tax credit.
• The payments are processed through the IRS.
• Employers do not have to pay back the credit.

Differences of Eligibility of PPP and ERC

Businesses of all shapes and sizes have taken advantage of two aid programs - the Paycheck Protection Program (PPP) and Employee Retention Credit (ERC). Take a look at their contrasting eligibility requirements to decide which may offer you better assistance.

PPP

• All small businesses with 300 employees or less may be eligible for the program.
• To be eligible, the business must show that it experienced a 25% decrease in any quarter’s gross receipts from 2019 to 2020.

ERC

• All employers, except those who are self-employed, may be eligible for the ERC.
• To be eligible, the business must show that it experienced a decrease in gross receipts by more than 20% in any quarter of 2020 compared to the same quarter in 2019.
• The ERC applies to wages paid after March 12, 2020 and before January 1, 2021.

Difference of Benefits of PPP and ERC:

By providing financial stability, PPP and ERC aid have become integral forces in supporting employees' earning potential. Through these forms of relief, businesses can create a lasting foundation for their workforce and ensuring that everyone is on an even playing field.

PPP

• Business owners can now access up to $2 million in additional funds through the second round of Paycheck Protection Program (PPP) loans, offering 3.5 times their average monthly payroll costs for 2019 or 2020.

ERC

• For each employee, up to $10,000 in wages can be counted to determine the amount of the 50% credit for their qualified wages.
• The payment from the IRS (often in the form of a cash payment) may work towards offsetting payroll tax payments in the future.

You CAN Use Both PPP and ERC

Business owners have the opportunity to benefit from the Taxpayer Certainty and Tax Relief Act (2020) and Consolidated Appropriations Act, 2021 by using both PPP Loans as well as Employee Retention Credits. The ability to participate in ERC remains valid through 2024 - an invaluable asset for employers on their pathway of recovery.

Choose Oppuous’ Cost Recovery Partners to Get You the Money That is Rightfully Yours

Oppuous’ Cost Recovery Partners are an invaluable business resource, offering expert advice and support to navigate the complexities of ERC. From finding out whether your company qualifies for use through providing assistance with taxes filing, our experienced team makes sure every step of a qualifying businesses’ journey runs as smoothly as possible. With superior client care at its core, Oppuous’ Cost Recovery Partner helps companies make sense of payments related to Employee Retention Credit while also taking time to answer any questions or concerns you may have along the way.

It’s Not Too Late to Apply for the ERC

Businesses everywhere have been impacted by the effects of COVID-19, however individuals are not without options for economic relief. The Employee Retention Credit (ERC) is one such opportunity to receive much needed aid in this difficult time. As an eligible business, don't miss out on this chance to gain vital support and get back on your feet! Contact us for more information about how you can take advantage of their services. It is never too late.?

Reach out to us for more information on how we can get you the money that you deserve: https://bit.ly/3CqIMp3