Early in the Covid-19 pandemic, the CARES Act was passed to provide stimulus to struggling businesses. One much-discussed highlight of the CARES Act was the Paycheck Protection Program (PPP). Also included in the CARES Act was a less-discussed program, the Employee Retention Tax Credit (ERTC); the ERTC didn’t get as much attention because businesses could not claim both the PPP and ERTC. Since the PPP was a more lucrative stimulus in most cases, the majority of eligible businesses opted for the PPP.
PPP + ERTC now allowed
Fast forward to the recently passed Consolidated Appropriations Act (CAA). While yes, PPP Part 2 was funded, a change in the CAA allowed businesses that previously claimed a PPP to now retroactively claim an ERTC in addition to any PPP forgiveness received. As a result, many businesses are eligible for up to an additional $5,000 refundable credit per employee for 2020. Further, the ERTC was extended and sweetened for 2021 – a refundable credit is also available for up to $14,000 per employee for Q1 and Q2 of 2021.
This welcomed, yet quiet change, presents opportunities for many businesses both retroactively and prospectively. Businesses that have not yet sought PPP forgiveness should first review the ERTC rules – as the same payroll dollars cannot be used for both PPP and the ERTC, thus presenting opportunities for businesses to strategically allocate payroll between the programs in order to maximize the overall value to the business. Businesses that have sought PPP forgiveness, or applied for PPP Part 2 funding may still be eligible for ERTC funding either retroactively or prospectively.
CSH is here to assist your business with this complex analysis and interplay between PPP (first draw and second draw) and ERTC (retroactive and prospective). Contact us today for a customized analysis based on your circumstances.