PPP Loan vs. Employee Retention Credit: Why Not Both?

Businesses could apply for a Paycheck Protection Program loan through May 31, 2021. As of June 1, 2021, the SBA is no longer accepting PPP loan applications. And, Congress passed the Infrastructure Investment and Jobs Act, which President Biden signed on November 15, 2021. The new expiration date of the ERTC is September 30, 2021 for most businesses.
Two of the most sought-after forms of coronavirus relief for employers are Paycheck Protection Program (PPP) loans and the Employee Retention Credit (ERC).

So, when it comes to a PPP loan vs. Employee Retention Credit, which should you choose? Thanks to the Consolidated Appropriations Act, you don’t have to choose anymore.现在,你可以申请ERC并申请PPP贷款。

Get the facts about both types of relief measures below.

PPP loan vs. Employee Retention Credit

《冠状病毒援助、救济和经济安全法》(CARES Act)建立了工资保护计划和员工保留信贷。而且,许多法律(如《综合拨款法》)也扩展和扩大了这些措施。

Both relief measures encourage employers to keep employees on their payroll. They essentially provide employers with funds to cover payroll costs. One comes in the form of an SBA-guaranteed loan and the other in the form of apayroll tax credit.

Learn about both below.

What are they?

Paycheck Protection Program:PPP是一种可原谅的贷款,雇主可以通过批准的贷款人申请,以帮助支付工资成本(高达10万美元的工资、员工福利以及州和地方税收)。雇主还可以使用部分资金(40%)支付抵押贷款的利息、租金、公用事业、运营支出、已覆盖的财产损失、供应商成本和工人保护支出。

Employee Retention Credit:该抵免是一种可退还的工资税抵免,雇主可以在其联邦就业税申报单上申请,以支付员工工资和与这些工资相关的合格健康计划费用。

Am I eligible?

Paycheck Protection Program:All small businesses with 500 or fewer employees andsome businesses in certain industrieswith more than 500 employees can apply for a PPP loan. This includes self-employed individuals, independent contractors, sole proprietorships, nonprofits, veterans organizations, tribal businesses, housing cooperatives, media organizations, and small agricultural cooperatives.

Employee Retention Credit:Employers of any size are eligible for the Employee Retention Credit if they meet the qualifications. But, self-employed individuals cannot claim the credit for their self-employment services or earnings.

To qualify, you must have experienced either of the following in any calendar quarter in 2020:

  1. Fully or partially suspended operations due to COVID-19-related government orders
  2. Experienced a significant decline in gross receipts or revenue due to the coronavirus

时间表是什么?

Paycheck Protection Program:小企业和个人独资企业可以在2021年5月31日前申请(得益于《2021年工资保护计划延期法案》)。请注意,资金有限,贷款以先到先得的方式发放。

Employee Retention Credit:雇主可以对2021年12月31日前支付的符合条件的工资申请工资税抵免。

How much could I receive?

Paycheck Protection Program:首次申请的申请人最高可获贷款1,000万元。第二次申请的申请人可获得最高200万美元的贷款。Loan amounts are based on the employer’s average payroll costs over a qualifying period, plus an additional 25%.

Employee Retention Credit:Employers can receive a maximum credit of $7,000 per employee. Credits are worth 70% of qualifying wages and associated qualified health plan expenses paid to employees (up to $10,000 in wages per employee).

Again, employer size doesn’t matter when it comes to Employee Retention Credit eligibility. However, your average number offull-time equivalent employeesin 2019 determines qualifying wages.

If you averaged fewer than 500 FTEs, your tax credit is based on wages paid to all employees during the period of suspended operations or gross receipts decline. If you averaged more than 500 FTEs in 2019, the tax credit is based on wages paid to employees whodid not workduring the period of suspended operations or gross receipts decline.

How do I apply?

Paycheck Protection Program:To apply for a PPP loan, fill out thefirst-draw application formorsecond-draw application form并向经批准的贷款人申请。你还需要其他文件,比如你公司的雇佣税表格和工资账本的复印件。

Employee Retention Credit:你可以通过保留缴款来减少欠税,而不是将它们存入国税局。在你的联邦就业税申报单上申请抵免(例如,表格941、944或943)。

What are my repayment responsibilities?

Paycheck Protection Program:PPP loans are 100% forgivable on the principal amount (plus accrued interest) if you use them for qualifying expenses and meet SBA requirements (e.g., borrowers of certain loan amounts must maintain employee count and salary levels). If you use part of the loan for non-qualifying reasons, that portion is not forgivable.

The PPP loan has a repayment plan of five years and a fixed interest rate of 1%.

Employee Retention Credit:You do not have to repay the Employee Retention Credit.

However, if you receive an advance of the credits (usingForm 7200), you’ll need to account for that amount when filing your federal employment tax return.

What kind of recordkeeping do I need to do?

Paycheck Protection Program:向你的贷方申请贷款减免。你需要证明全职员工的数量和工资水平,以及符合条件的非工资支出。

Employee Retention Credit:Keep documents showing how you calculated the credit amount. Also, retain documents that show that you had to suspend operations or experienced a decrease in gross receipts. If you applied for an advance, keep a copy of Form 7200 in your records, too.

No double-dipping with paid leave

The paid leave tax credit was established under the Families First Coronavirus Response Act. It lets employers who are required to providecoronavirus paid leavereceive a tax credit for the amount of the paid leave wages.

You can apply for the Paycheck Protection Program loan, claim the Employee Retention Credit, and claim the FFCRA paid leave credit.

However, you cannot double-dip.

如果你选择使用员工保留积分和带薪休假积分,你不能用相同的工资要求这些积分。因为您只能从带薪休假工资中申领带薪休假积分,所以您不能从FFCRA带薪休假工资中申领员工保留积分。

如果你得到了工资保护计划贷款,并要求带薪休假积分,带薪休假工资不计入符合PPP贷款减免条件的“工资成本”。由于您在FFCRA带薪休假工资上索赔带薪休假抵免,所以在请求PPP贷款减免时,不要将FFCRA带薪休假工资计算为工资成本。

尽管工资保障计划已经结束,但其他形式的政府援助仍可用于宣布的灾难和紧急情况。Download our FREE guide to navigating through disasters and emergencieshere!

This article has been updated from its original publication date of April 13, 2020.

This is not intended as legal advice; for more information, pleaseclick here.

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