Claiming Employee Retention Credit and PPP: Can Businesses Do Both?

March 3, 2023

Most small business owners are aware there are certain tax credits, grants, and other financial aid processes they can utilize to improve the economic situation of their business. But the Employee Retention Credit, a fully refundable payroll tax credit, is a fairly new initiative, and there is still some confusion around which businesses can or can’t take advantage of it. So it should come as no surprise that, when it comes to Employee Retention Credit and PPP loans, some business owners aren’t sure if they can receive both.

What is the ERC?

The ERC, sometimes stylized as the ERTC, is a tax credit businesses can claim on qualified wages paid to their employees if they kept employees on their payroll even in the wake of substantial setbacks during the height of the COVID-19 pandemic. 

In short, business owners who continued to employ W2 staff at their business in the midst of the worst of the pandemic may qualify for this credit and could receive up to $26,000 per employee!

You have to meet certain qualifications to claim the credit, which a trained professional like the ERC experts at Phillips Law Group can help you navigate. 

What Are PPP Loans?

Paycheck Protection Program loans – or PPP loans – on the other hand, were established by the CARES Act and administered by the U.S. Small Business Administration (SBA) and offered loans of up to $10 million to small businesses that dealt with financial hardship as a result of the COVID-19 pandemic. 

A PPP loan could be forgiven entirely if the business filed a forgiveness application and proved the money was used to cover rent, utilities, and other qualifying expenses.

Can Businesses Get Both ERC and PPP?

Previously, a business that received a PPP loan was not eligible for the ERC as well. But as a result of new legislation – the Consolidated Appropriations Act of 2021 – businesses can apply for the ERC even if they received PPP funding and loan forgiveness. (Businesses can no longer apply for a PPP loan, but the deadline to apply for ERC has not passed.)

Provided the payroll identified for the ERC was not paid out of PPP funds, it’s possible for one business to make use of both opportunities to get a little financial relief for their company. 

Ultimately, you’ll need proof that you’re not trying to “double dip,” so to speak, to use both the Employee Retention Credit and PPP programs to cover the same employee wages. That can be provided with certain documentation, which the ERC team at Phillips Law Group can help you sort out.

If you and your business previously received a PPP loan and you’re unsure of your ERC tax credit eligibility, please feel free to contact our firm to see how we can help. You can also fill out the form on this page for more information. 

Phillips and our partners have already been involved in getting ERC tax credit refunds for hundreds of companies and we have already helped these businesses apply for millions of dollars in credits. Give us a call today to see how we can help you!