For a long time, there was a lot of confusion about whether or not businesses could receive both a PPP loan and claim ERC benefits.
Eventually, this confusion was cleared up by further legislation that made it possible for businesses to utilize both benefits as part of their economic recovery strategy.
So yes, you can claim ERC funds even if you already received a PPP loan. Here's a brief overview of how this became possible.
Early rules governing PPP & ERC
When both the PPP and ERC programs were created by the CARES Act, the initial rules only allowed business to claim one of them.
Most chose to get a PPP loan, which is why that program became more widely known by the general public.
However, things changed in 2021 when Congress passed the Consolidated Appropriations Act. This law expanded ERC eligibility to businesses who already received the PPP loan. In fact, it even made that expansion of eligibility retroactive, all the way back to March 2020.
How the PPP could affect your ERC claim
Even though businesses are allowed to claim both the ERC tax refund and the PPP loan benefit, they do affect each other.
This is especially true when applying for PPP loan forgiveness.
In order to qualify for full forgiveness of your PPP loan, you'll need to prove that you used the loan funds for allowed expenses.
These allowed expenses include payroll costs, which must make up at least 60% of the funds used, as well as mortgage interest, rent, and utility payments.
Because PPP loan forgiveness requires you to prove payroll costs, any employee wages you list to meet the minimum requirement for forgiveness can NOT be counted as qualifying wages for your ERC refund.
Using the same wages for both would essentially be double-dipping, which the IRS really frowns upon.
In order to maximize how much you can claim on your ERC refund, you'll need to be strategic in listing wages on the application for PPP loan forgiveness.
Our team here at ERC Go can help you with that.
Your strategic partner for ERC claims
If you've held back from claiming an ERC refund because you thought your PPP loan(s) disqualified you from the program, then here's your wake-up call!
Receiving a PPP loan doesn't automatically disqualify you from claiming money under the ERC program. In fact, you're more likely to qualify than if you didn't receive a PPP loan!
However, because you CAN qualify for both, you'll need a well-planned strategy to maximize each benefit so that you don't accidentally leave any money on the table.
And that's where we come in.
As ERC experts, we know the rules of the program inside and out, including how it's affected by PPP loan forgiveness. This expertise means that we're able to make sure that you'll receive full forgiveness of your PPP funds and get the maximum possible amount for your ERC refund.
To get started, simply give our team a call or create an account and begin the process online.