Back to blog page >>

PPP2 and ERC Eligibility

January 18, 2021

Are you eligible for PPP and ERC?

Click here for Calculator

ERC Employee Retention Credit Extension

  • Now in addition to PPP
  • Can’t use the same wages though
  • Extended through 6/30/21
  • Refundable payroll tax credit reported on 941
  • Different rules for 2020 and 2021
  • Eligibility by quarter using the Shutdown test or Reduction in Revenue

2020

  • 50% of wages up to $5K per employee per year
  • Only the first $10K of payments to each employee matters
  • If over 100 employees, you can only use wages paid to employees who are not working

2021

  • 70% of wages up to $7K per employee per quarter
  • Only the first $10K of payments to each employee matters
  • If over 500 employees, you can only use wages paid to employees who are not working

Shutdown test

Operations are fully or partially suspended during a calendar quarter due to “orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes)” due to COVID-19.  For details about scenarios that qualify, please see the IRS page.

Gross Receipts Test

2020:  Starts with a 50% decline in receipts from the same quarter in 2019 to 2020.  Continues as long as you remain in a 20% decline, plus one more quarter

2021:  Must have a 20% decline compared to 2019 or if you didn’t pass this test, you can still pass if the preceding quarter had a 20% reduction (some questions here)

Next Steps:

  1. Complete this form if you haven’t already received our results – share this form link with your friends who own businesses Calculatedmoves.com/ppp2erc
  2. Do not apply for PPP1 forgiveness.  The deadline isn’t until Fall 2021 and you could miss out if you apply now.
  3. Give consideration to maximizing your ERC prior to applying for PPP2

If you are concerned the PPP2 will run out of funding, take your PPP2, but understand it may reduce your ERC.  Wages cannot be used for both PPP and ERC, so applying all your wages to your PPP will disqualify you from taking advantage of the newly improved ERC.