Strategies to Maximize your PPP and ERC Benefits

February 24, 2021

Per the Consolidated Appropriations Act of 2021, businesses can now benefit from the Paycheck Protection Program (PPP) loan forgiveness and remain eligible for the Employee Retention Credit (ERC), as long as they don’t use the same wages to calculate both.

This expansion in eligibility is exciting news for businesses impacted by the pandemic over the last year. However, maximizing your total benefit without “double-dipping” will require a carefully calculated strategy that accounts for your business’s unique needs and circumstances.

From my experience working with companies on PPP loan forgiveness and ERC calculations, I’ve found that three crucial considerations can help ensure you receive the best possible benefit.

  1. Assess your eligibility for a Second Draw PPP Loan. Now that getting a PPP loan doesn’t automatically disqualify you from the ERC, your first step should be to pursue the Second Draw PPP Loan while the application process is still open (or a First Draw Loan if you didn’t participate in the first round of PPP loans). Obtaining a PPP loan will require determining your eligibility, calculating your maximum loan amount, gathering the necessary supporting documentation, and finding a participating PPP lender. There is a finite window of opportunity to obtain a Second Draw PPP Loan, through March 31, subject to the availability of funds.
  2. Evaluate and Calculate your ERC. The Consolidated Appropriations Act created a new and improved ERC, introducing several other enhancements to the credit in addition to the expanded eligibility for PPP loan recipients. Businesses stand to receive substantially larger benefits under the new guidelines, but the changes also mean that credit is more complex than ever, especially if your business will need to juggle the requirements for both ERC and PPP loan forgiveness. You don’t want to leave money on the table by undervaluing your ERC benefit, but it is also critical that you don’t “double-dip” on any wages, which could result in future penalization.
  3. Revisit your First Draw PPP Loan Forgiveness strategy. Guidance on PPP loan forgiveness has been evolving and changing since the program’s inception, so it only makes sense that your business’s PPP loan forgiveness strategy might need to change, too. In light of the ever-changing guidance and the new interplay with the ERC, revisiting your First Draw PPP Loan Forgiveness strategy is an important step towards maximizing your total benefit. We know that businesses cannot claim the ERC for any wages considered for PPP loan forgiveness, and that establishes an opportunity to create an optimized and intentional loan forgiveness strategy that takes any potential ERC benefit into consideration.

What’s Next

If your business is trying to juggle PPP loan forgiveness with the ERC, now is the time to think about your strategy. Both programs boast huge potential benefits, but they’re highly complex as well. Aprio can help you create a winning strategy that maximizes your total benefit while keeping you safely within the rules. Our dedicated PPP and ERC teams are well-versed in the latest guidance and can help you achieve the best-possible long-term benefit to your business.

If you would like to discuss your ERC and PPP forgiveness strategy, contact us today.

Disclaimer for services provided relative to SBA programs and the CARES Act

Aprio’s goal is to provide the most up to date information, along with our insights and current understanding of these programs and regulations to help you navigate your business response to COVID-19.

The rules regarding SBA programs are constantly being refined and clarified by the SBA and other agencies In certain instances, the guidance being provided by the agencies and/or the financial institutions is in direct conflict with other competing guidance, regulations and/or existing laws.

Due to the evolving nature of the situation and the lack of final published rules, Aprio cannot guarantee that additional changes or updates won’t be needed or forthcoming and the original advice given by Aprio may be affected by the evolving nature of the situation.

You need to evaluate and draw your own conclusions and determine your Company’s best approach relative to participation within these programs based on your Company’s specific circumstances, cash flow forecast and business strategy.

In situations where resources are provided by third parties, those services should be covered under a separate agreement directly with that service provider. Aprio is not responsible for the actions of any other third party.

Aprio encourages you to contact your legal counsel to address the legal implications of the impact of the CARES Act and specifically your participation in any of the SBA programs.

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About the Author

Justin Elanjian

Justin Elanjian, CPA, is the Partner-in-Charge of Aprio’s Paycheck Protection Program (PPP) & Employee Retention Credit (ERC) Services. As a national PPP expert, prominent speaker and strategic business advisor, Justin helps both lenders and borrowers navigate the complexities of the PPP. He also helps his clients realize benefits from other stimulus package programs, such as the ERC, and is committed to strengthening his clients’ balance sheets and helping them achieve what’s next. Justin also leads a team of more than 50 professionals who share his passion for helping businesses maximize the federal COVID relief programs.