How is the ERTC Different From the PPP?

July 31, 2023
Dayes Law Firm

The Employee Retention Tax Credit (ERTC) is not the same thing as the Paycheck Protection Program, also known as PPP, although they may often be mentioned closely together. They are different programs that both benefit businesses and both were passed thanks to federal government action. Let’s take a quick look at how the ERTC is different from the PPP.

Employee Retention Tax Credit

The ERTC is a refundable credit that businesses can claim on qualified wages paid to employees. It applies to 2020 and 2021 tax quarters and was created as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed on March 27, 2020.

Employers can claim the ERTC for qualified wages paid in 2020, as well as quarters 1, 2, and 3 of 2021. (Plus, Recovery Startup Businesses can claim the Employee Retention Tax Credit for wages paid after June 30, 2021, and before January 1, 2022). Your business could be eligible to receive an ERTC check if it suffered losses and faced government restrictions due to the pandemic.

The key word with the ERTC is “refundable.” Eligible employers can claim it against certain employment taxes. It’s very important to note that the ERTC is not a loan and does not have to be repaid in most cases. 

The deadline to apply for the ERTC for all quarters in 2020 is April 15, 2024. For all quarters in 2021, the deadline is April 15, 2025.

Paycheck Protection Program

Alternatively, the Paycheck Protection Program is a loan program. “This program provides small businesses with funds to pay up to eight weeks of payroll costs including benefits,” and, “funds can also be used to pay interest on mortgages, rent, and utilities,” the Department of the Treasury reported.

The point of PPP loans was to give businesses a financial lifeline to cover certain bills during a time of financial uncertainty due to COVID-19. While they are loans, as long as the funds were used for suitable needs like payroll and rent, PPP loans are totally forgivable.

PPP borrowers can apply for forgiveness at any time up to the maturity date for the loan, according to the Small Business Association (SBA).

At first, businesses couldn’t take advantage of both programs. A business that received a PPP loan was not eligible for the ERTC initially, but the Consolidated Appropriations Act of 2021 made it so businesses can apply for both PPP funding and loan forgiveness and for the ERTC.

Getting ERTC Assistance

Just to be sure everything is above board when it comes to applying for the ERTC if you also received a PPP loan, you may want to have tax professionals with a strong track record in helping businesses apply for the ERTC on your side. That’s where Dayes Law Firm comes in.

The team at Dayes Law Firm can help you get started with the process of applying for the Employee Retention Tax Credit. We’ve already assisted many business owners in filing for millions in ERTC refunds so far. We would be more than happy to help you and your business, too.

Our firm can offer a free, no-obligation consultation to discuss the needs of your business, so please contact us today to see how we can help. Fill out the form on this page or give us a call at 602-888-2900 to speak with a member of the Dayes Law Firm ERTC team and find out why we are the best choice to help you navigate the process, especially if you’ve already accepted a PPP loan. 

We look forward to hearing from you!