Is the ERTC Possible if My Business Didn’t Take the PPP Loan?

September 26, 2023
Dayes Law Firm

Since there have been several government programs implemented to help businesses in the wake of financial challenges from the COVID-19 pandemic, it can be hard for business owners to keep track of what they’re eligible for and which programs may actually preclude their ability to claim a different tax benefit or program. The Employee Retention Tax Credit (ERTC/ERC) and Paycheck Protection Program (PPP) loan programs are two examples where some employers may not know the particulars of how to claim them and other benefits in conjunction with them – or if they’re even allowed to do so.

Are Businesses Eligible for the ERTC If They Didn’t Accept a Paycheck Protection Program (PPP) Loan?

The Employee Retention Credit is a fully refundable payroll tax credit that employers can claim on qualified wages paid to their employees if they kept staff on their payroll even in the wake of significant setbacks during the height of the COVID-19 pandemic. It applies to quarters in 2020 and 2021 and was created as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed on March 27, 2020.

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

Meanwhile, PPP loans were established by the CARES Act and administered by the U.S. Small Business Administration (SBA). The program offered loans of up to $10 million to small businesses that dealt with financial hardship as a result of the COVID-19 pandemic. PPP loans are completely forgivable, provided the funds given to a business are used for suitable needs like payroll and rent.

Early on, a business that received a PPP loan was not eligible to claim the ERTC as well. However, the Consolidated Appropriations Act of 2021 made it so businesses can apply for both PPP funding and related loan forgiveness and for the ERTC.

No ‘Double-Dipping’ of ERTC and PPP

As a business owner, if you want to take advantage of both programs, you’ll need to be ready to prove you didn’t use wages that qualified you for PPP loan forgiveness to determine your ERTC amount, too. As long as you can provide documentation that you didn’t partake in “double dipping” by using both programs to cover the same wages, you should be in the clear. 

The bottom line is, many businesses can receive a PPP loan and also claim the Employee Retention Tax Credit, and as an employer, you aren’t required to get a PPP loan to be eligible for the ERTC. They are separate government programs that serve different purposes, but ultimately both aim to assist businesses that struggled as a result of the COVID-19 pandemic. 

Getting ERTC Assistance from Dayes Law Firm 

If you’re still unsure of your business’s eligibility to claim the Employee Retention Tax Credit, the team at Dayes Law Firm may be able to help.

Our tax professionals can help you start the process of applying for the Employee Retention Tax Credit and assist in sorting out your eligible wages, even if you’ve also received a PPP loan in the past. Our team and our partners have already helped hundreds of business owners with filing for millions in ERTC refunds so far, and we may be able to assist you and your business as well. 

Dayes Law Firm can offer a free, no-obligation consultation to discuss the ERTC needs of your business. Please contact us today to see how we can help by giving us a call at (800) 503-2000 to speak with a member of our ERTC team. We look forward to hearing from you!