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Employee Retention Credit – Could it be a funding opportunity for your business?

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PPP loan programs have expired, but there are still significant stimulus funds available to help your business. The Employee Retention Credit (ERC) is one of the biggest potential funding opportunities available today. The maximum ERC funding is up to $5,000 per employee for 2020 and $7,000 per employee per quarter for quarters 1 – 3 of 2021.

The basic qualifications for the program differ for 2020 and 2021 and are as follows:

Qualification for ERC is a quarterly computation. Once a business qualifies for a particular quarter, it remains qualified in subsequent quarters until the reduction in revenue is less than 20% vs. the equivalent 2019 quarter. A business that does not qualify because their revenue reduction is less than the thresholds may still qualify if they were subject to full or partial shutdown due to government orders.

The amount of the ERC is based on total compensation paid to full-time and part-time employees plus health care benefits reduced by any payroll that was utilized for PPP forgiveness. As with all government programs, there are many technical aspects to qualifying and applying. Reach out to your accountant to learn if your business qualifies.

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