Paycheck Protection Program (PPP) Loans are extended to small businesses that need financial help due to the affects of Coronavirus. Even if your business has already applied for one PPP loan, it is possible to qualify for PPP loans again, depending on your individual circumstances. The money you get can be used to pay your employees for as long as eight weeks.
The maximum amount that your business can get per loan is $2 million. You don’t need to pay the money back unless you use less than 60% of it to pay your employees. If you use the full 60% of the loan to pay for them, you are allowed to use the rest on expenses such as rent, utilities, and any interest you may be paying on a mortgage taken out for the business.
These loans may be forgiven, in part or in full. As a result, the money from PPP loans is not considered income and you won’t have to pay taxes on it. As a business owner, you have many tax-deductible expenses. They include money spent on worker protection, supplier costs, and even property damage that isn’t covered by your insurance.
Employee Retention Tax Credit
The CARE ACT established the Employee Retention Tax Credit (ERTC,) so that businesses weren’t forced to fire their employees. As long as they are used for separate expenses, you can have ERTC and PPP at the same time without having to pay taxes on the money. There are a few qualifications your business must meet in order to get an ERTC.
One of them is that you can’t have any more than 500 employees. At the same time, your business has to have declined by a minimum of 20% during one 2020 sales quarter. If sales are not 20% lower than they were in the quarter exactly one year before, you are not eligible for these loans. The other requirement is that Coronavirus must have been responsible for your business shutting down, even just temporarily.
For more information on PPP loans, please take the time to contact Jasema Capital.