The Paycheck Protection Program (PPP) will re-open the week of January 11 for new borrowers and certain existing PPP borrowers. To promote access to capital, initially only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13. The PPP will open to all participating lenders shortly thereafter.

For the latest information on the recent stimulus package, register here for our third Small Business Update event, which will take place on Tuesday, January 19, at 2 p.m. ET.

With the nearly $900 billion coronavirus stimulus bill being signed into law on December 27, the federal government began the process of providing new aid to businesses and individuals impacted by COVID-19 disruptions.

During the January 5th Small Business Update, U.S. Chamber of Commerce executive vice president and chief policy officer Neil Bradley and Jeanette Mulvey, content director at CO—, discussed the coronavirus relief bill in more detail, including the Employee Retention Tax Credit (ERTC), Economic Injury Disaster Loans (EIDLs), second draw PPP loans and new live-venue grants.

Here are some takeaways (among many) from the wide-ranging discussion.

Who Qualifies for the Employee Retention Tax Credit

When the CARES Act was passed in March 2020, it included the ERTC as an option for financial relief for businesses. But companies could only take a PPP loan or the ERTC in the original bill.

Congress has now changed this so companies can take advantage of both ERTC and PPP, and they even expanded the ERTC for 2021. In the first and second quarter of 2021, employers that meet the eligibility can receive a tax credit for up to $14,000 per employee.

On top of the new ERTC credits that can be obtained in 2021, many businesses may also qualify for smaller credits that were offered in 2020, which are worth a maximum of $5,000 per employee. Some companies that are filing quarterly taxes with a deadline of January 15, for example, should talk to their tax preparers about 2020 ERTC eligibility.

“If I have one takeaway, it’s to pay attention to this tax credit,” Bradley said. “Small businesses had to choose between taking a PPP loan or getting the Employee Retention Tax Credit. A lot of people gravitated toward PPP because, frankly, it was a better deal. Congress has removed that prohibition about taking advantage of both. So now, if you took out a PPP loan in 2020, you can take advantage of the ERTC in 2021 and may be able to apply part of it looking backward for 2020. This is a more generous opportunity than what was originally in the CARES Act.”

So now, if you took out a PPP loan in 2020, you can take advantage of the ERTC in 2021 and may be able to apply part of it looking backward for 2020.

Neil Bradley, executive vice president and chief policy officer, U.S. Chamber of Commerce

What the new stimulus bill means for small business

Watch our event replay from Tuesday, January 19, where we continue to discuss and answer questions on the new coronavirus relief bill and how it pertains to small businesses.



The ERTC is refundable and advanceable

What makes the Employee Retention Tax Credit even better for businesses who qualify is that it is both refundable and advanceable. This means potentially having the ability to get the tax credit back early in the form of a check.

“The IRS sends you a check for the difference between what you would have paid in taxes and the eligible tax credit,” Bradley said. “Importantly, you can apply to receive an advance on this tax credit, which can help with cash-flow issues.”

Bradley strongly encourages businesses to talk with their tax preparers and payroll companies immediately to see if they can take advantage of the expanded ERTC.

New PPP, EIDL grant and live venue grant applications will be released soon

With legislation signed into law on December 27, many business owners are asking when applications will be available. For PPP, businesses should be in direct touch with lenders so they can be ready to submit applications as soon as they are accepting them. For EIDL grants and live venue grants, companies should be looking for new portals on the Small Business Administration’s website.

The “second draw” PPP program is much more targeted

Bradley noted that the new second draw PPP program is more narrow this time around. Businesses and nonprofits with fewer than 300 employees that have exhausted their first PPP loan and have seen a reduction in revenue of 25% in a single quarter of 2020 should be eligible.

“The second draw PPP is really an opportunity for the hardest-hit small businesses to get another loan that can also be forgiven,” Bradley said. “If your business is only off 5%, you don’t qualify for the second PPP even if you qualified for the first.”

Looking for more information?

Read more about second draw PPP loans in the CO— December 2020 Small Business Update. Businesses can also read more about PPP and the changes in the coronavirus relief bill in the U.S. Chamber’s Updated Guide to Small Business COVID-19 Emergency Loans.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Published January 05, 2021