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The second iteration of the Paycheck Protection Program launched Monday with new problems for some – which may encourage business owners to begin looking into other available options for economic assistance during the coronavirus pandemic.
Part of the CARES Act that could benefit some business owners is the Employee Retention Tax Credit, which, like PPP, is designed to incentivize companies to retain employees despite difficult economic conditions that have resulted from the coronavirus outbreak.
It is a fully refundable tax credit equal to 50 percent of qualified wages – including certain health care costs – paid between March 12 and Jan. 1 2021, up to $5,000 per worker.
Employers can get immediate access to the credit by reducing employment tax deposits. If the employer's employment tax deposits are not sufficient to cover the credit, the employer can get an advance payment from the IRS.
The credit is available only to individuals that have been affected by the coronavirus outbreak, which includes businesses that have either fully or partially suspended operations at some point or shown a significant decline in gross receipts.
Employers who receive aid through PPP are not eligible for this tax credit. The ERTC also cannot be combined with other tax credits.
Robert Spence, a certified financial planner for Raymond James, told FOX Business he is working on researching different options available to businesses because the assistance came out quickly. He noted it may not be the best course of action to just tell everyone to apply for PPP when – for some individuals – the tax credit could in fact “be a better deal.”
L.J. Suzuki, the founder of CFOShares.org, told FOX Business the best move for a particular individual will depend entirely on their specific situation.
To Spence’s point, Suzuki noted that for some business owners who may not have employees PPP is not useful. For those people, the SBA’s economic injury disaster loan program might be a better option. For others who may not want to personally guarantee a loan, PPP could be a better choice.
Another reason why some business owners may want to consider options beyond PPP? When the initial $350 billion in funding ran out millions of small businesses had applications in the queue waiting to be processed. Suzuki told FOX Business he doubted the additional $310 billion allocated to the program through the most recent round of stimulus funding would be enough to cover every eligible small business either.
He expects about half of eligible business owners to receive funding through the highly coveted program.
Meanwhile, as some businesses tried to apply for PPP funding Monday when the program reopened, they were met with error messages.
A senior Small Business Administration official told FOX Business on Monday the system was slowed by unprecedented demand – and as of Monday afternoon, 4,000 lenders had processed more than 100,000 loans.