President Biden has signed into law an extension to the Paycheck Protection Program (PPP) application period until May 31. The deadline had been March 31.
The PPP is designed to help struggling businesses with fewer than 500 employees keep workers employed during the COVID-19 crisis by providing loans that are forgivable if certain criteria are met.
In related news, Congress added an employee retention credit for disasters other than COVID-19, including the recent severe winter weather.
An employer still can’t “double dip” by using the same wages to claim both the employee retention credit and to obtain forgiveness for a PPP loan, but receiving a PPP loan no longer precludes claiming the employee retention credit. Even if an employer received a PPP loan in 2020 and that loan is forgiven or may be forgiven, the employer may still be eligible for employee retention credits for 2020 retroactively.
Employers should look again at the employee retention credit to see if they might qualify for 2020 and the first half of 2021. Even if there has been no decline in your business’s gross receipts, it may be possible to meet the business suspension test and qualify for these credits.
Sources: Barnes & Thornburg, Society for Human Resource Management