As business owners researched federal Covid relief programs last year, they found themselves facing an either/or proposition.

They could either take advantage of the Paycheck Protection Program or the Employee Retention Credit, but not both. Facing that choice, most employers took the PPP loan, and for good reason. For most businesses, PPP offered more money, and it came in the form of cash, instead of a credit.

But guess what? The rules have changed, and employers can now take advantage of both the PPP and ERC. But how many know that? Did you? 

Colossal mistake to ignore

Many small business owners, already having opted for PPP, have forgotten about the ERC, a credit against payroll taxes they can convert to cash and use to boost their working capital.

For eligible businesses to ignore the ERC would be a colossal mistake that could potentially leave huge sums of money on the table.

So who's eligible? Potentially every private employer that was affected by Covid. 

According to the IRS, employers that have had to fully or partially suspend operations due to Covid restrictions are eligible for the ERC. Businesses that can demonstrate substantial quarterly revenue losses due to the lockdowns are also eligible.

The indirect effects of Covid lockdowns are broadly interpreted under the ERC rules, and not always intuitive. 

There's not much ambiguity that a restaurant that had to shut down in-person dining for months on end would be eligible, for instance. But what about the vendors that supply those restaurants? Or attorneys or financial advisors, say, who promote their practices through seminar marketing at restaurants? They could have a case to make for the ERC.

Consider a small business with 20 people on the payroll, where quarterly payroll taxes run $50,000. Under the ERC and its maximum credits for individual employees, that employer could potentially eliminate an entire quarter of payroll taxes, without impacting their eligibility for a PPP loan.

What's more, the IRS is offering employers the opportunity to go back and make retroactive claims under the ERC for wages they paid in 2020 that were not covered by PPP loans that were eventually forgiven. 

The new rules governing the ERC have made it more accessible and expanded the opportunities for employers to claim federal money to compensate for the terrible year we've all endured. 

With tens of thousands of dollars potentially there for the taking, business owners should take a second look at the ERC. I know I am.