PPP Loans begin Monday. Here’s what you need to know

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Photo credit: Adobe Stock/Vitalii Vodolazskyi


Let’s begin by saying the White House just confirmed that PPP Loan applications will open beginning on Monday morning. There will be an ordering process on all applications. Only first-time applicants will be allowed to apply on Monday. Second draw applications will be allowed beginning Wednesday.

Some of the portals seem to be opening up telling people that they can be first in line, so the mad gold rush has again begun.

In many ways, the biggest change on the PPP2 Legislation was the Employer Retention Credit (ERC). Please remember that all of this is subject to change. We are still waiting for the final rulings from the SBA and IRS. As it sets, here are the highlights.

PPP Loan Borrowers Can Now Receive The ERC

Prior to this bill, these two items were mutually exclusive. Now, PPP borrowers can also receive an ERC retroactive to March 13, 2020. The difficulty comes in the use of the funds. An employer cannot double benefit from both. In other words, an ERC cannot be claimed on payroll that is used for forgiveness on a PPP Loan.

Employers Can Claim Previously Unclaimed ERC’s

Employers may catch up on unclaimed Employer Retention Credits by claiming the credit on the 4th Quarter of 2020 or by amending prior quarters of 2020.

PPP2 Lowers The Eligibility Threshold from a 50% Decline to 20% 

In order to be eligible for the credit, in 2020, an entity needs to be able to prove that it’s receipts were down 50% from the same calendar quarter in 2019. In 2021 that eligibility reduces to a 20% decline. Currently the expanded ERC is only available for the first two quarters of 2021.

Expansion of the Credit

The legislation expands the credit in the first two quarters of 2021 to 70% from 50%. It also changes the cap on qualified wages from $10,000 per year to $10,000 per quarter. This means that instead of getting $5,000 per employee per year, you can potentially get $7,000 per employee for the first two quarters of 2021.

I need all of you thinking about these changes before we decide what to do on the fourth quarter of 2020 payroll tax returns.


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Chris Amundson is the President & Founder of Accounting Solutions located at 3227 W Bryn Mawr Ave in Chicago. Chris has been an advocate for small business owners and entrepreneurs in the Chicagoland Area for over 25 years. He has concentrated his practice in the areas of commercial tax preparation and filing for businesses, estates, and trusts.

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