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Education

Maximizing COVID relief The Small Business Administration
noted that 76 percent of small
funds for small businesses businesses took out PPP loans in 2020
and 2021, for a total of $790 billion.
The PPP's forgivable loans provided
By Tyler Kem up to $10 million for companies that
continued to keep their employees on
Strike Tax Advisory the payroll. According to the Federal
Reserve Bank of Cleveland, "more
he U.S. government has poured nearly money was devoted to this program
$6 trillion into the American economy than any other in the fiscal response
since the beginning of the COVID-19 to the pandemic."
T pandemic. Starting with the CARES
Act in March 2020, COVID relief funds have The PPP loan was intended to
attempted to reduce the pandemic's financial primarily shoulder the highest
impact on businesses, local governments, and business operating costs—payroll.
communities across the country. However, only 60 percent of the loan
was required to be spent on payroll
Small business owners have had the unenviable position of navigating lockdowns for a loan to be forgiven. The rest
while also dealing with labor shortages and supply chain disruptions. Two of could be spent on utilities, rent/
the most popular COVID relief packages programs, the Paycheck Protection mortgage, PPE for employees, or sick
Program (PPP) and Employee Retention Tax Credit (ERTC), are tools small leave. Businesses were allowed to
business owners can use to recover in this economy. For maximum benefit, spend up to $46,000 per employee.
small business owners are able to stack the ERTC on top of their PPP loan, but
only if they understand how the two programs can work together. Millions of small businesses rushed
Small businesses and PPP loans to apply for PPP funds, requiring
a second round of funding. By the
time the program was over, the
SBA reported the average business
borrowed $101,000 in 2020 and $42,000
in 2021 to stay afloat. Businesses in
the construction industry received
the largest percentage of loans,
followed by professional services,
manufacturing and healthcare
providers. Across industries, small
business owners were able to borrow
PPP funds to pay their employees.

A distinct advantage of PPP funding
was that small business owners
could use PPP loans to pay their own
salaries. The Federal Reserve Bank
of Cleveland credits the program
with reducing the tsunami of
bankruptcies expected by shuttering
small businesses due to public health
orders. Instead, the small business
sector has been able to bounce back
much faster than the large business
sector.

Pandemic-related tax credits for
small businesses

Even though the PPP and the ERTC
were designed to provide COVID
relief to struggling businesses, as a
tax credit, the ERTC is not limited
by a funding problem. Eligibility
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