The Covid-19 pandemic has posed an unprecedented set of challenges for businesses of every size and scope.
When it comes to accessing government programs to assist businesses, professional employer organization (PEO) clients have fared better than their non-PEO counterparts in key areas; namely, the federal Payroll Protection Program (PPP) and Employee Retention Tax Credit (ERTC).
The first round of PPP loans was announced in April 2020. In 2021, businesses that received 2020 PPP loans were entitled to apply for full loan forgiveness.
In 2021, the federal government funded a second round of PPP loans.
The ERTC was designed to help small businesses weather the pandemic by enabling companies to keep people on their payrolls despite Covid-related hardships. Eligible companies were entitled to a refundable payroll tax credit equal to a percentage of wages.
Like the PPP, the guidelines for eligibility were complex. Furthermore, ERTC rules changed from 2020 to 2021. And because the ERTC has received less press coverage than the PPP, many small businesses may not even been aware of the program or its potential benefits.
PEO clients were less likely to take ERTC credits, both in 2020 and in 2021. Why? Perhaps because businesses that received PPP loans were initially considered ineligible for the ERTC. This was later changed retroactively. And, to qualify for the ERTC in 2020, a company had to have experienced at least one quarter where it had a revenue slump, compared to the same quarter in 2019, of at least 50 percent. The PPP by comparison required “only” a 25 percent decline.
When the law changed again to require only a 20 percent revenue decline for the ERTC in 2021, the gap of usage between PEO and non-PEOs closed significantly.
Like many government programs, mandates and regulations, those pertinent to Covid-19 can be a lot to take in and manage on an ongoing basis. Yet, it’s crucially important to do so, in order to keep your business on solid growth and competitive ground.
Lyons HR can help you address all these concerns and more, as you grow your business and position it for whatever the future looks like. Functioning like an off-site HR department, we can manage any or all your talent management needs, from recruitment through retirement. At Lyons, We Are HR. Read our related posts or contact us today to learn more.