The Covid-19 pandemic affected many businesses. The outbreak led many firms to shut down or lay off employees. However, many business owners tried to keep their businesses running and helped employees financially. In such cases, ERC and PPP funds play a crucial role. 

You should contact Sunrise Business Solutions to get started with your ERC credits application. Even if you have claimed PPP, you are eligible to claim both funds. ERC and PPP were created to provide similar benefits to businesses. However, ERC is more generous. While some business owners might be aware of both terms, most employers will likely be confused about one of them. You should look at this article if you want to know more about the differences between ERC and PPP. 

What is ERC? 

Employee Retention Credit is a type of credit that encourages employers not to lay off employees during difficult times. For instance, the pandemic made it difficult for a business to function normally. In such cases, many companies laid off several employees. 

However, some business owners still choose to keep their employees on the payroll and prevent them from being unemployed. Apart from covering the payroll, employers also ensured to protect employees’ health insurance costs. 

In such cases, an employer can apply for ERC credits while filing quarterly taxes and expect tax credits or refunds for covering employees’ costs and wages. 

What is PPP?

Often, small-scale businesses may suffer from financial hardships. It could be challenging for a company to cope with wages and other costs. Although, the Paycheck Protection plan can prove to be helpful for several small-scale businesses. 

The Paycheck Protection plan is a fund that provides small-scale business owners with finances and resources to cover employees’ wages and costs for up to eight weeks. The business owner can use PPP funds to pay rents, utilities, or mortgages. 

Difference between both terms

After getting familiar with each type of credit, you might know that both are not very similar. The significant difference between ERC and PPP is the timeline of coverage and that ERC is not a loan. ERC offers the business owners a long time to cover employees’ wages and costs and can be claimed retroactively, while PPP can only cover up to eight or ten weeks. 

The employer can apply for both credits. There are differences in application forms, documentation, application deadlines, etc.

However, the employer must contact a knowledgeable ERC specialist like Sunrise Business Solutions to apply for either of the plans.