There is no doubt that small businesses have been hit hard by the economic downturn. As a business owner, you are likely struggling to stay afloat and make ends meet. If you’re among the 80% of small businesses still experiencing the negative ramifications of COVID-19, you likely are looking for relief.
With all the news about stimulus checks being issued to individuals, you may wonder if there is also a stimulus check for small businesses. The answer is yes!
While you may not find the same stimulus check for business options that existed during the height of the pandemic, help is still available. This blog post will discuss what you need to know to take advantage of these opportunities.
The Payback Protection Program (PPP) Stimulus Check for Business
The Payback Protection Program (PPP) was a 2020/2021 SBA program. PPPs were potentially-forgivable loans that the government gave to small businesses impacted by COVID-19.
These loans were low-interest and paid for employee wages and some operational costs. This program would give SMBs about 2.5 times every employee’s average monthly payroll fees. It also included rent, interest, and utilities.
The loan was forgivable if the business did not lay off employees and kept their wages stable.
Unfortunately, the PPP concluded in 2021. This is no longer a viable stimulus check for small business operations. The deadline to apply was 3/31/2021, almost two years ago.
It is highly unlikely that there will be a stimulus package for business applications in 2023. This is because no new programs were introduced in 2022. There is no precedent for a new program.
Tax Implications Of Stimulus Checks And PPP Loans
It’s important to remember that both stimulus checks and PPP loans are subject to tax implications depending on how businesses and their owners/employees use them.
Generally speaking, both types of payments are treated as taxable income in most cases—so it’s important to consult with a qualified tax professional before deciding how best to use these funds so that you don’t face any surprises come tax season next year!
How Can You Fund Your Small Business Going Forward?
Getting a small business grant from the SBA is a great option for many small businesses. They offer programs for research, development, management, and technical assistance. Many grant types are available, so you must do your research and learn what options are open to you.
You also could take out a small business loan from your local bank or lender. However, this is not ideal since you would need to pay it back later.
Government assistance is by far a better option.
The Basics of Employee Retention Credits
An Employee Retention Credit (ERC) is the best way to get money for your small business. It was established in 2020’s CARES Act alongside the PPP.
Unlike a PPP, an ERC applies to wages paid in each quarter of small business operations. A PPP could have applied to periods beginning and ending in different quarters.
In 2020, those accepted for an ERC would receive a payment that equals 50% of qualified employee wages up to $5,000 per employee. This program ended on 1/1/2021.
However, a new 2021 program then came into play. Small businesses could receive even more funds from the IRS, assuming their application was accepted.
At this point, the credit was increased to 70% of qualifying employee wages. The upper limit was $10,000 per employee per quarter. Thus, the annual limit for one employee is $26,000.
As of 2023, many believe SMBs can no longer access an ERC. However, this is not the case.
Some businesses can still claim this credit in 2023 if they meet the appropriate qualifications.
What Must a Business Do to Qualify for an ERC?
Before learning whether you meet qualifications, it’s critical that you understand that you would be claiming the ERC from 2020 or 2021 retroactively. Specialized 2023 funds are unavailable since the worst impacts of the pandemic are considered to be over.
If you did not claim your ERC in 2020 or 2021, though, you still may be able to claim those funds. If you did not claim them in either year, you might even be able to get the funds that you did not claim during both years.
Note that you cannot claim an ERC for wages that you previously used for PPP benefits.
To be eligible for an ERC, your business must pass one of two tests.
The Gross Revenue Test
Businesses that pass the gross revenue test:
- Experienced a loss of revenue of 50% or more in any 2020 quarter, OR
- Experienced a loss of revenue of 20% or more in any 2021 quarter.
You will need to provide documentation of your 2019 revenue in addition to that of the years you’re looking to receive retroactive ERC benefits for.
This will allow officials to compare and contrast your income and determine how much the pandemic affected your earnings. If you can pass this quantifiable test, you will likely easily qualify for an ERC.
ERC experts are happy to answer any questions you have about your qualifications. Make sure that you take advantage of professional knowledge so that you can construct an ironclad application.
The Suspended Operations Test
If you do not pass the gross revenue test, all hope is not lost. The suspended operations test requires that you closed your business at some point during 2020 or 2021 because of a government order. This closure can be either full or partial.
Passing the suspended operations test is more challenging than passing the gross revenue test. It is challenging to quantify, though there are some guidelines.
COVID-19 must have been the reason for the government shutdown order. Your business must have been affected greatly, with 10% or more of your total service hours or total receipts having been lost.
Note that ERC-eligible shutdowns vary based on several factors. Your state and specific industry will likely have different parameters than other states or other markets. It’s critical that you do your research to provide accurate documentation for qualification.
Get an ERC Today
While the government is not issuing a new stimulus check for business operations in 2023, there are still ways to get funding. Now that you can retroactively claim your 2020/2021 small business ERC, it’s time to get started.
ERC today is committed to getting SMBs the compensation they deserve post-COVID. Our experts are excited to communicate about your specific needs and provide you with your due funding.
Apply now for an ERC to begin reaping government benefits ASAP.
Business Stimulus Checks FAQs for Small Businesses
A stimulus check for small businesses is a financial aid provided by the government during times of economic hardship, such as the COVID-19 pandemic. It aims to support small businesses by providing them with funds to cover essential expenses and keep their operations afloat.
Annual Gross Revenue
$1,000 – $100,000
$100,001 – $1,000,000
$1,000,001 – $2,500,000
Individuals who are sole proprietors or independent contractors may be eligible for stimulus checks for their small businesses. Additionally, small business owners with employees may also qualify if they meet the specific requirements set by the government.
Yes, there is typically an application process to receive the small business stimulus check. Business owners need to submit relevant documents and information, demonstrating their eligibility and the financial impact of the pandemic on their operations.
The taxability of stimulus checks for small businesses may vary depending on the government’s regulations and the specific program. In some cases, stimulus funds may be considered taxable income, while in others, they may be tax-exempt. Business owners should consult with a tax professional to understand their specific tax obligations.
Various businesses were affected by the COVID-19 pandemic, but certain industries such as the following were hit particularly hard:
- recreational services
These industries faced significant financial challenges due to restrictions, reduced consumer demand, and lockdown measures. Small businesses operating in these sectors were more likely to qualify for stimulus assistance.