The last three weeks have been a blur of sweeping changes to the way we live, and to the way we do business. Some might say “if” we do business at all. In that regard, the last 10 days or so have been a whirlwind of trying to digest, interpret, and apply for various funding to help many businesses stay afloat and keep paying employees.

First came the rush to apply for Economic Injury Disaster Loans (EIDL) through the SBA. Then came the rush to first understand and then apply for the new Payroll Protection Program (PPP) loans as a result of the CARES Act.

I’m not sure anyone really understands exactly how to calculate the PPP loan amounts, or how the loan forgiveness will work.

What I know for sure is that more guidelines and clarifications are to come from the SBA and the IRS on exactly how the loan forgiveness will work.

The focus over the last few days has been on clarifying the guidelines on what qualifies for the loan calculation. Now the focus will be on exactly how the loan forgiveness will be calculated.

Here’s to hoping many businesses won’t be disappointed by how much of the loan can actually be forgiven.

So your loan applications are in and the feeding frenzy is over. Now what?

The “now what” is to slow down a bit and analyze if you should accept the PPP loans or instead take advantage of the ERTC.

What’s been overshadowed in all this is the new Employee Retention Tax Credits (ERTC). Part of the CARES Act, these fully refundable tax credits are equal to 50% of qualified wages paid, up to a maximum of $10,000 of wages per employee.

You can go here to understand the details, and determine if your business qualifies. 

There may be circumstances where the ERTC works out to be a better deal than the PPP loans. If your business has been directly impacted by the “stay at home” orders and/or you have experienced significant declines in gross receipts, you most likely qualify for the ERTC.

The thing is it’s an either-or situation – either take the PPP loan or take the tax credit. You can’t do both.

There are pros and cons to each, and a lot depends on your need for the funds right now.

If you’ve been managing cash flow and building cash reserves as part of your business strategy, you may be able to take advantage of a better deal offered by the ERTC.

So before you accept the PPP money and sign the loan document, take the time to do an analysis to determine if the PPP loan or the ERTC is the better way to go.

If you intend to keep staff through the eight-week loan forgiveness period, then most likely the PPP loan is the better way to go.

However, at the least first determine if your business qualifies for the ERTC. If you do, contact your tax advisor and get help on calculating what the ERTC could mean for your business. Then decide on if you want to accept the terms of the PPP loan, or take the ERTC tax credit. Of course, that’s assuming you actually get your PPP loan approved. Time will tell how well the system works and how many loans are completed.

There’s an old adage that says “Nothing good happens fast.” 

Well, maybe it’s good you acted fast and got your PPP loan app in. Now is the time to slow down a bit to determine if you want to accept it.