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Since the beginning of the pandemic, Texas businesses and businesses across the United States have relied on various federal COVID-19 relief programs to help alleviate financial and working capital challenges. The impact of the pandemic was especially challenging because of the concurrent downturn in the oil and gas industry. Despite this, it appears the Texas and U.S. economy is rebounding as evidenced by the plummeting number of new unemployment claims, amongst other economic indicators. It is the various Small Business Administration (SBA) programs that helped to prevent disaster for many small businesses. As the pandemic continues to wane, many of these programs are no longer available leaving businesses with few options. In fact, the Infrastructure Investment and Jobs Act ended the Employee Retention Tax Credit (ERC) two months earlier than originally scheduled. When combined with the upcoming expiration of the COVID Economic Injury Disaster Loan (EIDL) program, it appears that options are running out. To help clients, prospects, and others, Calvetti Ferguson has provided a summary of the key details below.

ERC Early Termination

One main reason the ERC was terminated early was so the allocated funds could be recovered and redirected to help pay for the massive infrastructure investments outlined in the Act. Unfortunately, it also means the ERC officially ended on September 30, 2021, rather than December 31, 2021, as originally scheduled. This means that any 4th quarter advances received will need to be repaid to the IRS. Only Recovery Start-Up Businesses will be able to claim the credit through year-end.

The good news is even though the program ended early, it does not mean companies can not capture the credit. Since it can be claimed retroactively for the first three quarters of 2021, eligible businesses with qualifying wages can still receive a credit equal to $7,000 per employee, per quarter. In other words, it is still possible to receive a maximum 2021 credit of $21,000 per employee. Finally, any credit amount received will still be applied against quarterly payroll taxes just as before.

New EIDL Guidance

A fresh round of guidance was recently issued by the SBA to help companies applying for an EIDL, including:

  • EIDL Applications – There is a reminder that both EIDL loan and Targeted Advance applications will be accepted until December 31st. Processing will continue past the submission deadline until program funds are exhausted.
  • Supplemental Targeted Advanced Applications – These applications will also be accepted until December 31, 2021, but the SBA may not be able to process applications submitted near the deadline due to legal considerations. In addition, since these applications will not be processed past the deadline it is recommended that small businesses apply no later than December 10th to ensure adequate processing time.
  • Increased Loan Maximums – For those borrowers that would like to request an increase to their maximum loan amount, the guidance provides the timeframe for these requests to be submitted. The SBA will accept such requests for up to two years or until program funds are exhausted. Since it is unlikely the COVID-19 EIDL program funds will remain for two years, it is important to consider if any maximum increases will be needed.
  • Appeal Requests – It was also indicated that reconsideration and appeal requests for COVID-19 EIDL applications can be submitted before December 31st. These requests must be received within six months from the date of decline (for reconsiderations) and 30 days from the date of reconsideration decline for appeals. It is important to note when funding lapses these requests will no longer be accepted.
Contact Us

While federal COVID-19 relief programs continue to wind down, it does not mean Texas and U.S. businesses are out of luck. There is still an opportunity to retroactively claim the Employee Retention Tax Credit and apply for a COVID-19 EIDL. If you have questions about the information discussed above or need assistance with an ERC or EIDL issue, Calvetti Ferguson can help. For additional information, click here to contact us. We look forward to assisting you soon.

Lori Lato Morales, CPA

Tax Partner in Charge

832-782-5924
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