The pandemic inflicted tremendous economic uncertainties and not all small businesses were financially resilient. “99.99% of all businesses in the US qualify as small businesses” that generate 50% of the nation’s GDP have been marked as the hardest hit sectors during COVID-19.
On a positive note, the Employee Retention Credit (ERC) program that emerged as a beacon of light for adversely affected businesses during the pandemic is still spreading rays of hope for small businesses to claim monetary compensation from the government. In fact, the 2021 employee retention tax credits have been increased up to $28,000 per employee with additional benefits, according to a flyer released by The Department of the Treasury (USDT). And not just immediate support, churning out the tax benefits can translate into long term capital investments for these businesses, opening a massive portal of opportunity for B2SMB vendors in the future.
ERC Benefit Overview
“With the Small Business Administration (SBA) COVID-19 loan programs either closed or out of funds, the Employee Retention Tax Credit (ERTC) program is one of the last hopes for small businesses to get money in the form of an ERC refund check from the IRS, but only if they qualify, and calculate their ERC credit correctly,”.
—Marty Stewart, Chief Strategy Officer (CSO), Disaster Loan Advisors (DLA)
Deemed as one of the last hopes for small business owners to claim new-found money, ERC has been an invaluable lifeline for countless failing and struggling small businesses. Established as a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, its purpose was to avert massive layoffs by offering employee retention benefits.
Unlike the Paycheck Protection Program (PPP), ERC is not a loan, it is not taxable income either. It is a government grant for small, mid-sized as well as large businesses for keeping their employees against the pandemic hostilities. Some other eligibility conditions to enjoy ERC rewards are having W-2 employees and not contractors; reduced business capacity of complete shut down due to city, county, or state regulations; 20% less gross revenue in Q1, Q2, or Q3 in 2021 compared to the same quarter in 2019, amongst others.
As per the IRS, If any one of the conditions is applicable to a business, the business would qualify for the refund. Moreover, even if a business has received the PPP funds, it can still be eligible for ERC.
ERC Tax Credit: Win-Win for SMBs and B2SMB Solution Providers
Staying up to date on government grants can help businesses gain financially to evade several economic obstacles while adapting to efficient yet cost-effective measures. Gabriela Berrospi, the founder of the Latino Wall Street movement and a Forbes Councils Member has recently remarked, “Not only can the ERC potentially benefit you financially in the short term through you receiving a check, but it can also help your company in the long term by allowing you to reinvest the capital and hire new workers as needed.”
According to a 2023 article by Analysis Mason, “SMBs will invest in IT solutions that drive innovation; and the adoption of new technologies will transform sales channels.”
The forecast is impeccably in line with last year’s predictions that revealed SMBs’ IT spending will see growth in 2023, and their investments will prefer digital reinvention as well as newer technologies.
Clearly, ERC claims can not only help the SMBs get back on their feet but can also back them in chalking out their future roadmap. This amplifies business scopes for B2SMB solution providers who can help SMBs to increase revenue with their IT-enabled, consultative services. The bigger the field, the higher the chances to score!