Advisers juggle benefits of PPP and tax credits.

As the U.S. Small Business Administration continues to widen the eligibility pool for Paycheck Protection Program participants, financial advisors and tax professionals are scrambling to notify clients of new financing opportunities and what this may mean during the upcoming tax season.

From February 24 to March 9, only businesses with fewer than 20 employees could apply for the second round of PPP funding, following a Feb. 22 Biden administration policy shift that opened the program to business owners who have committed a non-fraud felony, are delinquent on federal student loans or are lawful U.S. residents who are not citizens, according to an SBA announcement.

The changes also allocated a higher amount of financial support for self-employed individuals, sole proprietors and independent contractors through a new formula.

"Then, of course, PPP now is not only open again to for a second time for those that received the PPP first round; it's also open for those that didn't get a chance last time," Quality Business Solutions' John McFarland, told GSA Business Report. The application portal reopened for both lenders on Jan. 19.

During the chaotic first round of PPP funding, some clients, concerned that they wouldn't be able to render the loan unforgivable or that it would come with unseen strings attached, did not apply. Others became overwhelmed by the process of applying for the loan, which tended to be rockier at large banks like Wells Fargo and Bank of America and smoother at regional banks, he said.

"I have spoken with clients that did not take it, and they are struggling hard," McFarland said, adding that the SBA has already forgiven 100% of his clients that did participate in the program.

Others chose to apply for employee retention tax credits instead which, at the time, was mutually exclusive from the forgivable SBA loan but promised up to $5,000 in refundable credits for each employee on payroll from March 13 to Dec. 31.

But the tide has since changed.

Businesses applying for PPP this time around can receive employee retention tax credits; recipients of the first round of funding can retroactively apply for the credit until June 30.

Still, there's one catch. Businesses can't claim credits for payroll expenses covered by the PPP or those covered by medical leave under the Families First Coronavirus Response Act, he said.

On top of this, clients are juggling credit and PPP deduction calculations with Form 941 deadlines.

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