Up To $400 Billion Available To Small Businesses Through The Employee Retention Credit

Small businesses looking for an infusion of cash could benefit from up to $400 billion in refundable tax credits through the Employee Retention Credit program based on a Lendio analysis of internal and SBA data. Signed into law as part of the CARES Act to provide relief during the COVID-19 pandemic, the Employee Retention Credit allows qualifying small businesses who retained W-2 employees throughout 2020-2021, to claim up to $26,000 per W-2 employee. 



On average businesses that apply through Lendio receive $74,000 through the ERC. Qualified businesses with less than two W-2 employees average $13,000, and companies with 25+ W-2 employees average $302,000. 



Based purely on the number of small businesses and the number of W-2 employees at those businesses the highest potential amount totals up to $1.5 trillion, but after going through complex qualification criteria, businesses get, on average, $7,000 per W-2 employee out of the maximum $26,000. 



Full qualification requirements include:



2020 qualifications:




Qualifying wages of up to 100 full-time W-2 employees;



A decrease in gross revenue of at least 50% compared to the corresponding quarter in 2019;



Or either a full or partial suspension of business operations created by a government mandate 




2021 qualifications:




Qualifying wages of up to 500 full-time W-2 employees

At least 95% of businesses in every state have less than 500 employees





A decrease in gross revenue of at least 20% compared to the corresponding quarter in 2019



Or either a full or partial suspension of business operations created by a government mandate






ERC Opportunity By State



By combining SBA data on:




Number of small businesses in each state in 2020 and 2021



Number of small business W-2 employees in each state in 2020 and 2021




With Lendio data on the typical credit amount small businesses qualify for, Lendio found the potential dollar amount available to SMBs in each state.







State # Of Small Businesses Likely ERC Potential Available For SMBs AK 73,981 $955,463,790.00 AL 408,374 $5,650,103,976.00 AR 258,552 $3,435,787,167.00 AZ 611,097 $7,693,400,000.00 CA 4,200,000 $50,921,700,000.00 CO 674,741 $8,258,300,000.00 CT 355,596 $5,181,664,955.00 DC 79,814 $1,776,757,105.00 DE 88,051 $1,325,359,503.00 FL 2,800,000 $25,043,900,000.00 GA 1,100,000 $11,889,800,000.00 HI 137,328 $1,925,000,584.00 IA 273,969 $4,559,925,524.00 ID 176,029 $2,333,867,134.00 IL 1,200,000 $17,485,000,000.00 IN 529,456 $8,392,800,000.00 KS 258,012 $4,212,078,665.00 KY 360,756 $5,007,094,984.00 LA 464,527 $6,338,986,883.00 MA 715,425 $10,491,000,000.00 MD 618,214 $8,392,800,000.00 ME 150,593 $2,052,182,977.00 MI 902,131 $13,288,600,000.00 MN 533,344 $9,092,200,000.00 MO 542,519 $8,392,800,000.00 MS 264,858 $3,061,171,849.00 MT 126,219 $1,739,868,328.00 NC 964,280 $11,889,800,000.00 ND 75,427 $1,371,983,121.00 NE 180,988 $2,904,851,376.00 NH 137,811 $2,125,962,145.00 NJ 937,436 $13,154,100,000.00 NM 158,844 $2,398,205,747.00 NV 297,183 $3,635,511,059.00 NY 2,300,000 $28,675,400,000.00 OH 982,035 $15,386,800,000.00 OK 362,364 $4,997,755,842.00 OR 396,925 $6,220,658,087.00 PA 1,100,000 $17,485,000,000.00 RI 106,412 $1,611,751,698.00 SC 445,804 $5,788,076,766.00 SD 89,942 $1,469,637,384.00 TN 636,842 $7,693,400,000.00 TX 3,000,000 $34,136,100,000.00 UT 313,590 $4,220,845,106.00 VA 783,977 $11,190,400,000.00 VT 79,189 $1,105,428,062.00 WA 647,639 $9,791,600,000.00 WI 461,525 $9,092,200,000.00 WV 113,184 $1,899,631,463.00 WY 70,618 $911,135,280.00








States Most Likely To Qualify



While Lendio’s analysis found potential money available largely aligns with the population of each state, certain states and industries are more likely to have businesses who qualify for the Employee Retention Credit based on the number of government mandates that impacted businesses and how broadly pandemic precautions impacted certain industries.



Businesses in the following states are most likely to qualify for the Employee Retention Credit based on being above average in the following variables:




Average number of qualifying quarters



Percent of the qualifying quarters revenue was impacted



Percent of the qualifying quarters a government order impacted that industry



Percent of the time there was no government order



Average last date of government order








State Z Score NY 3.85 MI 3.77 NJ 3.45 WA 3.00 CO 2.90 CA 2.69 NM 2.05 OH 2.00 MD 1.92 MA 1.88 IL 1.12 AL 1.06 NV 1.03 OR 0.80 LA 0.77 PA 0.71 MO 0.00 Based on data provided by ERC Pros.








ERC Opportunity By Industry



The following industries are most likely to qualify for the Employee Retention Credit based on being above average in the following variables:




Average number of qualifying quarters



Percent of the qualifying quarters revenue was impacted



Percent of the qualifying quarters a government order impacted that industry



Percent of the time there was no government order



Average last date of government order








Industry Z Score Gym 3.98 Amusement / Recreation 3.68 Church 3.63 Beauty Salon 3.43 Restaurant 3.06 Real Estate 2.79 Retail 2.69 Laundry Services 1.52 Bakery 1.48 Assisted Living 1.36 Manufacturing 1.16 School 1.15 Based on data provided by ERC Pros.








Advice For Small Businesses



Recent news around ‘ERC Mills’ taking advantage of small businesses is a great reminder to all small business owners to work with reputable companies when filing their tax credit. Lendio has been supporting small businesses for over a decade and has facilitated more than 350,000 small business loans in addition to facilitating more than $10 billion in PPP loan and ERC approvals as part of government COVID-19/CARES Act relief.



The qualification criteria for the ERC have evolved over time. Credible ERC professionals can help you navigate these details and maximize your refund. 



If you are qualifying due to a full or partial suspension rather than a decline in gross receipts, providing detailed documentation of how your business was impacted by a government order is key to ensuring your application is approved. 




Was your ability to provide goods or services to your customers affected? Did foot traffic in your store go down by 10, 20, 30%? Or did you lose half of your contracts because Zoom meetings didn’t cut it? There are lots of ways to be specific here.



Were any external businesses impacted by government orders that then impacted your normal operations? If you had a hard time getting supplies from vendors, let us know the dates, vendor names, and details.



Visit our ERC FAQs for more information about the Employee Retention Credit.




If in doubt about whether you’ll qualify for the money, still apply for free . You may be surprised by what you can qualify for. 







Sources



Lendio Proprietary Data



ERC Pros Proprietary Data



2020 SBA state profiles



2021 SBA state profiles  

















See If You Qualify For The ERC



Lendio’s easy-to-use ERC application is designed to simplify the process at every step. 





Get Started.
























Information provided on this blog is for educational purposes only , and is not intended to be business, legal, tax, or accounting advice. The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of Lendio. While Lendio strivers to keep its content up to-date, it is only accurate as of the date posted. Offers or trends may expire, or may no longer be relevant.
The post Up To $400 Billion Available To Small Businesses Through The Employee Retention Credit appeared first on Lendio .