Banks and their business customers that have not yet utilized the Employee Retention Credit can still do so and open up millions of dollars in new revenue opportunities in the process, according to Cindy Verity, executive vice president of the firm Innovation Refunds.
Verity presented May 6 during the Bank Holding Company Association’s Spring Seminar. Based in West Des Moines, Innovation Refunds assists small and medium-sized businesses in receiving cash incentives from state governments and the federal government.
Verity noted that employers can receive $26,000 per employee through the Credit — $5,000 for the 2020 tax year and, after eligibility was expanded for 2021, $21,000 from the following year. Verity noted that Innovation Refund clients receive an average of $380,000, which allows businesses to pay loans, expand, while allowing banks to attract and retain customers while gaining a revenue source.
The Employee Retention Credit, passed as part of the same bill as the Paycheck Protection Program, “is a refundable tax credit against certain employment taxes equal to half of the qualified wages an eligible employer paid to employees” between 2020 and the third quarter of 2021, according to the IRS. The credit covers businesses with up to 500 employees whose overall revenue dropped during that time or were “more than nominally impacted by Covid-19,” Verity added. This could include an employer not being able to meet with customers, or having to completely suspend operations.
The program will end by Q3 2024.