Blog / ERC
ERCPPP and ERC: Why a PPP Loan Does Not Rule Out the Credit
September 17, 2026 · 4 min read · By the SFG Capital team
Does taking a PPP loan disqualify me from the ERC?
No. Businesses that received a PPP loan can also claim the Employee Retention Credit. That was not true when both programs launched, and the restriction was removed retroactively by later legislation. The persistence of the original rule in people's memory is why the myth is still widespread.
What remains true is that the same wages cannot be counted toward both. That is a wage allocation question rather than an eligibility bar.
Who buys ERC claims that involved PPP wages?
Buyers prepared to review the wage allocation rather than treat any PPP overlap as disqualifying. Most ERC claims involve a business that also took PPP, so this is routine. SFG Capital reviews these claims individually, and whether one can be transacted depends on underwriting.
A clean allocation schedule moves a claim through review faster than almost anything else in the file.
Can I use the same wages for PPP forgiveness and the ERC?
No. Wages used to obtain PPP loan forgiveness cannot also support an ERC claim. Each dollar of qualified wages can be applied to one program. Where a business had more payroll than its PPP loan required for forgiveness, the excess may be available for the credit.
This is where careful allocation matters. Businesses with payroll well above their forgiveness requirement often had substantial room, and businesses that allocated everything to forgiveness may have little.
How does wage allocation between PPP and ERC actually work?
The wages claimed for forgiveness are identified, and the remaining qualified wages in the relevant periods are what can support an ERC claim. It is a reconciliation exercise across both programs, worked quarter by quarter against payroll records rather than estimated at a high level.
The output should be a schedule showing which wages went where. If your claim was prepared without one, that is a gap worth closing.
Why does PPP allocation matter when selling an ERC claim?
Because a buyer reviewing the claim will test it. Overlap between wages claimed for forgiveness and wages supporting the credit is one of the specific things underwriting looks for, since it is a common defect and one the IRS also examines. Clean allocation makes a claim straightforward to verify.
Claims that cannot demonstrate the split take longer to review and sometimes cannot be verified at all. See how ERC claims are underwritten.
What documentation supports a PPP and ERC allocation?
Your PPP forgiveness application and its supporting schedules, payroll records covering the periods used by both programs, and the ERC calculation showing which wages it relies on. Together these demonstrate that no wage was counted twice. Requirements vary by claim and are confirmed during review.
If a third party prepared the ERC claim, ask specifically for the allocation working. It is frequently the document that was never handed back.
What if my ERC claim did not account for PPP wages?
Take professional advice before doing anything else, because the answer depends on the extent of the overlap and on your specific filings. It may be correctable, and identifying it yourself is considerably better than the IRS identifying it during an examination.
It also matters commercially. Disclosing a known issue to a buyer is workable. Having it surface during diligence generally is not.
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SFG Capital purchases pending ERC claims and provides refund-related liquidity. Each claim is reviewed and underwritten individually. Pricing and terms are case by case and subject to underwriting. This page is general information and not tax or legal advice, and eligibility questions should be confirmed with a qualified tax professional. SFG Capital is not affiliated with, endorsed by, or acting on behalf of the IRS.