As many readers will know, by far the most important new federal law helping business owners deal with the coronavirus pandemic is the CARES Act, which was enacted on March 27.

The main program under that act that provides these benefits is the Payroll Protection Program. The PPP has provided millions of sole proprietors and small businesses – and some very large small businesses – with substantial loans to enable them to cover salaries and wages to sole proprietors and employees that the pandemic might otherwise prevent them from covering. And PPP loan proceeds, if properly spent, are forgivable and thus will effectively become grants that need never be repaid.

For example, in order to cover “paychecks” to its owner, a profitable sole proprietorship with no third-party employees whose business is likely to be severely impacted by the pandemic can receive a forgivable PPP loan of up to $20,800.

The federal government has just released revised “EZ” and regular forms for applying for PPP loan forgiveness. The EZ form and the regular form are accessible at home.treasury.gov. And under the PPP Flexibility Act, signed into law on June 5, Congress has significantly liberalized the terms of the PPP. For example, it has reduced the maximum permitted PPP loan amount for paychecks from 75% to 60% and has increased the maximum for other permitted expenses to 40%.

However, there is a second major CARES Act program, called the Employee Retention Credit (ECR) program, that is less well known than the PPP but which, for at least a few businesses, including New Hampshire businesses, may be more favorable than the PPP. The program is complex, but, subject to certain exceptions, its chief features are as follows:

■The program provides eligible businesses with a credit of up to $5,000 for the qualified wages (including allocable qualified health plan expenses) of each of their full-time employees that these businesses retain between March 13 and December 31.

■A business is eligible for ECR purposes if a state or federal order has required it to fully or partially shut down because of the coronavirus pandemic or if its gross receipts in a relevant quarter in 2020 fall below 50% of its gross receipts in the relevant quarter in 2019.

■The business can claim its credit immediately by reducing payroll taxes otherwise payable to the IRS.

■If the business’s ERC credits exceed its payroll taxes, it can request a direct refund from the IRS.’

■Self-employed individuals, governmental employers and, businesses that have received PPP loans are ineligible for the ERC program, and businesses that have used the ERC program are ineligible for the PPP.

■Wages for which a business has received a tax credit for paid sick and family leave under the federal Families First Coronavirus Response Act cannot qualify for ERC credits.

■Wages counted under the ERC program can’t be counted under Internal Revenue Code section 455 (which provides taxpayers with an election to include certain “prepaid subscription income in gross income).

■Employees for whom a business has been granted a Work Opportunity Tax Credit under IRC Section 51 can’t be counted for ERC purposes.

If you want to obtain a detailed understanding of the ERC program, a good place to start is with the FAQs about the program issued by the IRS on May 8, accessible at www.irs.gov.

If your business hasn’t yet made use of either the PPP or the ERC program, you should check with your accountant about which of these two programs will be better for you. If you don’t have an accountant, give me a call and I’ll provide you with referrals.

John Cunningham is an attorney of counsel to the law firm of McLane, Middleton, P.A.  His practice is focused on Coronavirus legal and tax issues, LLC formations and helping business owners maximize federal and statutory tax deductions from their business income under IRC section 199A and other tax provisions.  His telephone number is (603) 856-7172.  His e-mail address is lawjmc@comcast.net.  The link to his website is www.llc199A.com.