The SBA published guidance[1] in its PPP loan FAQ that duplicates that provided by the IRS earlier, but confirms that a borrower who pays back their PPP loan by May 14 (the extended due date announced by the SBA) will qualify for claiming the Employee Retention Credit.   The original IRS guidance providing the relief only mentioned the original May 7 due date for repaying the loan.

The new question and answer 45 provides:

45. Question: Is an employer that repays its PPP loan by the safe harbor deadline (May 14, 2020) eligible for the Employee Retention Credit?

Answer: Yes. An employer that applied for a PPP loan, received payment, and repays the loan by the safe harbor deadline (May 14, 2020) will be treated as though the employer had not received a covered loan under the PPP for purposes of the Employee Retention Credit. Therefore, the employer will be eligible for the credit if the employer is otherwise an eligible employer for purposes of the credit.

[1] “Paycheck Protection Program Loans Frequently Asked Questions (FAQs),” Small Business Administration, May 6, 2020 edition, https://www.sba.gov/sites/default/files/2020-05/Paycheck-Protection-Program-Frequently-Asked-Questions_05%2006%2020.pdf (retrieved May 6, 2020)