The American Rescue Plan Act has passed the House and Senate, and President Biden is expected to sign it this week. It includes a number of provisions that will help small business owners— including those who are self-employed or are independent contractors— in the form of grants, tax credits and forgivable loans.
Most of these are extensions of programs that were originally included in the CARES Act passed March 27, 2020 and the Economic Aid Act that was signed December 27, 2020. However there is a brand new grant program for restaurants and similar businesses.
Here’s an overview of what’s available to small businesses:
1. Targeted EIDL Advances
The legislation allocates $15 billion for Targeted EIDL Advances to qualified small businesses. Targeted EIDL Advances are tax-free grants of up to $10,000 to small businesses located in low-income areas that can demonstrate a 30% or greater economic impact. This package includes $10 billion in additional funding for these grants as well as another $5 billion to fund $5000 supplemental grants for businesses with ten or fewer employees that have suffered an economic impact of at least 50%.
2. Paycheck Protection Program (PPP)
An additional $7.25 billion is provided to fund PPP loans. The legislation also expands eligibility to certain not–for-profit organizations and digital media organizations that may not have been eligible previously. It currently does not, however, extend the deadline for PPP loans past March 31, 2021, the deadline set in the Economic Aid Act.
3. Restaurant Grants
Restaurants and related businesses (including food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, and others) may qualify for grants of up to $5 million per location ($10 million total per business) under the newly created Restaurant Revitalization Fund. Grants will generally be equal to the pandemic-related revenue loss of the business. The SBA will administer these grants.
Funds may be used for expenses similar to PPP loans though the use of funds is somewhat broader than PPP. The legislation does not state that a certain percentage of funds must be used toward payroll, and since this is a grant rather than a forgivable loan, applicants will not have to apply for forgiveness.
4. Pandemic Unemployment
Pandemic Unemployment Assistance (PUA) may be available to self-employed workers, independent contractors, and gig workers who traditionally don’t qualify for unemployment. PUA is extended through Sept. 6, 2021 and increases the total number of weeks of benefits that may be available to those who cannot return to work from 50 to 74 weeks. Other forms of unemployment are extended as well.
The first $10,200 in 2020 unemployment benefits will not be taxed (at the federal level) for households with incomes of less than $150,000 annually.
5. Employee Retention Credit
The Employee Retention Credit provides a credit for wages paid by businesses whose operations were fully or partially suspended due to a government order related to COVID-19 or that experienced a significant decline in receipts. This credit is extended through the end of 2021 and allows for a credit against Medicare tax. Startups may be eligible as well.
6. Shuttered Venue Operators Grants
Additional funding ($1.25 billion) is appropriated for the Shuttered Venue Operators grants program administered by the SBA. This program provides grants of up to $10 million to certain businesses, such as live venue operators, museums, theaters and more. While before these businesses had to choose between PPP and SVOG, now businesses may apply for both and subtract PPP funding from any SVOC grant received.
7. Paid Family and Sick Leave
This program extends the credit for employers providing paid sick and family leave under the Families First Coronavirus Response Act to September 30, 2021. Self-employed individuals may qualify, and their number of covered days are increased. The amount of covered wages is increased as well. It also expands covered time off to include time to get a COVID-19 vaccine or to recover from one.
8. Community Navigator Program
Funding is available for “Community Navigators,” including CDFIs and other nonprofits community organizations as well as resource partners such as SBDCs to help small business owners access programs and resources made available due to the pandemic. The SBA will establish a hotline that will provide referrals to these organizations. While this funding doesn’t go directly to small businesses, it should help more understand and qualify for assistance.
Many of these programs will be crucial to help businesses survive the pandemic crisis. Be sure to take advantage of those that apply to your small business.