American Rescue Plan: Small Business

Overview 

Congress has passed several rounds of financial assistance and relief in response to the COVID-19 pandemic, including most recently the American Rescue Plan. The American Rescue Plan includes additional relief to small businesses struggling as a result of the pandemic.

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SBA Paycheck Protection Program
The American Rescue Plan provides $7.25 billion nationwide for additional first- and second-round Paycheck Protection Program (PPP) loans to small businesses and nonprofits until the program expires on May 31, 2021. The Coronavirus Aid, Relief, and Economic Security (CARES) Act created a new Small Business Administration (SBA) loan program, called the Paycheck Protection Program (PPP). The Paycheck Protection Program provides small businesses with zero-fee loans of up to $10 million to cover payroll and other operating expenses. They can seek forgiveness for PPP funds spent on eligible payroll and overhead costs, such as rent, mortgage interest payments, and utility costs. Small businesses must spend at least 60 percent of the funds on payroll costs and no more than 40 percent on eligible overhead costs. 

The December COVID relief law enabled businesses that have already received a PPP loan to apply for a second forgivable loan of up to $2 million, and opened new categories of expenses to forgiveness. The American Rescue Plan also expands eligibility to additional categories of nonprofits and internet-only publishers, and changes rules about how PPP loans interact with Shuttered Venue Operators grants. Please click the link above for more information. 

SBA Economic Injury Disaster Loan (EIDL) Emergency Advance Grants
The American Rescue Plan provides an additional $15 billion nationwide of targeted funding for the SBA’s economic injury disaster loans (EIDL) emergency advance grants. The CARES Act expanded eligibility for SBA economic injury disaster loans (EIDLs). EIDLs are loans up to $2 million with interest rates of 3.75 percent for businesses and 2.75 percent for nonprofits. The CARES Act also established an EIDL emergency grant program, which allows loan applicants to request an advance of up to $10,000 to keep employees on payroll, pay for sick leave, or otherwise pay business obligations. These emergency advance grants do not need to be repaid. 

The December COVID relief law restricted eligibility for EIDL advance grants to qualified applicants located in low-income communities. SBA is currently limiting consideration for advance grants to those who applied for EIDL assistance on or before December 27, 2020. This is to prioritize applicants who received capped advances or were unable to obtain an advance after funding ran out in July 2020. If you meet this description, do not submit a duplicate EIDL application. SBA will contact qualified applicants directly. The American Rescue Plan also sets aside $5 billion for a new round of $5,000 grants to the smallest and most severely impacted small businesses. Please click the link above for more information. 

SBA Live Venue Grants Program
The American Rescue Plan provides an additional $1.25 billion nationwide for the SBA’s Shuttered Venue Operators (SVO) grants, a new program created in the December COVID relief law. The SBA is still working to operationalize the program and open it for applications. The American Rescue Plan also allows eligible entities to access both SVO grants and PPP loans, which was previously prohibited by the December COVID relief law. The December COVID relief law provided $15 billion nationwide to a new SBA grant program for live venues impacted by the public health crisis. Eligible grant recipients include live venue operators, promoters or theatrical producers, independent movie theatre operators, museum operators, and talent representatives. Of the total amount, $2 billion is set aside for eligible entities that employ fewer than 50 full-time employees. Grants are awarded by the SBA, which will make application information available as soon as possible.

SBA Restaurant Grant Program
New program: The American Rescue Plan provides $28.6 billion nationwide for a new SBA grant program specifically for restaurants and other food and drinking establishments impacted by the pandemic. The grants of up to $10 million per business ($5 million per physical location) can be used for a wide variety of expenses. Eligible entities include restaurants, food stands and food trucks, caterers, bars and lounges, brewpubs and tasting rooms, inns, taverns, and similar businesses, including those located in airport terminals.  

Employee Retention Tax Credit
The American Rescue Plan extends the employee retention tax credit through December 31, 2021. Starting June 30, the tax credit becomes a refundable payroll tax credit against the hospital insurance tax. The bill also expands eligibility to start-ups that began after February 15, 2020. The CARES Act created a refundable payroll tax credit for businesses and nonprofits that retain their employees during the COVID-19 crisis. Please click the link above for more information on important updates to the credit included in the December COVID relief law, including a larger credit amount and relaxed eligibility criteria. The December COVID relief law also permits certain governmental employers to claim the credit, including state- and local-run colleges and universities and entities whose principal function is providing medical or hospital care.