CONGRESS PASSES MASSIVE $1.9 TRILLION AMERICAN RESCUE PLAN ACT
More relief for small businesses is on the way. Congress passed the $1.9 trillion American Rescue Plan Act (“ARPA”), a top priority for the new Biden Administration. In addition to a number of provisions aimed at individuals, ARPA provides additional relief for businesses still struggling from the effects of COVID-19.
Highlights of additional relief available to businesses include:
- $28.6 billion in grants for food services businesses: Grants will be made available to bars, restaurants, and caterers equal to the difference between a business’s gross receipts pre-pandemic – i.e., 2019 – and gross receipts last year. If the business has fewer than 20 locations, it can get a grant of up to $5 million per location, up to $10 million in total.
- Extension of the Employee Retention Credit (“ERC”): The ERC has been extended through the end of the year. Businesses can claim a refundable credit up to $7,000 per employee per quarter during the last half of the year. Taken together with the existing provision, which is similarly apportioned, employers this year can qualify for up to $28,000 per employee. If they applied for 2020, the total amount available is $33,000 per employee. Eligible employers in 2021 include companies that experienced a full or partial suspension of operations as a result of government mandates, or those that can show at least a 20 percent reduction in quarterly gross receipts, compared with the same quarter in 2019. Companies eligible for the 2020 credit must show a more than 50 percent decline in gross receipts. Recipients can’t take a tax deduction on expenses paid for with PPP funds, a continuation of current law.
- $15 billion for Economic Injury Disaster Loan (EIDL) Advance Grants: Small businesses in low-income communities that have been affected by the pandemic will be eligible for up to $10,000 each. The program is designed to roll out in a series of three exclusive windows:
- First, businesses that didn’t get the full amount they applied for initially – i.e., $1,000 per employee, up to $10,000. Eligible businesses must have no more than 300 employees and have suffered a loss of gross receipts of more than 30 percent during an eight-week period between March 2, 2020 and December 31, 2021, compared with an eight-week period prior to March 2.
- Second, businesses that have had losses of 50 percent and have fewer than 10 employees.
- Third, businesses that have had losses of between 30 percent and 50 percent and have fewer than 10 employees.
- $7.25 billion in additional funding for the PPP: ARPA will provide additional funding for PPP loans, on top of the additional $284.5 billion provided mid-January when the second round of PPP loans began. ARPA does not otherwise change the current end date of March 31.
- $1.25 billion for closed venue operators: The grants are available to movie theaters, museums, performance venues, and other institutions whose principal business activity is live events. The grants are equal to the lesser of 45 percent of the venue’s gross revenue in 2019 or $10 million.
As more and more Americans become vaccinated, we all remain optimistic about a return to normalcy. In the meantime, businesses remain cautious and should continue to evaluate all potential relief available to them. We are here to help. If you have questions about what relief you can obtain for your business, please do not hesitate to contact us for assistance.