A 10-Point Overview of the American Rescue Plan for Your Business

With COVID and the new administration, change has been rapid and non-stop. At any moment, a snapshot of what the administration is doing for relief under the American Rescue Plan bill is for most business owners a maze of rapidly developing initiatives to help small businesses during the pandemic. The best way to respond is with a consult with your CPA or tax advisor, and do it quickly, as some things change and others may expire.

Of course, the bill is massive, and any attempt to explain it in detail here would have you clicking away in a heartbeat. However, a quick overview of 10 key points can put you on the right track for what you may need to discuss with your tax advisor with regards to applicability to your small businessi.

#1 – Some money is dedicated for use at the state level.

$10 billion has been allocated to the SSBCI, State Small Business Credit Initiative. This agency provides funding through lenders to help in supporting small businesses with fewer than 500 employees, as well as non-profits. The money helps them to expand economic opportunities. The states have varying rules and programs, so check your state for detailsii.

#2 – PPP Changes

These very recent changes were being made before the bill was passed and signediii:

  • Eligibility for PPP was expanded:
    • Those delinquent on student loan payments are qualified for PPP.
    • Non-citizen lawful US residents are qualified.
  • There is still $120 billion left in the program, so see if you can still apply and are eligible.
  • More and larger non-profits are now eligible.

PPP is moving fast, and some of it expires March 31st.

#3 – Changes to EIDL, Economic Injury Disaster Loan

The American Rescue Plan (ARP) added these provisions for the SBA’s EIDL programiv:

  • Added $15 billion in EIDL funds.
  • Businesses with fewer than 10 employees are to get priority.
  • Through April 9, 2021, any EIDL applicant that has not yet received the loan but were approved will be prioritized to receive up to $10,000.
  • Businesses with fewer than 10 employees and have lost over 50% in revenue can apply for priority $5,000 grants (no payback required) from April 9 through April 23d.
  • From April 23 through May 7th, the same situation as above applies, but with $5,000 grants to those businesses with fewer than 10 employees and verifiable 30% in revenue losses.

Act on these quickly if your business qualifies. Get with your financial advisor and move forward.

#4 – Restaurants financial relief.

The new bill established a Restaurant Revitalization Fund (RRF). The fund was allocated $28.6 billion to provide grants to restaurants with fewer than 21 locations or those affiliated with restaurant groups with fewer than 21 locations. Individual restaurants are eligible to receive up to $5 million.

#5 – Shuttered venue operators relief.

The bill allocates $15 billion to the Shuttered Venue Operators Grant (SVOG) programv. These are live theater, museums, and other live performance venues shut down due to COVID. There are detailed rules for eligibility and the type of venues that qualify, so check with a financial professional for program details.

#6 – Relief for child care providers.

The bill provides $39 billion for childcare providers that can be used to:

  • Pay employees
  • Pay rent
  • Cover operating expenses
  • Provide financial assistance to customer families having difficulty paying costs
  • Purchase personal protective equipment

Check for details on qualifications.

#7 – The Community Navigator Program

$175 million allocated to this SBA program that encourages business assistance organizations to provide support to small businesses. Assistance is provided primarily to entrepreneurs, particularly women, veterans, Native Americans, and the economically disadvantagedvi.

#8 – Tax Credits

Extension, expansion, and changes to certain tax credits, including:

  • The ERC, Employee Retention Creditvii, only for those employing people, is extended and funds expanded.
  • Family and sick leave tax credits extended and expanded.
  • CTC, Child Tax Credit is significantly expanded.
  • Child and Dependent Care Credit is made refundable for 2021.
  • Changes to the EITC, Earned Income Tax Credit, including a dollar-for-dollar reduction in the amount owed to the IRS.

There are many details at the reference links, so consult your financial advisorsviii.

#9 – Health Insurance and COBRA

The ACA, Affordable Care Act, marketplace was reopened and will remain so through May 15, 2021 to offer health insurance to those who need it. There were also increased subsidies and changes to eligibility.

COBRA changes were made that affect both employees and employers. Enrollment changes relaxed some rules for employees and provided 100 percent reimbursement for employers via tax credits.

#10 – Stimulus payment for individuals

Individuals earning up to $75,000 and married couples earning up to $150,000 will receive a $1,400 stimulus payment based on the filing of 2020 taxes or 2019 if 2020 not yet filed.

Those are the highlights of some very extensive and detailed changes, so use the reference links for more information and work with your financial professionals to apply for relief for which you qualify.

i How the American Rescue Plan Will Affect Businesses and Individuals, Gusto.com

ii State Small Business Credit Initiative Website, Treasury.gov

iii Complete guide to PPP Round 2, Gusto.com

iv Comprehensive EIDL information, Gusto.com

v SVOG Grant, SBA.gov

vi Community Navigators Initiative, SBA.gov

vii FAQs: Employee Retention Credit under the CARES Act, IRS.gov

viii COVID-19 Tax Credits Guide, Gusto.com

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