All The Provisions in the American Rescue Plan Act of 2021 For Small Businesses

The economic stimulus bill known as the American Rescue Plan Act of 2021, signed into law by President Biden on March 11, 2021, is designed to facilitate the country’s recovery from the devastating economic and health effects of the COVID-19 pandemic. Referred to as the ARP (and sometimes as the ARPA), it comes one year after the passage of the CARES Act and just over two months after the Consolidated Appropriations Act of 2021.

This new $1.9 trillion stimulus package extends and expands many of the programs and measures established by the earlier stimulus bills and creates some new ones as well.

With this article, we’re going to keep our focus on the ARP provisions that are intended to help small businesses. Read on to learn how your business can benefit from this latest stimulus package.

More Funding For The PPP

The Paycheck Protection Program, or PPP, was a key part of last year’s stimulus legislation. Though beset by problems from the beginning, the PPP has provided hundreds of billions of dollars in forgivable loans to businesses and other entities that have been impacted by the COVID-19 pandemic.

The ARP provides $7.25 billion in additional funding for the PPP. It also tweaks the eligibility criteria for receiving a PPP loan in an effort to better target the small businesses that truly need financial assistance. However, the primary purpose of the program is unchanged: it is meant to incentivize businesses to retain their employees while also helping businesses cover other operating expenses. If you’re looking to apply for a PPP loan, read our guide to applying for a first or second draw PPP loan. You may also want to read our guide to PPP loan forgiveness so you don’t end up having to pay back your loan.

I’ll note that while the ARP provided more funding for the PPP, it did not extend the March 31, 2021 application deadline. However, a bill pushing this deadline back to May 31, 2021 has just been signed by the President and is now law. However, the available funding may run out before May 31, so your chances of funding success will increase the sooner you apply.

More Funding For The EIDL Program

Along with creating the PPP, the original CARES Act expanded the existing Economic Injury Disaster Loan (EIDL) program, establishing it as another route for businesses hit by the pandemic to receive emergency funding. This program offers both grants and low-interest loans to eligible businesses. Read our piece on applying for an EIDL loan or grant (unlike with a PPP loan, you apply directly to the SBA) as well as our article on EIDL forgiveness (in most instances, an EIDL loan cannot be forgiven, but an EIDL grant or advance will be).

The ARP does not allocate more money for EIDL loans (though you can still apply for one if you qualify). However, the ARP does provide another $15 billion in funding for targeted EIDL grants, which we’ll get into in the next section. In addition, the SBA recently announced that the deferment period for EIDL loans will be extended to 2022 and that the maximum borrowing amount for an EIDL loan will go from $150,000 to $500,000 beginning the week of April 6, 2021.

More Funding For The Targeted EIDL Grant Program For Underserved Communities

As stated above, the ARP provides an additional $15 billion in funding for the Targeted EIDL Advance program. $10 billion of this funding goes to the existing Advance program, which, established by the stimulus round passed in December, provides grants of up to $10,000 to applicants in low-income communities who previously received an EIDL Advance for less than $10,000 or those who previously applied but did not receive EIDL funds due to lack of available funding. The SBA is reaching out to those who qualify; you cannot directly apply for this funding.

The remaining $5 billion of this new targeted EIDL grant funding goes to a new program, the Supplemental Targeted EIDL Advance program. Though the SBA has not yet established an application process for the program, eligibility requirements will be as follows:

• You must have been directly affected by the COVID-19 pandemic
• You must be located in a low-income community
• You must have suffered an economic loss greater than 50%
• You must have been in operation since at least January 31, 2020
• You must employ no more than 10 employees

Extended Deadline For The Employee Retention Credit

Another provision of the ARP extends the deadline for the Employee Retention Credit. This program is, as the name implies, a tax credit program meant to incentivize businesses to retain their employees. Our article on the Employee Retention Credit explains the ins and outs of the program — I’d advise reading the piece to learn how your small business may stand to benefit.

The ARP extends the ERC from June 20, 2021 until the end of 2021. It also makes a number of highly technical changes to the program regarding the wages eligible to be claimed, the types of taxes the tax credit may be claimed against, and more. The following article lays out all these changes in detail.

New “Restaurant Revitalization Fund” For Businesses In The Food Service Industry

Eateries of all kinds stand to benefit from the ARP through the creation of the Restaurant Revitalization Fund. Though the application process is not yet open, the $28.6 billion fund will distribute grants (not loans!) to eligible restaurants and other foodservice businesses. $5 billion in funding is preliminarily earmarked for eateries with gross receipts of no more than $500,000 during 2019.

The following article details how a restaurant must spend these grant funds as well as how a restaurant can apply once the SBA begins accepting applications.

New “Community Navigator Program” For Community Organizations

Finally, the ARP allocates $175 million to the new Community Navigator Program. This program is designed to support business assistance organizations in their efforts to support small businesses and entrepreneurs, particularly those who are women, veterans, POC, and the economically disadvantaged. The program’s first initiative will be a pilot program targeting businesses owned by women and/or by Native Americans.