In March earlier this year, President Biden signed the American Rescue Plan (ARP) Act. The American Rescue Plan Act is designed to breathe life into the small business community by providing substantial relief. This monumental $1.9 trillion coronavirus relief bill allocates new funds as well as tax credits to help small businesses that may be struggling. While the bill can seem confusing at first glance, we've broken down the top things you need to know about the American Rescue Plan Act. Read on to learn more and don't hesitate to reach out to the team at the MB Group for tailored support and guidance.
Additional Funding for the Paycheck Protection Program
The Paycheck Protection Program (PPP) was an integral component of the previous stimulus legislation — the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Although this initiative was wrought with complications from the very beginning, it provided forgivable loans to businesses and other entities that were hard hit by the pandemic. And the American Rescue Plan (ARP) infused a fresh jolt of cash for PPP to the tune of $7.25 billion.
One of the key provisions of the ARP is that it altered the eligibility criteria for receiving a PPP loan. This enhancement was intended to best meet the needs of smaller businesses that may be in more dire straits and in desperate need of cash. Yet, the main focus on the program remains the same: to incentivize businesses to keep their employees employed while offering assistance to cover other operating expenses. In other words, this program is working to keep Americans working and the doors of small businesses open.
Additional Funding for the Economic Injury Disaster Loan
In addition to establishing the PPP, the original CARES Act extended the Economic Injury Disaster Loan (EIDL) program that was already in place. The CARES Act positioned the EIDL as an alternate route for businesses impacted by the pandemic to have access to emergency funding. The EIDL offers eligible businesses both low-interest loans and grants. And the ARP allocated an additional $15 billion in funding for EIDL targeted grants — not loans.
$10 Billion for Existing Targeted EIDL Grant Program
The ARP allocates extra grant funding for underserved communities through the Targeted EIDL Grant program. $10 billion of this funding is allocated to the existing Advance program that was established by the stimulus. Through this program, grants are offered up to $10,000 to applicants in low-income communities that previously received the EIDL Advance for less than $10,000. These monies are also designated for those who applied previously but didn't receive EIDL funds because of a lack of available funds.
$5 Billion for New Applicants of Targeted EIDL
The remaining $5 billion is designed to go toward a new program called the Supplemental Targeted Advance EIDL program. While the SBA hasn't created the application process for this initiative, the requirements will be:
- You have suffered an economic loss of more than 50%
- You have been impacted directly by the pandemic
- You are located in a community deemed low-income
- Your business was in operation since January 31, 2020, at a minimum
- Your business employee 10 employees or fewer
New Restaurant Revitalization Fund for Food Service Industry
Restaurants of all types can potentially benefit from the American Rescue Plan Act — thanks to the Restaurant Revitalization Fund. This is a $28.6 billion fund that will offer eligible restaurants and other hospitality-type businesses access to grants. And $5 billion of this funding is earmarked preliminarily for restaurants with gross receipts of less than $500,000 during 2019. Learn more about how restaurants can apply once the SBA starts accepting applications as well as how these businesses must spend these funds.
Deadline Extended for the Employee Retention Credit
Another key attribute of the American Rescue Plan Act is the extension of the deadline for the Employee Retention Credit. As the name suggests, this is a tax credit designed to offer businesses incentives to keep their employees hired and working. The American Rescue Plan Act extends this program from June 20, 2021, until the end of the year. At the same time, the ARC makes several highly technical alterations to the program concerning:
- The different types of taxes the credit can be claimed to offset
- The types of wages that can be claimed
Learn more about all the changes included in the Employee Retention Credit.
Creation of Community Navigator Program
Lastly, the ARP earmarks $175 million for the new Community Navigator Program. This unique initiative is engineered to support organizations that assist businesses, especially businesses with diverse owners, such as:
- People of color
- Economically challenged
- And more
Contact the MB Group
Navigating all the provisions of the American Rescue Plan Act can be confusing and challenging. Fortunately, you don't have to do it alone. The team at MB Group offers expert guidance and assistance. We will help you understand which initiatives you may qualify for and guide you to the next best step. Contact the MB Group today.