The ARPA was signed into law by President Joe Biden on March 11, 2021.
Here are the provisions in the American Rescue Plan Act that relate to small business and entrepreneurship:
Employee Retention Tax Credit: Originally expiring on July 1 the credit is extended through Dec 31, 2021.
- Startup businesses established after February 15, 2020, with annual gross receipts of up to $1 million and that otherwise do not meet the ERC eligibility tests would now be eligible for the ERC.
- In the new bill, businesses can claim the refundable credit equal to as much as $7,000 per employee per quarter during the last half of the year.
- 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.
Families First Coronavirus Response Act Paid Leave Credits: The paid sick and expanded Family and Medical Leave Act credits made available under the FFCRA continue to be available to employers through September 30, 2021.
- The ARPA makes several changes to the credits for wages paid between April 1, 2021, and September 30, 2021, including increasing eligible wages to $12,000 per employee (up from $10,000 in 2020), expanding types of leave to include vaccination, and covering as many as 60 days of paid family leave for self-employed individuals (instead of 50 days under previous law).
- Providing this leave is now optional, and not mandated by law.
PPP: Additional $7B for PPP funding, but not an additional draw round (2 is currently the limit). Deadline to apply is still March 31.
EIDL: Additional $15B in funding for EIDL advance Grants.
- Small businesses in low-income communities that have been most affected by the pandemic will be eligible for up to $10,000 each. The program is designed to roll out in a series of exclusive windows, starting with businesses that didn’t get the full amount they applied for initially–that is, $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.
- The second window is for those who’ve endured losses of 50 percent and have fewer than 10 employees.
- The third is for those who’ve had losses of between 30 percent and 50 percent and have fewer than 10 employees. The Small Business Administration (SBA) must provide $5,000 grants to each eligible company, while funds last.
$1.25 billion for shuttered 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.
- Note: The SBA has yet to enact the existing live-venue grant program, which was passed under the last relief package.
$28.6 billion in grants for food services businesses: The grants available to bars, restaurants, and caterers would be equal to the difference between a business’s gross receipts pre-pandemic–that is, in 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.
Reauthorization of the State Small Business Credit Initiative (SSBCI)
- The program provides federal financing to deliver flexible, affordable capital to small businesses across the country. This new iteration of the program will provide $10 billion in funding to support small businesses responding to and recovering from the economic effects of the COVID–19 pandemic.
- The program will ensure business enterprises owned and controlled by socially and economically disadvantaged individuals have access to credit and investments and will provide technical assistance to help small businesses applying for various support programs.
- States receiving SSBCI funds may use them to support programs that leverage private lending to help finance creditworthy small businesses. Such lending programs include Capital Access Programs, loan guarantee programs, and venture capital funds. States must provide a plan showing how they will quickly use funds to support small businesses, including business enterprises owned and controlled by socially and economically disadvantaged individuals, in responding to and recovering from the economic effects of the COVID-19 pandemic.