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.

$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.

On December 27, 2020, President Donald Trump signed a $900 billion pandemic relief bill. Here are some resources to help you navigate what that means for your business.

The bill contains the following updates and changes to existing programs for small business support:

 

Paycheck Protection Program

  • Borrowers may apply for a first or second draw loan. To be eligible for a second draw loan, borrowers must have used up their first PPP loan, have 300 or less employees, and demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
  • PPP loans will cover additional expenses, including software expenditures, property damage costs, supplier costs, and worker protection expenditures.
  • The forgiveness process has been simplified for both first draw loans that have not been forgiven yet, and second draw loans of $150,000 or less.  Instead of the standard forgiveness forms, borrowers can submit a letter certifying that the funds were used correctly. 
  • $15 billion for first draw PPP loans and $25 billion for second draw PPP loans has been set aside for small-businesses borrowers with 10 or fewer employees as well as businesses in areas deemed to be of low to moderate income. It also sets aside $15 billion for small community banks and small credit unions and $15 billion for mission-based community lenders.

Employee Retention Tax Credit

  • Originally established under the CARES Act, this credit has been extended to cover wages paid until July 1, 2021.
  • Credit increased from 50% to 70% of qualified wages.
  • The allowable wage amount per employee has increased from $10,000 per year to $10,000 per quarter.
  • Expanded eligibility for employers who showed a gross decline in receipts of 20%.

EIDL

  • The deadline to apply has been extended to December 31, 2021.
  •  Grant advances of up to $10,000 will be available to businesses in low-income communities, with fewer than 300 employees, and have suffered a 30% revenue loss. Minority business owners can receive these grants regardless of whether their loan application was approved and accepted and even if they previously received a PPP loan.

Other provisions and tax extensions:

  • The Act allows PPP borrowers to fully deduct their covered expenses.
  • Business meals can be deducted until January 1, 2023.
  • Payroll tax credits established by the Families First Coronavirus Response Act (FFCRA) are extended through March 31, 2021, but are now voluntary.
  • The New Markets Tax Credit and the Work Opportunity Tax Credit have also been extended until December 31, 2025.
  • The charitable deduction increase has been extended through 2021. Corporations may increase their limit on charitable deductions from 10% to 25% of taxable income.

On March 26, 2020 Envolve Entrepreneurship (Envolve) hosted a conference call with Senior Staff from the Senate Small Business and Entrepreneurship Committee so that they could address a group of small business owners and entrepreneurs on the proposed economic stimulus package. Senate staff summarized the small business provisions of the stimulus bill passed by the Senate. 

Please note that while the bill passed the Senate on March 26, at the time of the conference call it had yet to pass the House and be signed by the President, so staff could only speak to the legislation at that current point. Once a bill has been signed, there will be more clarity around mobilization, implementation, and deployment of these programs. 

This is a $2.2 trillion bi-partisan stimulus package, with $377 Billion appropriated for SBA programs. In the bill there are 2 different loan programs applicable to small businesses as well as provisions for debt relief and development assistance:

 

Paycheck Protection Program – $350 billion in support “loans” (a portion of these will be forgivable). This is designed to cover 8 weeks of payroll and payment for debts for small business owners. Self employed individuals and non profits are also eligible.
There are different formulas to calculate how much your business is eligible for based on how long you have been in business, but the maximum loan size is $10 million.  

 

EIDL (Economic Injury Disaster Loans and GrantsWhen applying for an EIDL, borrowers may also request a cash advance grant of up to $10,000 that will be disbursed within 3 days of applying and does not need to be repaid.  The advance may be used to cover payroll, sick leave, business obligations and to meet increased production costs.

 

Entrepreneurial Development Assistance – $250 million in grants will be appropriated to Small Business Development Centers (SBDCs), Women’s Business Centers, and Minority Business Development Agency. The funding will allow SBDCs, WBCs, and MBDCs to hire staff and provide programming to help small businesses and minority-owned businesses respond to COVID-19. $25 million has also been allocated for these associations to create a joint platform that consolidates information and resources related to COVID-19 and $10 million  is specifically designated for minority businesses centers and chambers of commerce.

 

Debt Relief for Existing and New SBA borrowersThe stimulus includes $17 billion in funding for the  SBA to cover all loan payments for existing SBA  7(a), 504, or microloan borrowers, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out an SBA loan within six months after the President signs the bill.

For more in depth reading: