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American Rescue Plan Act: More Help for Small Businesses Is Here

American Rescue Plan Act helps small businesses

President Biden signed the American Rescue Plan Act (ARPA) on March 11, 2021, signaling a commitment to further help individuals and small businesses mitigate the impact of COVID-19. Many provisions in the plan aim to stabilize businesses whose earnings and workforces were significantly disrupted through 2020 and into 2021.

Here are the key elements of the plan and how they apply to small businesses.

Support for Small Businesses via SSBCI

$10 billion of the relief bill is earmarked for the State Small Business Credit Initiative (SSBCI), which funnels lender-provided funding to non-profits and businesses with fewer than 500 employees. Each state manages this program differently, so consult with your outsourced HR partner to determine if your business qualifies for SSCBI.

Expanded Paycheck Protection Plan

ARPA adds to the $600 billion previously allocated to the Paycheck Protection Plan. Updates to the program include $7 billion directed toward hard-hit sectors and expands eligibility to a greater number of 501(c) non-profits as well as larger non-profits. Lenders were required to focus on businesses with less than 20 employees until March 10; therefore, more small businesses were able to obtain much-needed help through the PPP.

ARPA also includes a second-draw opportunity for businesses who have received a first-draw PPP loan. Because navigating loan forgiveness or applying for the second draw can be complicated, we recommend working closely with your legal team or outsourced HR partner to ensure timely, complete applications.

EIDL Grants and Loans

$15 billion is now dedicated to the Economic Injury Disaster Loan (EIDL) program. Targeted EIDL Advance payments – also known as EIDL Grants – help businesses in low-income communities who have previously applied for EIDL relief but did not receive the full amount they needed. Previous applicants may now receive up to $10,000 in grants if they can demonstrate a 30% revenue reduction for eight weeks, starting in March 2020 or beyond. The Small Business Administration (SBA) will reach out via email to qualifying businesses.

Meanwhile, EIDL loans are still open to economically impacted small business meeting size requirements established by SBA.

Restaurant Revitalization Grants

Food and beverage establishments – including bars, restaurants, pubs, caterers, and food trucks – can benefit from this newly-established program aimed at offsetting the pandemic’s disproportionate economic impact on this industry. $28.6 billion of ARPA is reserved specifically to help these businesses. Grants may reach amounts up to the difference in revenue between 2020 and the previous year, with a limit of $10 million. A full $5 billion of the program’s capital will be directed toward food and beverage establishments with gross annual receipts of $500,000 or less.

SBA will issue guidance on this program in early April. Check SBA’s COVID-19 relief portal frequently for information updates.

Shuttered Venue Operators Grant (SVOG)

Live venues, theaters, performing arts organizations, museums, and movie theaters experienced a dramatic fall in revenue due to stay-at-home orders and restrictions on public gatherings. $16 billion of the American Rescue Plan is set aside to help venue operators regain firmer financial footing. Per SBA’s website, “Eligible applicants may qualify for grants equal to 45% of their gross earned revenue, with the maximum amount available for a single grant award of $10 million. $2 billion is reserved for eligible applications with up to 50 full-time employees.”

For venues in previous receipt of a PPP loan on or after December 27, 2020, SVOG will be reduced by an equal amount. Applications will be accepted beginning in April.

Considerations for Employers

The relief plan involves important extensions and updates to vital programs for workers and employers. Here are the main changes employers should be aware of:

Additional Paid Leave Tax Credits

The tax credit for voluntarily extending Families First Coronavirus Response Act (FFCRA) leave will be extended until September 30, 2021. Additional tax credits are now available for qualifying COVID-19-related reasons for employee paid leave, such as time off to obtain a vaccination, employees seeking or awaiting COVID-19 test results, and employees recovering from vaccine-related illness.

Businesses can offer Emergency Family Medical Leave Act (EFMLA) paid leave for all FFCRA-qualifying reasons, with the first two weeks paid at two-thirds the regular rate of pay. There must be no discriminatory preference toward high-wage workers, full-time employees, or those with seniority. The minimum tax credit is now raised to $12,000 per employee.

COBRA Subsidies

Starting April 1, 2021, through the end of September, employees who lost group health insurance due to termination or hour reduction will now be eligible for 100% subsidized COBRA coverage. Self-insured employers will pay COBRA premiums and receive a one-to-one tax credit by retaining payroll taxes matching COBRA premium amounts. For fully insured plans, insurers will claim the tax credit. Eligible participants will receive a letter within sixty days of April 1, 2021. Further guidance is expected from the Department of Labor.

Employee Retention Credit

Originally part of the CARES Act, the Employee Retention credit applies to qualifying employers who retained workers on their payroll during the pandemic. The credit is now extended to December 31, 2021, enabling those employers to claim a tax credit for wages paid out during the pandemic.

Unemployment Benefits Extensions for Workers

Three unemployment programs will be extended through September 6, 2021: Pandemic Emergency Unemployment Compensation (PEUC), the Pandemic Unemployment Assistance (PUA), and the Federal Pandemic Unemployment Compensation (FPUC)/Mixed Earners Unemployment Compensation (MEUC).

PUA and PEUC will continue to enhance unemployment benefits with an additional $300 per week while MEUC remains at an additional $100 per week. Up to $10,200 is now tax-free for workers who received unemployment benefits during 2020 with household income not exceeding $150,000.

The American Rescue Plan Act (ARPA) brings aid to employers still struggling with pandemic-related disruption. With an emphasis on supporting small businesses, the provisions above provide some relief and stability. However, navigating all requirements can be tricky. Consult with the experts at your outsourced HR partner or legal team to ensure you receive the full scope of support available under the plan.

Do you have questions about how ARPA will impact your business? Our experienced HR managers are here to help.

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