On March 11, 2021, President Biden signed the $1.9 trillion stimulus package called the American Rescue Plan Act of 2021 (the Act) into law. Several parts of the law are of interest to small business owners, including the following:
Additional funding and expansion of eligibility for PPP loans. Section 5001 of the Act appropriates $7.25 billion in additional funding for PPP loans. However, it does not extend the program, which is currently set to expire on March 31, 2021. In addition, the Act extends eligibility for PPP loans to certain nonprofits and digital news services.
Additional funding for Targeted Economic Injury Disaster Loan (EIDL) Advances. Section 5002 appropriates $15 billion in additional funding for Targeted Economic Injury Disaster Loan Advance payments for hard-hit small businesses in low-income communities. The Act makes $10 billion available to pay covered entities (businesses located in low-income communities that suffered losses of more than 30 percent during an eight-week period between March 2, 2020, and December 31, 2020) that have not received the full amounts to which they are entitled. Advance funds of up to $10,000 will be available to eligible applicants who previously received an EIDL Advance for less than $10,000, or those who applied but did not receive funds due to lack of available program funding. In addition, $5 billion is available for supplemental advances of $5,000 for eligible businesses that suffered an economic loss of more than 50 percent and employ not more than ten employees.
New funding for the Restaurant Revitalization Fund. Pursuant to Section 5003, restaurants, food stands and trucks, pubs, and other similar businesses where patrons or the public assemble for the primary purpose of being served food or drink will be eligible for grants from a newly established Restaurant Revitalization Fund to be administered by the SBA. The $28.6 billion in funding will be used to provide grants of up to $10 million to eligible applicants. The amount of each grant may not exceed the applicant’s “pandemic-related revenue loss,” which is generally the difference between the applicant’s 2019 and 2020 gross receipts. The grants may be used for payroll costs, principal and interest on a mortgage, rent payments, utilities, maintenance expenses (including the construction of outdoor seating), supplies (including protective equipment and cleaning supplies), food and beverage expenses, supplier costs, operational expenses, paid sick leave, and other expenses determined by the SBA to be essential. Small businesses owned and controlled by women, veterans, and the socially and economically disadvantaged are prioritized for the initial twenty-one-day period during which the SBA awards the grants. In addition, $5 billion is reserved for applicants who had $500,000 or less in gross receipts during 2019. Applicants must make a good faith certification that the uncertainty of current economic conditions makes the grant requested necessary to support their ongoing operations and that they have not applied for or received a grant under the Shuttered Venue Operators Grant program.
Additional funding and eligibility for the Shuttered Venue Operators Grant program. Section 5005 of the Act provides an additional $1.25 billion to the Shuttered Venue Operators Grant (SVOG) program established by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, which was signed into law on December 27, 2020, and provided an initial $15 billion in funding. The program provides relief for eligible live venue operators and promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators and talent representatives that have been significantly impacted by the COVID-19 pandemic in the amount of the lesser of $10 million or 45 percent of their 2019 gross earned revenue. The Act allows eligible businesses to apply for both a PPP loan and the SVOG program, which was prohibited under previous legislation. However, a new interim final rule issued by the SBA on March 18, 2021, clarifies that if a PPP applicant is approved for an SVOG before the SBA issues a loan number for the PPP loan, the applicant is ineligible for the PPP loan.
For small businesses interested in learning more about loan forgiveness or how to navigate their way through it, please contact Chris Young at 301-738-2033.
Chris Young is an associate in the Business & Tax practice at Miller, Miller & Canby. He focuses his practice on corporate legal agreements, business formation, tax controversy work and helping clients deal with new tax regulations. View more information about Miller, Miller & Canby’s Business & Tax practice by clicking here.