Over the past year, our world as we knew it was turned upside down. In many ways, it’s been a time of loss, suffering, and uncertainty. The American Rescue Plan Act, signed by President Biden on March 11th, 2021, was created to relieve people of financial strains caused by the global pandemic. The plan puts $1.9 trillion towards recovering what was lost during this time and includes several provisions that specifically aid small businesses.
Economic Injury Disaster Loans (EIDL)
The American Rescue Plan Act pours an additional $15 billion into the Economic Injury Disaster Loans (EIDL) program. This program is specifically designed to provide aid for small businesses, including nonprofits and agricultural programs that have experienced temporary financial strains caused by COVID-19. This program’s main focus is to award grants to businesses that have experienced a 50% revenue loss, have 10 employees or less, and/or are located in a low-income area.
The Restaurants Act, a new program for restaurants and bars, also comes as a result of The American Rescue Plan Act. The grant is a total of $29 billion with $5 billion set aside for restaurants that made less than $500,000 in revenue in 2019. The funds can be used for a variety of purposes, whether it’s for payroll and rent payments or for utilities and stock.
Veterans, women, and socially/economically disadvantaged owners are given priority for these grants.
Employee Retention Tax Credit (ERTC)
The ERTC has been extended with the American Rescue Plan Act, including eligible startups that launched after February 15th, 2020. Businesses that are experiencing severe financial distress will be given additional flexibility. This would include any business that had 90% or greater decline in gross receipts over 2019.
Aid for Venues
The Shuttered Venue Operations Grants Program gives an additional $15 billion of support to concert halls, museums, and other live entertainment venues that were forced to close because of COVID-19 restrictions. The program will first open to businesses that have suffered 90% or more revenue loss from this past April to December. Plus, businesses can now apply for both the Shuttered Venue Operators Grant and a PPP Loan.
Employer Paid Leave Credit
The Employer Paid Leave Credit provides tax credits to cover some of the costs of employee paid sick, family, and medical leave due to COVID-19. The amendment to this credit also includes employee time off to receive the COVID-19 vaccine and to recover from any side effects. The total credit is $12,000 per employee for 10 days.
Paycheck Protection Program (PPP)
A substantial amount of $7.25 billion will also be added to the Paycheck Protection Program. The program offers forgivable loans to small businesses and organizations that have been affected by the pandemic. If your business is awarded this loan, 60% of it must be used for payroll expenses while the remaining 40% can be used for rent, mortgage interest, PPE, and more.
State and Local Government Funding
This program is specifically for your small business. The funding is a total of $15 billion to state and local governments that funnels directly to small businesses of the respective areas.
Childcare and Health Insurance Help
A total of $25 billion will be gifted to childcare providers who are in financial distress.
$5.5 billion will be included for education programs, with $3 billion allocated toward education technology (improving online learning), $1.25 billion for after-school programs, and $1.25 billion for summer-enrichment programs.
Additionally, there is extended COBRA coverage through the end of September for those who have lost their jobs.
Another Covid relief program provides emergency paid leave for workers who didn’t have this benefit with their job. This benefit will be extended through the end of September.
The American Rescue Plan Act is perfect for small business owners like you who want to take advantage of the perks, whether it’s the EIDL, Restaurant Funding, PPP, or the Employer Paid Leave Credit.
We understand the importance of accounting for small businesses. At Elevated CPA, we’re here to help you every step of the way! Schedule a 15-minute introductory call with us so we can get to know you and your financial goals.