The American Rescue Plan: A Summary For Small Businesses

By

Brett Wheatley

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Reviewed by

on

March 15, 2021

This article is Tax Professional approved

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On March 11, President Biden signed the $1.9 trillion American Rescue Plan Act into law. What does this mean? This bill has many significant impacts on American small businesses and you may now be eligible for more funding. Here’s what you need to know.

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Paycheck Protection Program (PPP)

  • $7.25 Billion in additional funding for the Paycheck Protection Program.
  • Expanding program eligibility to Internet publishing organizations. Businesses with the NAICS code 519130 will now be eligible.
  • Expanding program eligibility to non-profit organizations that are NOT listed in section 501©(3), 501©(4), 501©(6), or 501©(19) who receive and spend less than 15% of its receipts and expenses on lobbying and spends less than $1 million on lobbying and employs no more than 300 employees.

Further reading: For all the information you need on PPP eligibility, applications and forgiveness, please visit our Paycheck Protection Program Resource Hub for Small Business.

Economic Injury Disaster Loan (EIDL) Program

  • Makes EIDL advance grants exempt from taxation.
  • $15 billion in additional funding for the targeted EIDL advance.
  • $5 billion of any remaining funding available for supplemental grants to “severely impacted” organizations. These are organizations that have suffered an economic loss greater than 50% and have 10 employees or less.

Restaurant Revitalization Fund (NEW)

  • $28.6 billion allocated to create the Restaurant Revitalization Fund for industry-focused grants. Restaurants, bars, food trucks, and other similar businesses will be eligible to apply.
  • The grants can provide up to $10 million per company with a limit of $5 million per physical location and used to cover payroll, rent, utilities, and other expenses.
  • The program will be administered by the Small Business Administration (SBA).
  • More details about eligibility and the application process are expected from the SBA in the coming weeks.

Unemployment benefits

  • Extends the expanded $300 supplemented unemployment benefits program through to September 6th, 2021.
  • This extension will allow for self-employed individuals and those who are unable to safely work due to COVID-19 to continue to collect unemployment benefits.
  • The maximum number of weeks one can claim unemployment benefits is being increased from 24 to 53 weeks total.
  • Additionally, the first $10,200 in 2020 benefits is now tax-free for families making $150,000 or less. People who had taxes withheld from unemployment benefits in 2020 will be able to recover them when they file their 2020 taxes or via an amended tax return if they have already filed taxes.
  • Finally, the Act also provides a 100% subsidy of COBRA health insurance premiums so unemployed workers can remain on their employer healthcare plans through the end of September.

Economic impact payments

  • The plan provides direct $1,400 stimulus payments to individuals making $75,000 or less and couples making a combined $150,000 or less annually. An additional $1,400 payment will also be provided for each dependent.
  • Those who earn between $75,000 - $80,000 (or $150,000- $160,000 for couples), will receive a reduced payment.

Tax credits

  • Extends the Employee Retention Tax Credit program from June 30, 2021, to December 31, 2021.
  • Extends the Paid Family Leave Credit from March 31, 2021, to September 30, 2021. It also increases the number of wages employers can claim from $10,000 to $12,000 and Increases the number of days for which self-employed individuals can claim the credit from 50 to 60.
  • A raise in the maximum child tax credit to $3,600 a year per child under 6, and $3000 a year for children ages 6-17 for couples earning $150,000 or less, or single parents earning $112,500 or less.

Continued eviction and foreclosure moratoriums

  • Additional funding will be allocated to provide relief to those behind on mortgages, rent, and utility bills. The legislation includes $30 billion in emergency rental assistance and $10 billion for mortgage assistance.

Shuttered Venue Operators Fund

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.
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