How the Third Stimulus Plan Helps Small Businesses
Washington recently passed the American Rescue Plan Act (ARP) – America’s third stimulus plan aimed at blunting COVID-19’s economic damage. And just like the two plans before it, ARP contains several items designed to bolster struggling small businesses.
That’s hardly the headline, of course. The primary draw of the American Rescue Plan Act is the $1,400 stimulus checks for individuals. An extension of (and boost to) federal unemployment supplement payments is receiving a lot of press. So is a massive increase in the child tax credit.
Getting less publicity, but still of importance, is that smaller companies are yet again getting much-needed attention. Read on as we outline several ways the third stimulus plan will help out small businesses.
Renewed PPP Funding
The Paycheck Protection Program (PPP) isn’t nearly as prominent a feature of the American Rescue Plan Act as it was the prior two stimulus plans. Nonetheless, ARP infused another $7.25 billion into the PPP and opened the program even further.
Specifically, the PPP has been opened up to a number of nonprofits. Among them: larger 501(c)(3) and veterans organizations of 500 or fewer employees per physical location, as well as larger 501(c)(6) organizations, domestic marketing organizations and other not-for-profit organizations of fewer than 300 employees per physical location. (Note: Businesses and nonprofits must meet other conditions, too.)
But one thing the ARP does not do is extend the current PPP application deadline. Small businesses and nonprofits looking for one of these loans must apply by March 31.
Targeted EIDL Advances Are Back, Too
The first stimulus plan – the CARES Act – also allowed the U.S. Small Business Administration (SBA) to make economic injury disaster loans (EIDLs), as well as provide $10,000 advances, to small businesses and nonprofits.
In the second stimulus – the Economic Aid to Hard-Hit Small Businesses, Non-Profits and Venues Act – COVID-19 Target EIDL Advances were signed into law. These were additional EIDL advances of up to $10,000 to applicants in low-income communities.
Targeted EIDL Advance grants are back again in the ARP, which provides $15 billion for these advances. To be eligible, businesses must not only be located in low-income communities, but have 300 or fewer employees, and have sustained an economic loss of more than 30% year-over-year based on gross receipts for any eight-week period between March 2, 2020, and Dec. 31, 2021.
Small businesses also should note that the SBA recently announced it would extend deferment periods for all disaster loans, including the EIDL program. For all disaster loans made in calendar 2020, first payments are now due 24 months from the date of the note, as opposed to 12. For all disaster loans made in calendar 2021, the first payment is now due 18 months out, as opposed to 12.
New Aid for Bars and Restaurants
One new form of small business aid in the ARP is the $28.6 billion Restaurant Revitalization Fund (RRF).
Food services has been among the most notably hard-hit industries of the economy during COVID-19. The latest stimulus plan includes tax-free federal grants for restaurants, bars, inns, taverns, food trucks, caterers and other similar businesses.
How much businesses will receive is based on several factors, including the level of their pandemic-related revenue losses and when they began operating. However, ARP caps awards at $10 million per business, or $5 million per physical location. Restaurant.org has provided a comprehensive brief covering the Restaurant Revitalization Fund.
Does Your Business Qualify for Help?
McManamon & Co. is an accounting, tax, fraud, forensic and consulting firm that specializes in small and midsize businesses. And among the many tasks that our consultants can help businesses with is determining their eligibility for grants, loans and other forms of relief – from COVID-related stimulus to future financial opportunities.
PPP, EIDL and the RFF are literal lifelines that may help scores of small businesses make it through the pandemic. Don’t miss out on help that you might be eligible for. Call McManamon at 440.892.8900, or contact us online, today.
Tags: consulting, EIDL, financing, McManamon, McManamon & Co., PPP, small business, small business finances, small business financing | Posted in Business interruption, Consulting, PPP, small business, Small business finances