The $1.9 trillion American Rescue Plan Act (ARPA) that President Biden signed into law on March 11 contains a number of provisions intended to help small businesses and other organizations hurt by the pandemic.
Foremost, it includes additional Paycheck Protection Program (PPP) loans to struggling businesses, and a number of special grants to companies in industries that have been especially hard hit, including restaurants, movie theaters, concert spaces and museums.
The measure also includes provisions extending a number of tax credits to employers affected by the pandemic, in order to make it easier for people laid off during the health emergency to access COBRA coverage after they lose their jobs and their health coverage.
ARPA opens up a new opportunity for businesses that have been hurt by the pandemic to access financial aid and assistance to keep their doors open and stay viable. Here are the main points of interest to employers. Many of the programs build on ones introduced earlier in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and extended by the Consolidated Appropriations Act of 2021 (CAA).
The law authorizes another $7.25 billion for the Paycheck Protection Program, which offers forgivable loans to small businesses and other organizations that have seen their revenues hit by the pandemic.
These loans are forgivable if 60% of the funds are used on payroll and the rest pays for mortgage interest, rent, utilities, personal protective equipment or certain other business expenses.
The additional money is intended to expand eligibility for the loans to include more nonprofit organizations than were eligible before, as well as digital news services providing local news and public health guidance during the pandemic.
While the legislation set the deadline to apply for March 31, the deadline was extended until June 30 after Congress passed supplemental legislation.
There are a number of other provisions of the new law aimed at providing financial aid to small businesses:
- $10 billion for state governments to help leverage private capital and make low-interest loans and other investments to help their small businesses recover.
- $15 billion to the Economic Injury Disaster Loan grants program to be given to small businesses in underserved areas, especially minority-owned enterprises.
- $29 billion to create a grant program that provides direct relief to restaurants. The maximum grant size will be $5 million for restaurants and $10 million for restaurant groups. The Small Business Administration will administer these grants.
- $15 billion will be added to the Shuttered Venue Operators Grants program, which was launched by the CARES Act. More funds will be made available to museums, theaters, concert and other venues that had to shut down due to COVID-19-induced restrictions. This program has not yet launched.
Originally enacted under the CARES Act and ACC, the Employee Retention Credit (ERC) lets certain employers take advantage of a tax credit for qualified wages paid to employees.
The CARES Act capped the ERC at $5,000 per employee for 2020. The CAA, passed in late December, expanded the ERC to apply to payments of qualified wages made between Jan. 1 and June 30 this year. It also increased the maximum amount of the credit to $7,000 per employee per quarter.
The new stimulus law extends the ERC for an additional two quarters through the end of this year. That means that eligible small businesses can take a tax credit of up to $28,000 per employee for 2021.
Who is eligible: Businesses that were either fully or partially suspended as a result of COVID-19-related government orders that restricted their ability to operate and generate sales. Also, any business that that has gross receipts that are less than 80% of gross receipts for the same calendar quarter in 2019.
ARPA also makes eligible for the tax credit any start-up businesses that also suffered revenue losses as a result of the pandemic.
In addition, ARPA extends through September the availability of paid leave credits to small and midsize businesses that offer paid leave to employees who may take leave due to illness, quarantine or caregiving due to the pandemic and any closure orders.
Employers that offer paid leave to workers who are sick or in quarantine can take dollar-for-dollar tax credits equal to wages of up to $5,000.
The bill also extends assistance to people who have lost their jobs as well as their employer-sponsored health insurance due to the pandemic, by providing a 100% COBRA premium subsidy to them. This will allow them to continue their health insurance with no out-of-pocket premium costs on the employees’ part. This subsidy is effective April 1 through Sept. 30.
Who is eligible: Workers who are involuntarily terminated and want to remain on their employer’s health insurance. The employer would pass along the subsidy so that qualifying individuals would pay nothing for their COBRA coverage during this period.