If you recently received a third stimulus check, you can thank the $1.9 trillion American Rescue Plan Act of 2021 passed by Congress and signed into law by President Biden. The historic relief package also contains billions in funding for new and existing stimulus programs — particularly those that benefit small business owners still recovering from the pandemic.
Some highlights for small business owners include:
- $7.25 billion in additional Paycheck Protection Program (PPP) funding
- $28.6 billion for the Restaurant Revitalization Fund that will provide grants to restaurant, bar, food truck, and catering operators
- $16 billion for the Shuttered Venue Operators Grant open to arts and entertainment businesses
- New rules for SBA loan forgiveness
- Tax credits that could save you thousands of dollars
Below, we’ll walk you through the most relevant parts of the law and how to take advantage of them yourself. For an even more in-depth explanation of each measure, you can also view our step-by-step guide.
Loans and Grants
The long-running Paycheck Protection Program, which offers forgivable loans to small business owners, received an additional $7.25 billion and will now accept applications from larger nonprofits. You should apply before the deadline on March 31, 2021 — although it is likely the program will be extended through May 31, 2021. (UPDATE 3/26/21: The deadline has officially been extended to May 31, 2021.)
Lawmakers also extended the application period for an Economic Injury Disaster Loan (EIDL) through December 31, 2021. This Small Business Administration program provides six months of working capital, up to $2 million. If you already received EIDL and operate in a low-income community, you may be eligible for a COVID-19 Targeted EIDL Advance of up to $10,000. The SBA will reach out to those who qualify for this invite-only advance via email.
The SBA’s popular 504 and 7(a) loan programs for small business owners now offer partial loan forgiveness. If you apply for either loan by September 20, 2021, you will have your first three months of principal and interest payments waived. Additionally, if you spend at least 60% of your PPP loan amount on payroll and other allowable expenses, that loan will be forgiven entirely.
A new $28.6 billion Restaurant Revitalization Fund will offer grants of up to $10 million to make up the revenue loss between 2020 and 2019. The program applications are not yet available, so make sure to keep checking on the Small Business Administration’s website.
Arts and entertainment businesses may be eligible for the $16 billion Shuttered Venue Operators Program. If you qualify, you could receive a grant equal to 45% of your gross earned revenue, with the maximum amount available for a single grant award of $10 million. Grants are available even if you participate in the Paycheck Protection Program (with certain restrictions).
An expanded Employee Retention Tax Credit targets businesses affected by shutdowns that also experienced a significant drop in revenue. The amount of credit taken will reduce the deductible payroll expense reported on the business tax return.
The Consolidated Omnibus Budget Reconciliation Act of 1985 (better known as COBRA) helps employees and their families maintain health insurance coverage after an event such as job loss. The COBRA Tax Credit provides relief to employers who pay for this coverage and is calculated on the employer’s federal payroll tax returns.
Available through September 30, 2021, the Families First Coronavirus Response Credit (FFCRA) compensates employers for the cost of providing paid sick and family leave wages to their employees for leave related to COVID-19. If your workers have to miss work to get vaccinated, for example, this credit will reimburse the cost of their wages.
The Work Opportunity Tax Credit (WOTC) provides up to a $9,600 per employee benefit for employers hiring certain workers such as veterans, individuals coming out of prison, individuals with disabilities, individuals receiving public assistance, or those who have been unemployed more than six months.
We recommend consulting a tax or payroll professional to ensure your business qualifies for each credit.