Stimulus money for small businesses: Here’s what’s in the American Rescue Plan

Kimiko G. Judith

Now that the American Rescue Plan (ARP) is officially law, more help is on the way for small businesses, including additional money for efforts like the Paycheck Protection Program (PPP) and a whole new grant offering specifically for restaurants.

In total, the ARP — which Congress passed two weeks ago — has about $50 billion dedicated to bolstering grants and loans for small businesses still navigating the economic fallout of the pandemic. According to a Yelp study, as of August 31, 2020, nearly 100,000 establishments had permanently closed since last March, and another 65,000 had done so temporarily.

The new money in the ARP is in addition to more than $600 billion that’s been allocated in previous bills. In this package, $28.6 billion is set aside for a new program called the Restaurant Revitalization Fund, $15 billion is allocated to beef up funding for Targeted Economic Injury Disaster Loan Advance payments (a.k.a. EIDL grants), $7.25 billion is for PPP, and $1.25 billion is laid out to boost the Shuttered Venue Operators Grant program.

Because the legislation has only recently become law, not all of the aid it provides is accessible just yet, though the Small Business Administration (SBA) is expected to issue more guidance shortly. At this point, here’s what we know about these programs and how businesses can access the support they offer.

“We always recommend talking to your lender, and just staying on top of SBA’s website to see when these programs go live,” says Awesta Sarkash, government affairs manager for the advocacy group Small Business Majority. For now, check out the SBA hub for pandemic relief for more information.

Paycheck Protection Program

Who qualifies: Small businesses are now able to apply for up to two loans via PPP.

To get a first draw PPP loan, most businesses that meet the size standards set by SBA are eligible. For many industries, that means having 500 employees or fewer, though these constraints vary.

Meanwhile, there are more restrictions on second draw PPP loans. To qualify, businesses had to receive a first PPP loan and show that it’s already been (or will be) spent in full. Additionally, only businesses with 300 employees or fewer that can show at least a 25 percent decline in their gross receipts between comparable quarters in 2019 and 2020 are eligible.

What it is: This effort was established in 2020 to help businesses cover their payroll costs specifically, with the goal of preventing layoffs and enabling businesses to bring back employees they had furloughed or let go.

Businesses can receive fully forgivable loans of up to 2.5 times their monthly payroll costs, up to $10 million in total for the first loan and up to $2 million for the second. The funds, however, need to be used a certain way in order for them to ultimately be forgiven. Businesses in the program will have to demonstrate that they used at least 60 percent of the funds for payroll costs, for instance, while the remaining 40 percent can be utilized on operational costs like rent and other overhead.

How to apply: PPP is run through lenders including banks, fintech companies, and community development financial institutions (CDFIs), so business owners must apply directly through them.

The best first step for businesses applying to the program is to reach out to either a lender they have an existing relationship with or one of the options listed on the SBA website.

Though several larger banks have said they won’t consider clients that don’t have an existing line of credit with them, there are a number of other options that are open to new customers, including fintech companies such as PayPal and CDFIs.

Businesses should be prepared with their monthly payroll data and tax identification information. The application forms for first draw loans look like this, while application forms for second draw loans look like this.

What’s new: The ARP adds another $7.25 billion to PPP and makes organizations such as agricultural groups and local digital news services eligible for these loans.

Currently, businesses have until March 31 to apply to PPP, though Congress is actively working to extend the deadline through the end of May. (Lawmakers were unable to include an extension in the ARP due to budget reconciliation rules.)

Economic Injury Disaster Loan and Targeted EIDL Advance payments (a.k.a. EIDL grants)

Who qualifies: There are two programs that are part of the Economic Injury Disaster program including targeted grants and more standard SBA loans.

EIDL grants: The grant — or targeted advance — program is currently aimed at businesses in low-income communities that have applied for EIDL relief in the past but did not receive the full amount they needed. These businesses also had to show a 30 percent decline in revenue in an eight-week window from March 2020 onward versus a comparable time frame before then. SBA is reaching out directly to those eligible for this targeted advance via email.

EIDL loans: The loans program, meanwhile, is still open to all small businesses that meet the SBA size standards and have suffered economic injury during the pandemic.

What it is:

EIDL grants: Businesses in need that have previously submitted applications are eligible for up to $10,000 in grants. These include businesses that either did not receive grants in the past or ones that received a smaller amount than they requested. SBA is directly reaching out to these businesses in order to update them.

EIDL loans: Businesses pursuing the loans can receive up to $150,000 to use on everything from payroll to operational costs.

How to apply:

EIDL grants: Currently, the grants application process is closed to new applicants, and SBA is focused on addressing applications they already received. Those who are eligible for this advance will receive a specific email notice from SBA.

EIDL loans: The application for EIDL loans is directly through SBA’s website here. Businesses should be prepared with gross revenue information as well as payroll data.

What’s new: There’s $15 billion in new funds dedicated to this program, which are intended to help distribute grants to businesses that didn’t previously get as much as they had requested.

Shuttered Venue Operators Grant program

Who qualifies: Businesses that operate venues including theaters, museums, and concert halls are able to participate in this program. They need to be able to show that they suffered a 25 percent decline in revenue between comparable quarters in 2019 and 2020, and that they meet the SBA’s eligibility requirements.

What it is: This program was created last December as part of the stimulus bill that Congress passed at the time. It’s aimed at helping venue operators who’ve been hit particularly hard by the pandemic, given the need for social distancing and public health restrictions that limit larger gatherings.

Businesses are able to obtain grants of up to 45 percent of their annual 2019 gross earned revenue, capped at $10 million.

How to apply: Businesses can apply directly through the SBA website, which is slated to begin taking applications on Thursday, April 8. They should be prepared with their 2019 tax return, quarterly income statements, and payroll statements. The SBA will also be holding a webinar about the program on Tuesday, March 30.

What’s new: The program previously received $15 billion in funding in the stimulus bill passed last December and received another $1.25 billion in the ARP.

The Restaurant Revitalization Grant program

Who qualifies: Businesses that focus predominantly on serving food and beverages are able to apply, including restaurants, bars, caterers, food trucks, and brewpubs.

What it is: A new program established by the ARP, this effort is intended to help one of the industries disproportionately affected by the pandemic and distribute grants to establishments in need.

These grants could be as much as the difference in revenue that businesses experienced between 2020 and 2019, based on their gross receipts, and are capped at $10 million. $5 billion of the funding for the program is also specifically set aside for establishments that made $500,000 or less in gross receipts in 2019.

“The shuttered venue program is up and running. Hopefully the idea is the restaurants one can look really similar,” says Sarah Crozier, a communications director for the advocacy group Main Street Alliance.

How to apply: Information about this program’s application isn’t available yet, but the SBA should be issuing guidance shortly. Much like the venues program, the application is expected to go through the agency directly.

What’s new: The ARP includes $28.6 billion to set up this program and ultimately distribute to different establishments.

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