(This article originally appeared in the Philadelphia Inquirer)
The American Rescue Actwas signed into law last week and included some extensions to existing stimulus programs as well as the creation of new ones for small businesses. Now that the dust has settled, what is available? Here’s a recap.
Paycheck Protection Program
About $7.25 billion was added to this popular programthat provides forgivable loans to small businesses, independent contractors, freelancers, and proprietors. The rules of the program have been changed to target businesses that have suffered revenue declines and expanded to include more eligible businesses, particularly larger nonprofits. Money has been set aside specifically for businesses in low-incomecommunities.
The final day for applications is March 31, although there is new legislation in both the Senate and House that proposes to extendthe deadline two months through the end of May. You can apply by finding a Small Business approved lender here.
Economic Injury Disaster Loan Program
This program offers funds directly through the Small Business Administration to businesses affected by and located in disaster areas impacted by COVID-19. These $2 million loans have a 30-year maturity and interest rates of 3.75% for for-profit companies (2.75% for nonprofits). You can receive an EIDL loan even if you get a Paycheck Protection Program loan and you can apply for these loans herethrough Dec. 31.
Economic Injury Disaster Loan Program Grants
Special grants have been set aside for very small businesses located in low-income communities that have no more than 300 employees and that have suffered an economic loss of more than 30%, as determined by the amount that the entity’s gross receipts declined during an eight-week period between March 2, 2020, and Dec. 31, 2021, relative to a comparable eight-week period immediately preceding March 2, 2020.
SBA Loan Forgiveness
Any small firm applying for a Small Business Administration Section 7(a)or 504loan by Sept. 20, 2021, will get the first three months of principal and interest payments waived. Existing businesses, particularly those in harder hit industries such as restaurants and travel, can also get their principal and interest payments waived. You can apply for these loans and check on what forgiveness is available for your business through an SBA lender.
Restaurant Revitalization Fund
The American Rescue Plan created this $29 billion fund to help restaurants, bars, food trucks, caterers, or similar places of business in which, according to the bill, “the public or patrons assemble for the primary purpose of being served food or drink.” Eligible businesses can apply for grants of as much as $10 million that make up the loss of their revenue between 2020 and 2019. Applications for this program are not yet available but will ultimately be found on the Small Business Administration’s website, so keep checking.
Shuttered Venue Arts Program
This program, which is part of the December 2020 stimulus legislation, is expected to begin accepting applications hereshortly.
The program targets as much as $15 million in grants for live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, or talent representatives who demonstrate a 25% reduction in revenues with special amounts set aside for organizations with fewer than 50 full-time employees.
Because of implementation delays, the grants are now available even if you’re participating in the Paycheck Protection Program, with certain restrictions.
Employee Retention Tax Credit
This generous credit (up to $7,000 per employee per quarter in 2021) is available for companies who have been either shut down or experienced quarterly revenue declines (20% in 2021 or 50% in 2020 compared with comparable quarters in 2019). The credit is taken against the employer’s share of payroll taxes owed on its quarterly federal tax payroll tax returns, with any excess credit refundable back to the employer. The credit is available even if you’re participating in the Paycheck Protection Program (with certain restrictions) and has been extended to Dec. 31, 2021. To get more details, it’s best that you consult a tax or payroll professional, or start here.
COBRA Tax Credit
To help laid-off workers continue their health insurance under the Consolidated Omnibus Budget Reconciliation Act of 1985 (better known as COBRA), the American Rescue Plan provides for a tax credit for employers who pay for this coverage, which can be calculated on the employer’s federal payroll tax returns. Employers should work with their tax and payroll professionals to ensure that they are offering this benefit to their eligible workers, and taking advantage of the credit.
Families First Coronavirus Response Act Tax Credit
Although employers no longer must provide compensation to employees who — with their families — have been affected by COVID-19, those that choose to can take advantage of a tax crediton their federal payroll tax returns that reimburses them for these expense. The cost of compensating employees who miss work to get a vaccination shot — or who suffer any side effects — is now part of the eligible expenses allowed for this calculation. The credit is available through Sept. 30, 2021.
Work Opportunity Tax Credit
This credit, which is taken against a company’s income taxes due, was extended through 2025. It provides up to a $9,600 per employee benefit for employers who hire certain workers such as veterans, those coming off of welfare or out of prison or, most important, those who have been unemployed for more than six months. More information about calculating the Work Opportunity Tax Credit can be found hereand like the other credits mentioned, it’s best to get help from a tax or payroll professional to help calculate your benefit.
Things are looking hopeful that the economy will recover in 2021. But regardless of this recovery, many small businesses still need help recovering from the devastating financial impact of the prior year. My smartest clients are taking advantage of as many of these stimulus programs as they can.