How the New Stimulus Impacts Your Small Business
On Thursday, March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, making this the third "stimulus" since the pandemic began back in March 2020, nearly one year ago.
Similar to past stimulus packages, there are several provisions in this one that serve a variety of purposes, ranging from vaccine distribution to unemployment to restaurant funding. For the purposes of this article, I'll simply be covering the provisions that impact Small Businesses.
Many of the provisions outlined in the most recent stimulus package expand on previously enacted provisions from earlier stimulus packages. This bill primarily targets smaller businesses and industries that have been hit the hardest by the pandemic. Here are the highlights:
1) $7.25 billion in additional funding for the Paycheck Protection Program (PPP)
Over the past 12 months, the PPP has approved over $679 billion in forgivable loans. There is still approximately $119 billion remaining for the PPP, so the $7.25 billion will get added to that. However, it's worth noting that the application period was not extended. It is still set to close on March 31, 2021.
The bill expanded further on who qualified for the program, specifically increasing the eligibility for certain 501c organizations and internet publishing companies. The Journal of Accountancy has a nice bullet-point summary of which additional organizations qualify this time around.
Who this applies to? Businesses with fewer than 500 employees that experienced a greater than 25% loss in revenue in 2020.
How to apply? Get matched with a local lender through the SBA website to submit an application.
2) $15 billion for Targeted Economic Injury Disaster Loan (EIDL) Advance grants
The Target EIDL Advance was signed into law under the second stimulus package on December 27, 2020, which narrowed the rules for funding under the EIDL program that many businesses attempted to take advantage of back in March 2020. Funding under this program is limited to $10,000 and does not need to be repaid (as before), but with the Target EIDL Advance, funding is limited to those who applied for the EIDL grant but didn't receive the full $10,000. A further exclusion is that, in order to receive the grant under the Target EIDL Advance, your business has to be located in a "low-income" community, defined as an area with a "poverty rate in excess of 20% or an area where the median household income falls below 80% of your state’s median household income." Finally, you must demonstrate a 30% loss of income due to the COVID pandemic.
Who this applies to? Small businesses in low-income communities
How to apply? The SBA will contact you if you qualify.
3) $25 billion for restaurants, bars, and other eligible providers of food and drink
It's no secret that restaurants, bars, and pretty much all food & drink providers have been disproportionately hurt by the pandemic. The latest stimulus introduced the $25 billion Restaurant Revitalization Fund (RRF), which will provide grants to businesses in the food industry. For each qualifying business, they will be eligible up to the amount of revenue lost due to the pandemic (calculated by subtracting 2020 revenue from 2019 revenue). Grants can be used to cover a variety of business expenses (see the full list here). Similar to much of the other provisions around these stimulus packages, it will be administered by the SBA. They should have a dedicated place for this on their website soon. It's also worth noting that during the first 21 days that the application is open, priority will be given to businesses owned by women, veterans, and economically disadvantaged individuals.
Who this applies to? Restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility, or premise of a beverage alcohol producer where the public may taste, sample, or purchase products, or other similar places of business in which the public or patrons assemble for the primary purpose of being served food or drink.
How to apply? TBD; keep an eye on the SBA website for further details.
4) $1.25 billion in additional funding for the Shuttered Venue Operator Grant (SVOG) Program
This SBA program was also introduced in the second stimulus package on December 27, 2020. This program targets another industry that has been hit hard financially by the pandemic--entertainment venues. More specifically, this program is eligible for live venues, performing arts centers, movie theaters, museums, etc. In order to qualify, you must have had a loss of at least 25% in revenue at least one quarter in 2020 relative to the same quarter in 2019. You must also be reopened or have plans to reopen (meaning, if you went out of business permanently, you don't qualify). Publicly-traded companies also don't qualify, so this is specifically geared towards small-ish businesses in the entertainment industry. Also, if you received a PPP loan AFTER December 27, 2020, you will not qualify (but if you received a PPP loan before December 27, 2020, then you may still qualify). Fun fact: Strip clubs or shows that are "sexual" in nature also don't qualify.
Who this applies to? Live venue operators or promoters, theatrical producers, live performing arts organization operators, relevant museum operators, zoos and aquariums who meet specific criteria, motion picture theater operators, and talent representatives.
How to apply? The SBA is not yet accepting applications but you can sign-up for e-mail alerts here.
5) $175 million to create a "Community Navigator" Pilot Program
This new program is designed to help small business owners navigate SBA resources regarding pandemic-related financial assistance. The goal is to improve access to assistance programs and knowledge around resources for small businesses. The SBA will develop and implement a program to promote Community Navigator services to current or prospective owners of eligible businesses. This may include the establishment of a call center, website enhancements, and ongoing education at the community-level. Hopefully, this investment makes it easier for business owners to navigate the programs that are available to them.
Who this applies to? All small businesses.
How to apply? N/A; this is not a funding avenue, but simply an additional resource that will soon be made available to everyone.
There has been additional funding allocated to the airline industry, but since that doesn't fall under "small business" I excluded them from this list. The above program categories are where the majority of affected small business owners will fit. The SBA hasn't updated their website for the stimulus yet, but I anticipate that coming soon. You can check this page on the SBA website periodically to look for updates.
FYI, if you're confused on how the cross-eligibility works for the PPP, EIDL, and SVOG, the SBA has a page dedicated to exactly this. Check it out!