American Rescue Plan Act
ComplianceMarch 16, 2021

American Rescue Plan Act: How it helps small businesses

On March 11, 2021, President Biden signed H.R. 1319, the American Rescue Plan Act (ARPA). This $1.9 trillion stimulus bill includes $50 billion in aid for small businesses through loans, grants, and other programs. This article will review some of ARPA’s initiatives designed to help small businesses.

Modifications to the Paycheck Protection Program

ARPA provides $7.25 billion in additional funding for Paycheck Protection Program (PPP) loans. It also expands the categories of nonprofits eligible for the PPP. It creates a new category called “additional covered nonprofit entity”, which includes nonprofits listed in Sec. 501(c) of the Internal Revenue Code other than those listed in Secs. 501(c)(3), (c)(4), (c)(6), or (c)(19). To be eligible, the additional covered nonprofit must not employ more than 300 people and must meet certain limits on its lobbying activities. ARPA also grants eligibility to certain larger nonprofit organizations that employ not more than 500 employees per physical location.

ARPA also provides that certain internet-only publishing organizations can now qualify for PPP loans. They must have 500 or fewer employees and certify that the loan will support locally focused news.

Targeted Economic Industry Disaster Loan Advances

The Act provides $15 billion for Targeted Economic Industry Disaster Loan (EIDL) Advances. These advances do not have to be repaid. To be eligible, the applicant must be located in a low-income community and have suffered a loss due to COVID-19.

The Act allocates $10 billion for entities with 300 or fewer employees that have suffered an economic loss of more than 30%, and that applied for a Targeted EIDL Advance previously, but did not receive the full amount to which they were entitled ($1,000 per employee up to $10,000). In addition, $5 billion is allocated to provide grants of $5,000 to eligible entities that have suffered an economic loss of more than 50% and have no more than 10 employees.

Support for restaurants

The Act allocates $28.6 billion to establish the Restaurant Revitalization Fund (RRF). Entities eligible to receive an RRF grant include a restaurant, food cart, caterer, bar, lounge, brewpub, tasting room, or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink. Eligible businesses must not operate more than 20 locations.

The grants equal the pandemic-related revenue loss of the eligible entity, which is calculated by subtracting 2020 revenue from 2019 revenue. The maximum grant is $10 million or $5 million per physical location. $5 billion is set aside for businesses with less than $500,000 in 2019 annual revenue.

The grants may be used for certain eligible expenses including payroll, mortgage, rent, utilities, supplies, paid sick leave, maintenance expenses, food and beverage expenses, and operational expenses.

The Small Business Administration will prioritize applications from eligible businesses owned and operated or controlled by women, veterans, or socially and economically disadvantaged individuals

Community navigator pilot program

There has been $175 million allocated to establish a community navigator pilot program to increase awareness of and participation in COVID-19 relief programs for business owners currently lacking access, with priority for businesses owned by socially and economically disadvantaged individuals, women, and veterans. This includes $100 million in grants to be awarded to organizations to help small businesses take advantage of the available relief programs and $75 million for outreach and education programs.

Shuttered venue operators

There has been $1.25 billion added to the SBA’s Shuttered Venue Operators Grant (SVOG) program. Entities eligible to apply include live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, motion picture theater operators, and talent representatives. SVOG grants are equal to 45 percent of the applicant’s gross revenue in 2019 with a $10 million maximum. Eligible applicants can receive both the SVOG grant and a PPP loan.

Conclusion

This has been just an overview of some of the provisions specifically targeted to small businesses by the American Rescue Plan Act. Business owners and their advisers should review the Act itself for details on the programs mentioned in the article (which can be found in Title 5, Secs. 5001 – 5006) and see what else this important piece of legislation provides that may benefit them.

Small business owners interested in applying for any of these grants or loans may wish to start gathering the documents and records that they’ll need. If they need assistance in obtaining organizational documents such certify copies of articles of incorporation or articles of organization, or a certificate of existence they can contact CT at 1-888-606-5002.

Sandra Feldman
Publications Attorney
Sandra (Sandy) Feldman has been with CT Corporation since 1985 and has been the Publications Attorney since 1988. Sandy stays on top of the most pressing and pertinent business entity law issues that impact CT customers of all sizes and segments.
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