The University of Mary Washington Center for Economic Development has outlined important points on the American Rescue Plan Act:
- With certain changes, the American Rescue Plan Act continues to make available, to eligible employers through Sept. 30, 2021, paid sick and family leave credits that have been available under the CARES Act and the Consolidated Appropriations Act. For compensation paid between April 1, 2021, and Sept. 30, 2021, changes include increasing eligible wages to $12,000 per employee (up from $10,000 in 2020), expanding qualifying leave, and covering up to 60 days of paid family leave for self-employed individuals (instead of 50 days under previous law).
- $7.25 billion in Paycheck Protection Program (PPP) funding has been added with less stringent access standards for, among others, nonprofit entities, digital media companies, sole proprietors, independent contractors, and self-employed individuals. Eligible nonprofits now include those employing 500 or fewer per physical location (300 or fewer per physical location for second PPP loans) and meeting other standards.
- $15 billion in Economic Injury Disaster Loan (EIDL) funding has been added, with one third of such amount targeted to businesses that suffered a revenue loss of greater than 50 percent, are located in low income census tract areas, and employ 10 or fewer people.
- The expanded Employee Retention Credit (ERC) provisions under the Consolidated Appropriations Act, set to expire on July 1, will be made available through Dec. 31, 2021, for eligible employers. In addition, startup businesses established after Feb. 15, 2020, with annual gross receipts of up to $1 million and that otherwise do not meet the ERC eligibility tests, will now be eligible for the ERC. The startup ERC is capped at $50,000 per quarter, per employer, and the credit will be computed under regular ERC rules. The revised ERC rules also include a new provision for “severely financially distressed employers,” which is defined as an employer that experienced a gross receipts reduction of more than 90 percent as compared to the same quarter in 2019. If an employer meets this definition, it may treat all wages paid to employees as qualified wages, regardless of the number of full-time employees.
- Establishes a $25 billion Restaurant Revitalization Fund for 2021 to be administered by the Small Business Administration (SBA). $5 billion of this will be allocated to restaurants whose gross receipts in 2019 were less than $500,000, and the first 21 days of the program prioritizes small businesses owned by women, veterans, or socially and economically disadvantaged individuals. Public companies, government-managed businesses, entities, and affiliates that have more than 20 locations, and entities that applied for a shuttered venue operator grant (as discussed below) will not qualify. Grant amounts will not exceed a restaurant’s pandemic-related revenue loss (which is measured by the difference between 2020 and 2019 gross receipts) of up to $10 million (with a limit of $5 million per physical location). Grant amounts may be used to cover payroll costs, mortgage payments, rent, utilities, maintenance expenses, operational expenses, paid sick leave, and supplies. Grant amounts received from the restaurant revitalization fund won’t be treated as taxable income, and expenditures paid with such grant amounts will still be deductible.
- Adds $1.5 billion to the $15 billion in shuttered venue operators grants, which are administered by the SBA, and that were funded under the Consolidated Appropriations Act to assist live venue operators or promoters, theatrical producers or live performing arts organization operators, motion picture theater operators, museum operators, and talent representatives that were in operation on Feb. 29, 2020, and that had a 25 percent or greater drop in gross earned revenue during any quarter of 2020 as compared to the same quarter of 2019. The new law removes the requirements under the Consolidated Appropriations Act that prohibited an entity from receiving both a PPP loan after Dec. 27, 2020, and being eligible for a shuttered venue operators grant. The amount of the grant will instead be reduced by the PPP loan amount received after Dec. 27, 2020.
- Adds $86 billion to support approximately 185 failing multi-employer pension plans.
- Adds $10.4 billion to support agriculture, including supply chain monitoring and surveillance, debt relief, grants, training, education, and other forms of assistance aimed at acquiring land.
Helpful resource links were also provided by the University of Mary Washington Center for Economic Development:
- SCORE: New $10,000 EIDL Grants: Do You Qualify?
- Journal of Accountancy: SBA defers EIDL payments until 2022
- Small Business Administration (SBA): Second Draw PPP loan
- Paychex.com: Employee Retention Tax Credit Extended to End of 2021 by American Rescue Plan Act
- Internal Revenue Service (IRS): FAQs: Employee Retention Credit under the CARES Act