In my last update, I dove into the most recently passed COVID-19 stimulus bill — Officially dubbed the American Rescue Plan — specifically reviewing the key benefits this new package provides to individuals.
Now, I’m shifting gears a bit to look at what the latest stimulus bill does for small businesses.
It’s no secret the pandemic has ravaged a great many businesses. Countless operations have either been significantly scaled back or shuttered altogether. And sadly, some of these enterprises will never reopen their doors. In addition, the businesses now beginning to reopen have a long road to recovery and are still vulnerable to financial collapse.
To aid these struggling businesses struggling, the federal government has approved another round of financial support. Let’s take a closer look at how this new bill impacts small businesses…
More Payroll Protection (PPP) Funds
The American Rescue Plan includes another $284 billion in PPP funds. This sizable figure provides several earmarks for specific economic segments and particular industries hit hard by the pandemic.
$15 billion is set aside for minority-owned businesses. And another $12 billion is dedicated to live venues, cultural institutions, and independent movie theaters. There is also a grant program specifically for restaurants. And expanded financing opportunities for non-profit organizations, along with similar options for local newspapers, radio, and TV stations.
Who qualifies for new PPP funding?
- Small businesses with under 300 employees that can demonstrate a 25% decline in gross income between 2019 and 2020.
- Those businesses taking “second draw” PPP funds must demonstrate they have spent all of their first draw PPP funds.
What are the terms of second draw PPP funding?
- Businesses can borrow up to $10 million in the first loan, and up to $2 million in their second loan.
- To qualify for loan forgiveness, at least 60% of the funds must be used to cover payroll, while the other 40% can be used to pay operational costs, including rent, administrative fees, and property-casualty.
Economic Injury Disaster Loan and Targeted EIDL Advance payments
EIDL is a grant a loan program aimed primarily at businesses in low-income communities that weren’t able to take full advantage of prior PPP funding.
To qualify, businesses must demonstrate a 30% decline in gross income from an 8 week period following March 2020 compared to a similar period in the prior year.
Eligible businesses can apply for grants up to $10,000. These businesses can also apply for loans up to $150,000. And the funds can be spent on payroll, rent, and other operational costs.
Stimulus Support For Freelancers + Other Self-Employed Workers
The additional unemployment benefits offered to freelancers, independent contractors, gig workers, and the self-employed have been extended for another 13 weeks.
And because the American Rescue Act was not passed until after the prior enhanced benefits package expired, self-employed workers can expect retroactive payments covering the lapsed period.
Wondering If Your Business Can Take Advantage of The New Stimulus Package?
As with most government legislation, there’s a LOT to unpack in the American Rescue Act. If you have questions about this new legislation and how it impacts your business, I encourage you to get in touch for a FREE consultation.