Business Provisions of the American Rescue Plan Act
On March 11th, President Biden signed into law the American Rescue Plan Act. This new law provides more than $50 billion in additional relief to small businesses. Detailed below are some of the highlights of the new law.
The bill includes $7.25 billion more for the Paycheck Protection Program; however, the bill did not extend the current application period which is currently scheduled to close on March 31st.
The bill also expands not-for-profits eligibility for the PPP with the new category called “additional covered nonprofit entity,” which are those not-for-profits listed in Sec. 501(c) of the Internal Revenue Code other than 501(c)(3), 501(c)(4), 501(c)(6), or 501(c)(19) organizations, that can receive an initial PPP loan, provided that:
-No more than 15% of receipts from lobbying activities.
-Lobbying expenses did not exceed $1 million during the most recent tax year that ended prior to Feb. 15, 2020.
-The organization has no more than 300 employees.
-Additional limits apply to eligibility of 501(c)(7) organizations.
Also made eligible for the PPP are some larger not-for-profits.
-Larger 501(c)(3) organizations and veterans’ organizations that employ no more than 500 employees per physical location.
-Larger 501(c)(6) organizations, domestic marketing organizations, and additional covered not-for-profit entities that employ not more than 300 employees per physical location.
$15 billion for targeted Economic Injury Disaster Loan (EIDL) advance payments.
-Funds to businesses located in low-income communities with no more than 300 employees and 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.
-Funds from Targeted EIDL Advances shall not be included in the gross income of the person who receives the grant and that no tax deductions will be denied, no tax attribute reduced, and no basis increase denied due to the exclusion of the grant funds from gross income for Federal tax purposes.
$25 billion for restaurants, bars, and other eligible providers of food and drink.
-Allows for grants equal to the pandemic-related revenue loss of the eligible entity, up to $10 million per entity, or $5 million per physical location. The grants are calculated by subtracting 2020 revenue from 2019 revenue. Entities are limited to 20 locations.
-$1.25 billion for shuttered venue operators.
-$175 million to create 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.
Provides $4 billion to the U.S. Department of Agriculture (USDA), of which:
-$3.6 billion is dedicated to supporting the food supply chain, including purchasing food and agricultural commodities; making grants and loans for small to mid-size processors; seafood processing facilities; farmers markets, producers and other organizations responding to COVID; providing assistance to maintain and improve food and agricultural supply chain resiliency; and making payments for expenses related to crop losses pursuant to the Wildfire Hurricane Indemnity Program Plus.
-$300 million for surveillance and monitoring of animals susceptible to COVID-19 transmission.
-$100 million to reduce the amount of overtime meat, poultry and egg inspection costs at small establishments.
-$1.01 billion is dedicated for grants and loans to improve land access for socially disadvantaged farmers, ranchers, and forest landowners, in addition to scholarships, outreach, financial training, and other technical assistance.
-$800 million is provided to use the Commodity Credit Corporation to make purchases and distributions under the Food for Peace Program.
-Appropriates funds as may be necessary for loan modifications and payments to farmers and ranchers, who are members of groups that have been socially disadvantaged in the USDA programs. The department could pay as much as 120% of each such farmer’s or rancher’s debt on loans it made or guaranteed.
Employee Retention Credit (“ERC”)
The availability of ERC has been extended through December 31, 2021. Eligible employers have had operations fully or partially suspended as a result of government orders that impose limitations upon travel, commerce or group meetings due to COVID-19. Or employers that had a decline of more than 20% quarterly gross receipts compared to the same quarter of 2019 gross receipts.
-For 2021 qualified employers can take a 70% payroll tax credit on up to $10,000 qualified wages per employee per quarter for a maximum annual credit of $28,000 per employee.
-For 2021 employers with over 500 full-time employees qualified wages are only those wages paid to an employee on account of services not being performed. Employers with under 500 full-time employees qualified wages are those wages paid to employees whether or not the employees are providing services.
-The changes below only impact the 3rd and 4th quarter of 2021:
-New Recovery Startup Business expands eligibility to employers that began carrying on a trade or business after February 15, 2020, with annual gross receipts of up to $1 million that doesn’t otherwise meet the ERC eligibility. The credit is capped at $50,000 per quarter for recovery startup businesses.
-New severely financially distressed employers are those employers that experienced a decline in gross receipts of more than 90% compared to the same quarter in 2019. Severely financially distressed employers may treat all wages paid to employees as qualified wages regardless of the number of full-time employees.
Federal Emergency Paid Sick and Family Leave Credits
The availability of the federal emergency paid sick and family leave credits are extended through September 30, 2021. Providing federal emergency paid sick and family leave is voluntary by the employer and not required.
-The amount of eligible leave restarts on April 1, 2021.
-Employers can provide up to 10 days of sick leave from April 1, 2021 to September 30, 2021.
-COVID-19 testing without symptoms or if employer requests testing is eligible for paid sick leave up to $511 per day. Vaccine related leave is eligible for paid sick leave up to $511 per day.
– Federal emergency family leave credit is extended from 10 week to 12 weeks of paid leave between April 1, 2021 and September 30, 2021.
Child and Dependent Care Flex Benefit Plan
The amount that can be excluded from employee wages for employer-provided dependent care benefits is increased to $10,500 for married taxpayers and $5,250 for single taxpayers. This increase is for 2021 only.