Small Business Relief Update
The U.S. has lost approximately 400,000 small businesses during the pandemic, and minority-owned businesses have been hit disproportionately hard. Minority-owned SMEs have also had a harder time accessing relief, which is why President Biden’s recently signed $1.9 trillion American Rescue Plan stimulus provides both more, and more equitably distributed, small business relief.
The roughly $50 billion in small business assistance in the American Rescue Plan includes:
- ADDITIONAL: $7.25 billion in additional funds for the Paycheck Protection Program (PPP), including expanding eligibility to additional nonprofits and digital news services.
- ADDITIONAL: Additional $1.25 billion in funds for the Shuttered Venue Operators Grant (SVOG) program, which gives grants to theaters, museums, and other entertainment venues. The plan also allows businesses to apply for both a PPP loan after Dec. 27, 2020 and the SVOG (not just one program or the other). The SVOG will be able to start taking applications in April.
- ADDITIONAL: $15 billion additional for Targeted Economic Injury Disaster Loan Advance(EIDL) payments, including NEW $5 billion for Supplemental Targeted EIDL Advance payments for those hardest hit. EIDL loans provide up to $10,000 in grants to businesses in low- to moderate-income communities and hard-hit areas.
- NEW:$28.6 billion for the Restaurant Revitalization Fund for grants for restaurants and bars, which have been the hardest hit industry during COVID-19.
- NEW:$100 million to establish a Community Navigator pilot program. Grants will go to eligible organizations that improve access to COVID–19 pandemic assistance and funds are designed to help communities of color or minority communities that have had a harder time accessing relief funding. Trusted, well-established groups within communities provide support by helping small businesses figure out which relief program is best for them, how to fill out an application, and how to get the funding into their accounts.
- NEW: $10 billion for the Small Business Opportunity Fund, which will be distributed by state and local governments and leverage private capital at a rate of around 8:1. The fund is expected to result in $50-100 billion in working capital going into small businesses to help them grow.
- EXTENDED: The Employee Retention Credit provides that any eligible small business can get $7,000 per quarter per employee, which helps cover the cost of payroll. Congress increased the credit and has clarified that you can use both the PPP program and Employee Retention Credit.
The PPP program includes several changes, such as:
- A 2-week exclusivity period for businesses with fewer than 20 employees
- Change of how relief for sole proprietors is calculated based on gross income so they have the option of getting more relief
- Removing student loan delinquency as a reason for denying a PPP loan, which has allowed 30,000 additional loans to go through the system
- Clarified people with Individual Taxpayer Identification Numbers (ITIN) could participate in the program because uncertainty in this area resulted in immigrants being denied relief
Additionally, there are still tens of billions of dollars of capacity in the PPP program and the deadline to apply is March 31. The U.S. House is also considering a bill that would extend that deadline by two months to May.