On Thursday, March 11th, President Biden signed the much-anticipated American Rescue Plan Act of 2021 into law. The $1.9 Trillion stimulus package expands COVID-19 relief for individuals, families, local governments, and businesses and includes direct payments and increased child credits. While the contents of the plan have been cause for much debate in the last several months, there is no denying that the injection of funds is sure to have a drastic and lasting impact. Here at KROST, we have closely monitored the evolution of government relief programs, beginning with the 2020 CARES Act, which launched the Paycheck Protection Program (PPP) and other emergency funding programs. Here’s what you need to know about this new law and how it, directly and indirectly, affects you and your business.
American Rescue Plan Timeline
(sent to Senate)
February 27, 2021
March 6, 2021
(President Biden to Sign)
March 10, 2021
(President Biden signed)
March 11, 2021
American Rescue Plan for Businesses
$28.6 Billion Restaurant Revitalization Fund
The Small Business Administration (SBA) is set to receive $28.6 billion in new grant funding for qualifying restaurants and bars. Companies with a NAICS code starting with “72” with 20 locations or fewer may apply for grants equal to the difference between their 2020 and 2019 revenue. Grants would max out at $10 million per company and $5 million per physical location. $5 billion of this fund will be exclusively available to businesses with 2019 gross receipts of no more than $500,000.
The SBA grants will cover a range of eligible expenses, including payroll costs, payments of principal or interest on mortgage obligations, rent payments, utilities, maintenance expenses (including construction to accommodate outdoor seating), supplies (including PPE and cleaning materials), food and beverage expenses, covered supplier costs as defined in the PPP rules, operational expenses, paid sick leave, and any other expenses that the SBA determines to be essential to maintaining the business.
$15 Billion in Additional Economic Injury Disaster Loans (EIDL) Funding
To continue relief for severely impacted small businesses with fewer than 10 workers, the American Rescue Plan also includes additional funding for the EIDL program.
$7.25 Billion for the Paycheck Protection Program
In addition to these additional funds for PPP, the program will expand eligibility criteria to some non-profit organizations that were previously excluded. These groups include organizations that promote advocacy and lobbying, as well as larger non-profits. » Learn about our PPP services
Extension of Employee Retention Tax Credit
The American Rescue Plan extends the 2021 Employee Retention Tax Credit program to include the 2nd half of 2021. Previously the end date of the 2021 credit was June 30th, 2021. » See if you qualify
Other Business Funding & Support
In addition to the major programs, $3 billion will be allocated for a payroll support program for Aviation Manufacturers, $1.25 billion in funding will be received by the Shuttered Venue Operators Grant to aid music halls and other concert venues, $175 million will go to the Community Navigator Program for eligible businesses, and credit will continue to be given to companies that provide family and sick leave under the FFCRA, although that is now voluntary and not mandated.
Provisions for Individuals & Families
Direct Financial Payments
Individuals and families will again receive relief payments based on adjusted gross income. This will be the third economic impact payment sent out to qualifying Americans. Individuals with adjusted gross incomes (AGIs) of $75,000 or less—and couples with AGIs of $150,000 or less—will receive $1,400 each and for each of their dependents, regardless of age.
Payments to individuals with AGIs over $75,000 will be reduced until they disappear entirely at $80,000 ($160,000 for couples).
Extended Unemployment Benefits
Unemployment benefits of $300 per week of federal payments are extended through September 6, 2021. For households with income lower than $150,000, the first $10,200 in 2020 benefits is also tax-free.
The Act also provides 100% subsidy of COBRA health insurance premiums, so unemployed workers can remain on their employer healthcare plans through to the end of September 2021.
Child Tax Credits
The new legislation will temporarily expand the Child Tax Credit. For couples with a combined income of $150,000 or less or $112,500 in the case of a head of household or $75,000 otherwise, a credit of $3,000 a year will be provided for each child ages 6 to 17 and $3,600 for each child under age 6.
Advance payments against these credits can be requested and will be sent to families by direct deposit on a monthly basis.
In addition to these provisions for businesses, individuals, and families, the package includes funding for state and local governments, education funding for K-12 and college and universities, money for FEMA for vaccination distribution and assistance, additional assistance to veterans, enacting the Defense Production Act for PPE manufacturing, and more.
For more information on the American Rescue Plan, join us for an upcoming educational webinar. We will review the provisions in more detail and how they impact your home and business. Questions about a specific provision and how to take advantage of the benefit? Our consultants are here to assist you. Contact us today.
About the Author
Paren Knadjian, Practice Leader
Mergers & Acquisitions, Technology, PPP Forgiveness
Paren is the practice leader of the M&A and Capital Markets group at KROST. He comes with over 20 years of experience in mergers and acquisitions as well as equity and debt financings. In that time, Paren successfully completed over 200 M&A and Capital Markets transactions worth over $1 billion, acting as both a buy-side and sell-side advisor. » Full Bio