Market Perspective

5 Ways Businesses Can Benefit Now From the New Stimulus Plan

May 10, 2021
The C2FO Team

The $1.9 trillion American Rescue Plan passed in March contains funding aimed at helping small and minority-owned businesses. Here’s what you need to know.  

With $1,400 checks going out to millions of Americans, the American Rescue Plan Act of 2021 has already had a major impact on individuals affected by the COVID-19 pandemic.

However, the sweeping $1.9 trillion stimulus package signed into law by President Joe Biden on March 11 also includes several provisions that will affect companies of all sizes. 

According to data released last year by Yelp!, at least 98,000 US businesses closed permanently due to the pandemic. Many companies that have managed to survive are only now recovering from last year’s economic crisis, particularly firms in retail, entertainment and hospitality. 

Here are five significant ways the American Rescue Plan (ARP) could impact — and benefit — your business.

1. Tax credits for COVID-related paid time off  

Under the ARP, companies that have 500 or fewer employees are eligible to claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave for employees affected by COVID-19. That includes time taken by employees to receive or recover from vaccination treatments for the virus. 

The tax credits are available for paid leave occurring between April 1 and Sept. 30, 2021. Companies can be reimbursed for sick leaves as long as two weeks, at as much as $511 per day. 

The tax credit for family leave wages can cover a leave of up to 12 weeks, at a maximum of $200 per day. To learn more about how to claim these credits on your quarterly Form 941 tax return, visit this page on IRS.gov.   

2. Grants available for businesses that shut down

For-profit and nonprofit companies that suspended operations during the pandemic-related lockdown last year can now apply for Shuttered Venue Operators Grants from the Small Business Administration (SBA). The program provides $16.2 billion to businesses like movie theater chains, museums, as well as live performance promoters and venues. 

Eligible companies can qualify for grants equaling 45% of gross earned revenue, with a maximum single grant amount of $10 million. The program includes $2 billion reserved for eligible applicants with as many as 50 employees. 

3. More funding for restaurants 

More than 110,000 restaurants and bars closed in the US last year — temporarily or permanently — due to the pandemic. To help eateries that are just now starting to recover, the ARP created the Restaurant Revitalization Fund, which earmarks $28.6 billion in grants for restaurants and bars that have between one and 20 locations. The grants are tax-free and can equal the amount of revenue lost due to the pandemic dating back to Feb. 15, 2020.

The grants are capped at $10 million per business, with a $5 million limit per physical location. In addition to bars and restaurants, other businesses that could qualify for funding under the program include food trucks, food stands, caterers and tasting rooms.

4. More time to apply for some PPP funding

Created a year ago to aid businesses affected by the pandemic, the Paycheck Protection Program (PPP) was revised earlier this year to benefit more small and minority-owned businesses.

Recently, Biden signed a bill extending PPP’s deadline. Businesses now have until May 31 to apply for a first or second PPP loan. Authorization of loans has also been extended to June 30 to give the SBA time to process applications. 

On May 4, the SBA announced that PPP is nearly out of funding. About $8 billion remains, which is earmarked to be distributed by community financial institutions. The SBA said that it will still fund loans that are already in the application process.  

It remains to be seen if the government will approve additional funding for PPP. As of March 28, the program has approved more than 8.7 million loans totaling $734 billion.

5. More money if you are self-employed

New PPP rules issued by the SBA now allow self-employed entrepreneurs to calculate their maximum PPP loan amount using gross revenue instead of net profit. 

That change creates opportunities for larger loans for the self-employed, many of whom do not record any net profit on their Form 1040 Schedule Cs. Details of the new way to calculate your maximum loan amount are part of a 32-page interim final rule the SBA published in early March.  

But wait — there’s much more

As the largest stimulus spending bill in US history, the ARP contains many other components that could help small to mid-sized businesses. Those include: 

  • A $15 billion program to enable the SBA to deliver $10,000 grants to small companies.
  • Flexible fiscal aid of $350 billion that local and state governments can use to support small businesses and other initiatives. 

For more details about the full scope of the ARP’s impact on businesses, families, schools and local governments, visit Whitehouse.gov.

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