One year after the start of the pandemic and a substantial number of businesses continue to struggle with the ongoing economic crisis. According to the Committee on Small Business, in 2020, the US experienced the largest yearly drop in business activity on record. As difficult as 2020 was, 2021 continues to take a toll on the overall economy and put a strain on businesses as revenues remain down. Over the past year, waves of lockdowns and reopenings have led not only to low levels of small business confidence, but a survey from the Federal Reserve Bank shows that 3 out of 10 small businesses believe they won’t survive the current year without additional government assistance from a covid relief bill.
Fresh coronavirus relief legislation provides hope for struggling businesses. At $1.9 trillion, the American Rescue Plan would be one of the biggest spending bills in history. The package addresses a number of items intended to aid economic recovery, including policies specifically aimed at helping small businesses.
American Rescue Plan: The Latest Covid Stimulus Plan
The American Rescue Plan Act follows the CARES Act (Coronavirus Aid, Relief, and Economic Security) of 2020, as well as the stimulus aid in the Consolidated Appropriations Act of 2021 as the most recent Covid relief bill. The most recent package contains several provisions affecting small business, including allocating funds for
- Paycheck Protection Program (PPP)
- Economic Injury Disaster Loan Program (EIDL)
- Restaurants, bars, and other eligible food and drinking establishments
- Shuttered venue operators
- Community Navigator Program
Paycheck Protection Program (PPP)
Established by the CARES Act, the latest Covid relief bill aims to allocate an additional $7.25 billion for the Small Business Administration’s Paycheck Protection Program (PPP) forgivable loans. While the American Rescue Plan does not extend the PPP’s current application period, which is scheduled to close March 31, it does expand PPP reach to include both nonprofits and digital journalism entities.
Nonprofits would be eligible based on creating a new category called “additional covered nonprofit entity,” and they would have to meet certain eligibility requirements relating to lobbying activities and numbers of employees.
PPP loans to Internet-only news and periodical publishers are intended to support locally-focused or emergency information. These digital journalism entities would be eligible as long as they have no more than 500 employees per physical location or the applicable U.S. Small Business Administration (SBA) size standard, and the entity certifies that they are an Internet-only publisher.
The PPP has previously disbursed more than $600 billion in forgivable loans over three rounds in the past 11 months.
Targeted Economic Injury Disaster Loan (EIDL)
The EIDL program is specifically designed to provide relief to small businesses and nonprofit organizations that are experiencing a temporary loss of revenue due to COVID-19. This program provides long-term, low-interest loans from the Small Business Administration. The first round, disbursed in early 2020, was referred to as the EIDL Advance, while this second round will be the Targeted EIDL Advance program.
Like the EIDL Advance, the Targeted EIDL Advance program will provide up to $10,000 to qualifying small businesses and nonprofits, but it will have more stringent qualification criteria. While the American Rescue Plan will allocate $15 billion for the Targeted Economic Injury Disaster Loan (EIDL) Advance program and extends the application deadline to December 31, 2021, businesses must meet the following criteria to qualify:
- Have suffered an economic loss of more than 30% in 2020 compared to 2019
- Employ no more than 300 employees
- Be located in a low-income area
Targeted EIDL Advances are ideal for businesses who can’t afford to take on any more debt as they don’t need to be paid back in any form.
Support for Restaurants and Venues
Restaurants, bars, and live event venues have been among the businesses most impacted by the pandemic. The American Rescue Plan establishes new grant programs specifically for these business entities.
The Restaurant Revitalization Fund (RRF) is a $25 billion program aimed specifically to help businesses in the food services sector, including:
- food stands
- food trucks
- food carts
- tasting rooms
Grants are to be equal to the pandemic-related revenue loss, up to $10 million, or $5 million per physical location. Eligible businesses may use the money for expenses, including payroll, mortgage and rent, utilities, supplies, food and beverage expenses, paid sick leave, and operational expenses.
Separate to the RRF is the Shuttered Venue Operator grant. Many entertainment venues continue to sit empty due to the pandemic, and the American Rescue Plan will provide an additional $1.25 billion to this SBA program to help struggling venues.
Additional Small Business Assistance
Small businesses frequently struggle to navigate the application process for many of these programs, which is why another $175 million would be used to create a Community Navigator Program. This program would aid in outreach and promotion to help target eligible businesses for relief programs. Community organizations would be brought in to serve as “navigators” to assist small businesses.
The pandemic continues to force business owners to quickly adapt to changing conditions. During these turbulent times, there is one thing your business can always depend on, and that is your Safeguard Advisor. Trusted for over 64 years, you can depend on your local Safeguard advisor for products, services, and advice that make managing and marketing your business easier and more effective. Call 855.778.3124 to get started.
- The latest Covid relief bill addresses a number of items intended to aid economic recovery.
- The latest Covid stimulus plan expands PPP reach to include both nonprofits and digital journalism entities.
- The Targeted EIDL Advance program will provide up to $10,000 to qualifying small businesses and nonprofits.
- The new Covid relief bill offers specific support to restaurants, bars, and live event venues.
- The American Rescue Plan establishes the Community Navigator Program to aid in outreach and promotion to target eligible businesses for relief programs.