American Rescue Plan Act Supports Small Business and Targeted Industries

The American Rescue Plan Act (ARPA) provides substantial support for targeted industries including small businesses to help them recover from COVID 19.  It is no secret that the pandemic has disproportionately impacted small businesses across the country, particularly those owned and operated by women and minorities. Every community has had to face the unfortunate reality of local storefronts that are closing or have closed, resulting in friends and family members being furloughed or laid off.  According to the U.S. Treasury, nationally, small business revenue is down 32 percent, and at least 400,000 firms have permanently closed. After a year of the public health crisis, many businesses are hanging on by a thread. Within this law are plans to provide critical assistance to small businesses across the country, facilitating the urgent deployment of capital and support to help these organizations not just persevere, but recover on solid footing.

Small business remains a focus of COVID 19 economic recovery.  ARPA appropriates $15 B to the Small Business Administration provide EIDL $10,000 grants to small businesses eligible under Section 331 of the Economic Aid to Hard Hit Small Businesses, Nonprofits, and Venues Act or Section 1110(e) of the CARES Act.  ARPA also provides $10 B to state and Tribal governments to fund small business credit expansion initiatives to include: $1.5 B for states to support businesses owned by socially and poor people; $1 B for an incentive program to boost funding tranches for states that show robust support for such businesses; and $500 M to support very small businesses with fewer than 10 employees.  ARPA will inject capital into state small business support and capital access programs, provide collateral support, facilitate loan participation, and enable credit guarantee programs.  ARPA also is designed to boost state venture capital programs and provide funding for technical support and assistance.  ARPA extends several critical tax benefits to small businesses that are intended to help businesses through to the recovery while keeping up their payrolls and still taking steps to protect health outcomes for employees.  ARPA extends the availability of the Employee Retention Credit for small businesses through December 2021 and allows businesses to offset their current payroll tax liabilities by up to $7,000 per employee per quarter. This credit of up to $28,000 per employee for 2021 is available to small businesses who have seen their revenues decline, or even been temporarily shuttered, due to COVID. ARPA also extends through September 2021 the availability of Paid Leave Credits for small and midsize businesses that offer paid leave to employees who may take leave due to illness, quarantine, or caregiving. Businesses can take dollar-for-dollar tax credits equal to wages of up to $5,000 if they offer paid leave to employees who are sick or quarantining.

Agriculture is another important focus for ARPA. ARPA provides $4 B for the U.S. Department of Agriculture to: purchase food and agricultural commodities; purchase and distribute agricultural commodities (including fresh produce, dairy, seafood, eggs and meat) to individuals in need; make grants and loans for small or midsized food processors or distributors, producers or other organizations to respond to COVID; make loans and grants to maintain and improve food and agricultural supply chain resiliency; provides $300 M to monitor and survey acceptable animals for incidents of COVID; provides $100 M to reduce the amount of overtime inspection costs of federally inspected small establishments and very small establishments engaged in meat processing.

Addressing the challenges of the hospitality industry is another major focus of ARPA. ARPA appropriates $28.6 B for the SBA to administer a grant program to restaurants through a new Restaurant Revitalization Fund.  The new grant program follows the enactment of a similar grant program for shuttered live venues enacted in Section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act enacted in December 2020. Eligible restaurants must certify that the uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations of the restaurant, and ARPA prohibits eligibility of a restaurant that: is a state or local government operated business; owns or operates more than 20 locations as of March 13, 2020; has a pending application for; has received a grant under SBA shuttered live venues grant program; or is a publicly traded company.  The maximum grant amount is $10M per eligible entity and any affiliated businesses, and $5 M per physical location of the eligible entity.  ARPA also provides $1.25 B in additional funds for the Shuttered Venue Operators Grant Program enacted in Section 324 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act enacted in December 2020.  ARPA also allows eligible applicants to access both the Shuttered Venue Operators Grant (SVOG) and PPP to address SVOG’s delayed start. 

Finally, the airline industry is another ARPA winner.  ARPA provides $14 B to extend Payroll Support Program funding for eligible air carriers and contractors, with the new round of funding extending restrictions on involuntary furloughs and reductions in pay rates or benefits through Sept. 30, 2021, or the date on which funds are expended; it also extends the restrictions on stock buybacks, dividends and capital distributions through Sept. 30, 2022, and restrictions on executive compensation to April 1, 2023. The Secretary of the Treasury is required to issue streamlined procedures within five days of enactment and make initial payments under the program within 10 days of enactment.

ARPA devotes substantial resources to support the development of small companies and support targeted industries disproportionately impacted by COVID 19.