SUMMARY:

• Provides another round of direct payments of $1,400 for individuals, $2,800 for joint filers, and $1,400 for each qualifying dependent, for individuals with an adjusted gross income (AGI) of $75,000 ($150,000 for couples) or less, with no direct payments for individuals with AGI of $80,000 ($160,000 for couples) or more;
• Provides $7.5 billion to the Centers for Disease Control and Prevention (CDC) for tracking, administering and distributing COVID-19 vaccines;
• Appropriates $27.4 billion in emergency rental assistance;
• Provides $7.25 billion for the Paycheck Protection Program (PPP) for forgivable loans, and extends nonprofits’ eligibility for the loans;
• Tax changes such as:
  • Raising the maximum Earned Income Tax Credit (EITC) for adults without children from $543 to $1,502;
  • increasing the Child Tax Credit maximum amount to $3,000 per child and $3,600 for children under age 6;
  • extending the employee retention credit established by the CARES Act through December 31, 2021;
  • extending tax credits for employer-provided paid sick and family leave established under the Families First Coronavirus Response Act (FFCRA) through September 30, 2021;
• Provides $350 billion to help states, counties, cities and tribal governments to assist with COVID-19 and to address its economic effects, including aid to households, small businesses, nonprofits, and industries such as tourism and hospitality;
• Gives $4 billion to the USDA to assist with purchasing food and agricultural commodities, and making grants and loans for small to mid-size processors, seafood processing facilities, farmers markets, producers and other organizations responding to COVID;
• Provides $50 million in funding for the Consumer Product Safety Fund to protect consumers from potentially dangerous products related to COVID-19;
• Provides $4.5 billion for the Low-Income Home Energy Assistance Program to assist eligible low-income households with heating and cooling energy costs;
• Extends the Pandemic Unemployment Assistance program through September 6, 2021, while increasing the total number of weeks of benefits available to individuals who are not able to return to work from 50 to 79 weeks;
• Creates a $7.2 billion Emergency Connectivity Fund to reimburse schools and libraries for internet access and connected devices; and
• Provides $30.5 billion for grants to transit agencies for operating expenses, including payroll and personal protective equipment costs.

The American Rescue Plan Act of 2021 (the “Act”) passed the Senate with a vote of 50 to 49;  the House passed the Senate’s revised version by a vote of 220 to 211. Passed with no Republican support, President Biden signed the Act into law on March 11, 2021.

The Act is a $1.9 trillion continuation of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act Pub.L. 116–136) enacted on March 27, 2020; the $484 billion Paycheck Protection Program and Health Care Enhancement Act (Pub.L. 116–139) enacted on April 24, 2020; and the Consolidated Appropriations Act, 2021 enacted on December 27, 2020 (Pub.L. 116–260) that combined $900 billion in COVID-19 relief with the $1.4 trillion in normal governmental expenses that averted a governmental shutdown.

As part of President Biden’s promise of vaccine availability for all adults by the end of May, the Act allocates $7.5 billion dollars for COVID-19 vaccines. Although the Act’s publicity is focused on the individual level, there are a few items of interest for businesses as well. This includes a dramatic resurrection of an expired program, the creation of three new programs, and some slight ancillary changes to existing relief measures.  

The Act revitalizes the State Small Business Credit Initiative (SSBCI) created by the Small Business Jobs Act of 2010. Until now, the SSBCI’s sole federal funding was the $1.5 billion allotted in its creation. Now, the Act allots an additional $1.5 billion out of the overall $10 billion to “business enterprises owned and controlled by socially and economically disadvantaged individuals,” $500 million to “very small businesses”, and another $500 million to Tribal governments. Unlike the Small Business Administration (SBA) plans, the States administer the SSBCI; so in essence, this provision of the Act subsidizes state versions of the SBA. Some idea of the anticipated administrative costs may be found in the $500 million allotment to provide “technical assistance” to states. States are generally at liberty to set eligibility requirements if recipients are limited to businesses with 500 or fewer employees for loan amounts of $5 million or less. There is no federally imposed revenue ceiling for these programs, not even for “very small businesses.”

The new Restaurant Revitalization Fund is created with a $25 billion allotment, of which $5 billion is allotted to eligible entities with gross receipts of not more than half a million dollars during 2019. This fund is to be administrated by the SBA. Grants are to be equal to pandemic-related revenue loss of the eligible entity, not exceeding $10 million per eligible entity and not exceeding $5 million per physical location of the eligible entity. Applicants to the Shuttered Venue Operators Grant Program are ineligible.

The Community Navigator Pilot Program is another new program in the SBA. This consists of $100 million allotted to nonprofits dedicated to helping businesses apply to the SBA.

Finally, the Payroll Support Program is created with a $3 billion endowment designed to assist employers who have yet to receive COVID-19 related relief. Entities that are “currently expending” PPP funds, that were allowed to claim the CARES Act payroll tax credit in the prior calendar year quarter, or that received a specific air carrier subsidy (15 U.S. Code § 9073), are ineligible. The program is scheduled to last for six months, beginning on the effective date of the first agreement made under the program. There are no other eligibility conditions for employers willing to spend the grant on employees. There is curiously little statutory text devoted to a program of such a wide scope.

The Payroll Protection Program (PPP) is expanded to now include a business or organization that is an “Internet-only news publisher or Internet-only periodical publisher, and is engaged in the collection and distribution of local or regional and national news and information.” New PPP loans will be reduced by the amount of SBA Section 7(a) loans executed after December 26, 2020. The Targeted Economic Injury Disaster Loan (EIDL) is fortified with $5 billion to provide $5,000 loans for covered entities with economic loss greater than 50% with no more than 10 employees. This is in addition to prior EIDL payments.

In tax terms, the limitation on excess business losses of noncorporate taxpayers is extended from January 1, 2026 to January 1, 2027. Funds received through targeted EIDL advances and through restaurant revitalization grants are both tax-exempt.

For more information, please contact the Burton Law Firm at 916.822.8700. You can read the full text of the bill, H.R.1319, at: https://www.congress.gov/bill/117th-congress/house-bill/1319/text.

Additional helpful information can also be found on the National Conference of State Legislatures website, at, : https://www.ncsl.org/ncsl-in-dc/publications-and-resources/american-rescue-plan-act-of-2021.aspx.