ARPA Funding for Industry-Specific Programs; Tax & Labor Changes

On March 11, 2021, President Joe Biden signed the American Rescue Plan Act of 2021 (ARP) into law. Among the various types of funding, the latest stimulus package provides industry-specific funding for (i) small businesses, (ii) healthcare, (iii) transportation, and (iv) agriculture. In addition, the ARP includes various tax and labor and employment changes for businesses. This alert summarizes the key features of the ARP as applied to those industries, the full text of which can be accessed here.

Additional Aid for Small Businesses

The ARP provides additional options for government aid to small businesses, administered through the previous and newly created Small Business Administration (SBA) programs discussed below.

Paycheck Protection Program (PPP)

The PPP is set to end on March 31, 2021, and the ARP notably has not extended that deadline. Consequently, the window for borrowers to apply for a first or second draw PPP loan will expire at the end of the month. However, the bill does appropriate an additional $7.25 billion to the PPP, increasing total program funding to $813.7 billion. In addition, the ARP expands PPP eligibility to certain internet-only news publishers, additional tax-exempt groups, and larger nonprofit organizations that meet the outlined eligibility criteria. Lastly, the COBRA premium subsidies provided under the ARP, which are eligible for a 100% reimbursement via a payroll tax credit, are specifically excluded as eligible payroll expenses for PPP loan forgiveness. A more in-depth discussion of the PPP changes is available here.

Restaurant Revitalization Fund (RRF)

The ARP establishes and provides $28.6 billion for the new RRF, which will provide grants to certain eligible restaurants and other food and drinking establishments. Grants are equal to the revenue loss of the eligible entity due to the COVID-19 pandemic, up to $10 million per entity, or $5 million per physical location, and are calculated by subtracting 2020 revenue from 2019 revenue. However, awards will be reduced by amounts received through the PPP. Grants are also limited to certain eligible expenses outlined in the ARP, similar to the list of forgivable expenses under the PPP (such as payroll costs, mortgage and rent payments, supplies, normal food and beverage costs, and paid sick leave). During the first 21 days of the application period for the new program, the SBA will prioritize applications from small businesses owned by women, veterans, and socially or economically disadvantaged individuals, and for 60 days following the measure’s enactment, $5 billion will be set aside for eligible entities with gross revenue of $500,000 or less in 2019. Other grant funds are to be awarded on a first-come, first-served basis. Businesses may use grant funds through December 31, 2021, but no later than a date set by the SBA prior to March 11, 2023. A detailed overview of the RRF can be found here.

Economic Injury Disaster Loan (EIDL)

The ARP provides an additional $15 billion for the Targeted EIDL Advance program created by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act), which provides grants of up to $10,000 to small businesses located in low-income communities that have no more than 300 employees and that have suffered an economic loss of more than 30%. Of the $15 billion, the ARP stipulates that the SBA must allocate $10 billion to covered entities that did not receive the full eligible advance payments to which they were entitled under the Economic Aid Act, and the remaining $5 billion must be set aside for new supplemental payments of $5,000 to covered entities with 10 or fewer employees that suffered economic losses of more than 50% during the covered period.

State Small Business Credit Initiative (SSBCI)

The ARP also restores funding for the SSBCI, which expired in 2017, with $10 billion, including Treasury Department set asides for:

• $1.5 billion for states to…