On March 11, 2021, President Biden passed the first major legislation of his presidency, the American Rescue Plan.  While the $1,400 individual stimulus checks and the continuance of unemployment benefits augmented by the federal government in the amount of $300 are both important to families who are experiencing lower incomes and job loss, we want to focus on a few of the highlights of the stimulus for business owners and employers with this plan (for the full text of the plan, go here.)

Help for small business owners, non-profits, restaurants and the arts

The plan includes $7.25 billion in funds for a second round of Paycheck Protection Program loans for small businesses.  This version will allow more nonprofits to apply and provide access for small and low- and moderate-income (LMI) businesses who need the relief.  While the deadline was set for March 21, 2021, the PPP Extension Act of 2021, has passed both the Senate and the House and is expected to have the President’s support.  This act extends the program application deadline to May 31, 2021 and gives the SBA another 30 days to process loans.

While PPP loans are the most recognized support measures from the stimulus for business owners, a number of other provisions expand the opportunity for help:

    • The measure also contains new funds to support small businesses, providing $15 billion in new funding for Targeted Economic Injury Disaster Loan (EIDL) grants.
    • The American Rescue Plan provides $10 billion for the State Small Business Credit Initiative (SSBCI), allowing states to lend 10 times that amount to small businesses.
    • Restaurants and other food and drinking establishments received funding of $25 billion.  Grants will be up to $10 million per entity and $5 million per physical location, with a maximum of 20 locations. The legislation sets aside $5 billion of the total money to be targeted to businesses with less than $500,000 in revenue in 2019. 
    • The legislation includes $1.25 billion for the Small Business Administration’s Shuttered Venue Operators Grant (SVOG) program. passed in December to provide relief to independent live music venues, performing arts centers, movie theaters and museums.

Employer tax credits

If you employ other people for your business, you should be aware of these important provisions of the America Rescue Plan:

  • Families First Coronavirus Response Act Paid Leave Credit – The mandate to provide sick an family leave for COVID-19 is not extended into 2021.  However, Employers who choose to voluntarily provide sick and expanded FMLA leave in 2021 are eligible for tax credits.  Notably, the definition of “leave” has been expanded to include getting vaccinated.
  • While the Employee Retention Credit was set to expire at the end of June, it has been extended through the end of 2021.  This mean companies can earn up to $28,00 per employee that you keep on board (if you’re eligible).  The ERC was originally enacted under the CARES Act in March 2020 to encourage employers to retain employees during the pandemic.

Finally, there are a few noticeable absences from the legislation.  Two areas that business owners and employers may want to take note of are (1)  There is no federal minimum wage hike (Note: California still has its minimums). (2)  No elimination of COLA (cost of living adjustments) for retirement plan contributions will occur.  Limitations were supposed to kick in starting in 2030.

An important RMD note for retirees

While 2020’s relief eliminated mandatory required minimum distributions (RMDs), the America Rescue Plan does not.  Accounts owners and qualified retirement plan participants of retirement age (currently 72). must withdraw the required amounts from employer-sponsored retirement plans, Traditional, SEP, or SIMPLE individual retirement account (IRA) in 2021 (and beyond).

Primary Sources: NPR, Axios, Mondaq