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On March 11th, President Biden signed the American Rescue Plan (ARP) into law. There are a lot of components of the ARP, but I wanted to give our clients and contacts an update on the ARP. This will cover some of the business-related aspects of the ARP while you can click here for the individual update. Obviously, there are a lot of details we are still learning about, but we hope this provides you some insight at a high level.
Employee Retention Credit
The Employee Retention Credit (ERC) has been extended again. The ERC, which was extended once before, now goes through the entire 2021 calendar year. The ERC can be a big help to a lot of businesses that have been impacted by the pandemic and have had reduced revenues coming in the door but still want or need to keep their employees working.
As a reminder, the 2021 ERC is primarily for businesses whose quarterly gross receipts dropped by 20% or more in 2021 compared to the same quarter in 2019, whereas the 2020 ERC had a 50% reduction requirement. The ERC is 70% of qualified earnings up to $10,000 per quarter, so it can be quite lucrative. You will need to work through your payroll provider to process the ERC since it is a payroll credit.
Payroll Protection Plan
The ARP does not necessarily change much about the current Payroll Protection Program (PPP) that many of you have already benefited from. ARP appears to put a bit more money into the program, but it has not extended the March 31st deadline. There is talk about a separate legislative action that would bring an extension, so watch in the coming weeks. This is especially important since we hear banks are cutting off accepting applications to give them time to process and submit loans to the SBA by the March 31st deadline.
Coronavirus Related Family & Sick Leave
ARP also tweaked an already existing program known as FFCRA (Families First Coronavirus Response Act), which allows for paid leave for employees who must take time off due to having COVID, someone in their family having it, or having to quarantine. This is not a new program, so as a reminder, it effectively reimburses businesses for the time employees need to take off (up to 10-days) due to COVID.
ARP extends the FFCRA program through September 30th. Further, it resets the clock as of April 1st for those who may have already used their 10-day FFRCA leave. This essentially means that an employee who already used their 10-days prior to April 1st will be able to utilize another 10-days from April 1st through September 30th.
For those in the foodservice industry, ARP may be of great assistance for an industry that has been hit so very hard. ARP provides new grants for restaurants and others in the food and beverage industry through the new Restaurant Revitalization Fund. We are still a bit murky on this, and it will take some time to figure it out, but if you are in that industry, start looking into it now through your trade organizations.
From what we can tell, the assistance will be in the form of a grant and administered by the SBA. The grant is expected to be applied for through a new SBA online application portal.
The target of this grant is for those with fewer than 20 locations and have had revenue decreases. The amount of the grant will be determined based upon when you opened, but for a restaurant that opened prior to 2019, it is believed the grant will essentially replace revenue loss when comparing 2020 to 2019 and subtracting PPP loans received. So, essentially, the goal of the grant appears to bring revenue levels back up to pre-pandemic levels when including PPP.
Disclaimer: This is all new to us also, so please be patient as interpretations of ARP will inevitably evolve as we get a better understanding of the details.
We’re Here to Help
If you have questions about how the ARP might apply to you and your business, feel free to reach out to me at firstname.lastname@example.org or click here.