The U.S. Home of Representatives handed, by a vote of 219–212, a $1.9 trillion COVID-19 aid package deal early Saturday morning that features $1,400 stimulus checks to people, an extension of unemployment advantages, and tens of billions in support for small companies and not-for-profits.
The invoice, titled the American Rescue Plan Act of 2021, H.R. 1319, additionally consists of phased will increase within the minimal wage that will convey it to $15 an hour by 2025. That a part of the invoice probably won’t be thought of within the invoice’s subsequent cease, the Senate. That is as a result of the Senate parliamentarian dominated Thursday that the minimal wage hike couldn’t be a part of the invoice as a result of it’s being thought of utilizing budget-reconciliation guidelines, which clears the best way for the Senate to move the laws by a easy majority.
Vice President Kamala Harris might overrule the Senate parliamentarian however was not anticipated to take action. This is able to assure that any invoice handed by the Senate can be totally different from the Home model, requiring modifications and sure follow-up votes by each chambers in March.
Proponents of the invoice have been pushing to have it handed and signed into regulation by March 14, which is when a $300-per-week federal complement to unemployment checks is scheduled to run out. The American Rescue Plan Act strikes the expiration date to Aug. 29 and will increase the whole variety of weeks eligible for the complement to 73 weeks per particular person from 50 weeks (mainly relationship again to when the COVID-19 pandemic disrupted the U.S. financial system). The act additionally boosts the federal complement to $400 per week.
The American Rescue Plan Act consists of quite a few tax provisions, together with a $1,400 restoration rebate credit score ($2,800 for married taxpayers submitting collectively) plus $1,400 for every dependent for 2021. Advance funds of the credit score shall be despatched to people as financial influence fee checks. For extra particulars, see the JofA article “Tax Provisions in the American Rescue Plan Act.”
The invoice additionally consists of:
- $350 billion for state, native, and Tribal governments, a lot of which have skilled a discount in tax income because of the pandemic.
- About $130 billion for Okay-12 colleges and $40 billion for schools and universities.
- Greater than $75 billion for COVID-19 testing and assist of the vaccine rollout, together with funds for hospitals, public well being businesses, and biomedical analysis.
Small enterprise objects
The American Rescue Plan Act additionally comprises various provisions for small companies. It allocates an extra $7.25 billion for Paycheck Safety Program (PPP) forgivable loans however in any other case depends extra on focused grants to small companies in sectors of the financial system hardest hit by pandemic-related financial slowdowns. Particularly, the invoice gives:
- $15 billion for focused Financial Damage Catastrophe Mortgage (EIDL) advance funds.
- $25 billion for eating places, bars, and different eligible suppliers of foods and drinks.
- $1.25 billion for shuttered venue operators.
- $175 million to create a “neighborhood navigator” pilot program to extend consciousness of and participation in COVID-19 aid packages for enterprise house owners presently missing entry, with precedence for companies owned by socially and economically deprived people, girls, and veterans.
The invoice additionally allocates $15 billion in grant cash to the airline business, with $14 billion for eligible air carries and $1 billion for eligible contractors. An extra $8 billion is offered for airports.
Following is a high-level take a look at key small enterprise objects within the invoice.
After being the centerpiece of the small enterprise assist within the Coronavirus Assist, Aid, and Financial Safety (CARES) Act, P.L. 116-136, and the Financial Assist to Exhausting-Hit Small Companies, Nonprofits, and Venues Act (Financial Assist Act, or EAA), P.L. 116-260, the PPP performs a a lot smaller function within the American Rescue Plan Act. This system has disbursed more than $662 billion in forgivable loans in three iterations over the previous 11 months. However with about half of the $284 billion in present funding out there, the American Rescue Plan Act appropriates simply $7.25 billion in extra funding and doesn’t lengthen the PPP’s present utility interval, which is scheduled to shut March 31.
The plan does make extra not-for-profits eligible for the PPP by creating a brand new class known as “extra coated nonprofit entity,” that are these not-for-profits listed in Sec. 501(c) of the Inside Income Code aside from 501(c)(3), 501(c)(4), 501(c)(6), or 501(c)(19) organizations, that may obtain an preliminary PPP mortgage, offered that:
- The group doesn’t obtain greater than 15% of receipts from lobbying actions;
- The lobbying actions don’t comprise greater than 15% of actions;
- The price of lobbying actions of the group didn’t exceed $1 million throughout the latest tax yr that ended previous to Feb. 15, 2020; and
- The group employs no more than 300 staff.
Additionally made eligible for the PPP are some bigger not-for-profits:
- Bigger 501(c)(3) organizations and veterans organizations that make use of no more than 500 staff per bodily location.
- Bigger 501(c)(6) organizations, home advertising organizations, and extra coated not-for-profit entities that make use of no more than 300 staff per bodily location.
The plan additionally expands PPP eligibility to internet-only information and periodical publishers with multiple
bodily location, so long as the enterprise has not more than 500 staff per bodily location or the relevant U.S. Small Enterprise Administration (SBA) dimension customary, offered that the group certifies it’s an internet-only information or periodical writer and that the mortgage will assist regionally targeted or emergency info.
Help for eating places
Eating places and bars have been among the many companies most damage by the stay-at-home and social-distancing restrictions imposed to gradual the unfold of COVID-19. The $25 billion Restaurant Revitalization Fund (RRF) is meant to assist companies within the meals providers sector.
Along with eating places and bars, different entities eligible for assist from the RRF embrace meals stands, meals vans, meals carts, caterers, saloons, inns, taverns, lounges, brewpubs, tasting rooms, taprooms, and any licensed facility or premise of a beverage alcohol producer the place the general public could style, pattern, or buy merchandise, or different comparable office by which the general public or patrons assemble for the first goal of being served meals or drink.
The act permits for grants equal to the pandemic-related income lack of the eligible entity, as much as $10 million per entity, or $5 million per bodily location. The grants are calculated by subtracting 2020 income from 2019 income. Entities are restricted to twenty places.
The grant funds could also be used to pay for the next eligible bills:
- Payroll prices;
- Principal and curiosity funds on a mortgage, not together with any prepayments on principal.
- Hire funds, not together with prepayments;
- Upkeep bills together with development to accommodate out of doors seating and partitions, floods, deck surfaces, furnishings, fixtures, and tools;
- Provides together with private protecting tools and cleansing supplies;
- Meals and beverage bills throughout the eligible entity’s scope of regular enterprise apply earlier than the coated interval, which runs from Feb. 15, 2020, by means of Dec. 31, 2021, or one other date as decided by the SBA;
- Lined provider prices;
- Operational bills;
- Paid sick go away; and
- Another bills the SBA determines to be important to sustaining the eligible entity.
The plan requires candidates to make a good-faith certification that the uncertainty of present financial circumstances makes the grant request essential to assist the applicant’s ongoing operations and that the applicant has not additionally utilized for or obtained a Shuttered Venue Operator grant.
The plan units apart $5 billion for eligible candidates with 2019 gross receipts of $500,000 or much less. The invoice additionally fees the SBA with awarding the opposite $20 billion in grants in “an equitable method to eligible entities of various sizes primarily based on annual gross receipts.”
In the course of the first 21 days of the grants, the SBA will prioritize purposes from eating places owned and operated or managed by girls, veterans, or socially and economically deprived people.
Focused EIDL Advances
The act gives $15 billion for Focused EIDL Advance grants, which give funds to companies situated in low-income communities which have not more than 300 staff and which have suffered an financial lack of greater than 30%, as decided by the quantity that the entity’s gross receipts declined throughout an eight-week interval between March 2, 2020, and Dec. 31, 2021, relative to a comparable eight-week interval instantly previous March 2, 2020.
Focused EIDL Advance grants have been created by the Financial Assist Act (EAA). The American Rescue Plan Act extends and expands this system in a collection of steps, each beginning not more than 14 days after the earlier step. To start, no later than 14 days after the American Rescue Plan Act is enacted, the SBA should provoke a two-week interval of accepting purposes from any candidates that utilized for Focused EIDL Advances underneath the EAA and, due to lack of funds, didn’t obtain the quantity to which they have been entitled ($1,000 per worker as much as $10,000). The primary 28 days after the plan enactment are reserved to addressing these potential funding shortfalls from the EAA.
Starting 28 days after enactment is a 14-day interval by which the SBA can even make grants of $5,000 to “severely impacted” small companies, that are eligible entities which have suffered an financial lack of greater than 50% and have not more than 10 staff. After 14 extra days, the SBA could make $5,000 grants to “considerably impacted” companies, that are these with not more than 10 staff that may show a lack of between 30% and 50%.
The plan states that funds from RRF grants and Focused EIDL Advances shall not be included within the gross earnings of the one who receives the grant and that no tax deductions shall be denied, no tax attribute lowered, and no foundation improve denied as a result of exclusion of the grant funds from gross earnings.
AICPA specialists talk about the newest on the PPP and different small enterprise support packages throughout a biweekly digital city corridor. The webcasts, which give CPE credit score, are free to AICPA members and $39.99 for nonmembers. Go to the AICPA Town Hall Series webpage for extra info and to register.
The AICPA’s Paycheck Protection Program Resources page homes sources and instruments produced by the AICPA to assist handle the financial influence of the coronavirus.
Accounting corporations can put together and course of purposes for the PPP on the CPA Business Funding Portal, created by the AICPA, CPA.com, and fintech accomplice Biz2Credit.
For extra information and reporting on the coronavirus and the way CPAs can deal with challenges associated to the outbreak, go to the JofA‘s coronavirus resources page or subscribe to our email alerts for breaking PPP information.
— Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.