A couple of weeks ago, our blog highlighted some of the relief programs available to individuals and families as part of the American Rescue Plan Act of 2021 (or ARPA for short). While the 242-page bill isn’t as large as last year’s CARES Act, it’s still chock full of information that’s not only important to individuals, but also to businesses. This week, we’ll try to break down some of the highlights that business owners need to know.
At a Glance
ARPA contains several types of programs to benefit small businesses, including:
- $28.6 billion for restaurants and bars (the “Restaurant Revitalization Fund”)
- An additional $15 billion for Targeted Economic Injury Disaster Loans (EIDL) advance payments
- $1.25 billion for shuttered venue operator grants (SVOG)
- $100 million to establish a Community Navigator pilot program, in which the Small Business Administration (SBA) will engage with states, local governments, SBA resource partners and other organizations in targeted outreach for small businesses and underserved communities
In addition to these programs, ARPA also added $7.25 billion in new funds for the Paycheck Protection Program (PPP), which has helped to save millions of businesses in the last year. In the last two weeks, the House and Senate both approved an extension for the PPP to May 31, 2021(from March 31). So far, as of March 28, there have been 8.7 million PPP loans approved, totaling more than $734 million.
If your business needs an economic boost, the best place to start is at the SBA website, which has a special portal for COVID-19 relief options. On the portal, you can review all the different programs available to you, determine whether your business qualifies, get matched with a lender in your area, and download the forms you need to apply for a loan or grant.
Information for Restaurateurs
Restaurant and bar owners will soon be able to apply for grants to replace the revenue they lost in 2020. Although a firm date has not been announced, the SBA is targeting early April to launch a phased rollout of the Restaurant Revitalization Fund. According to Senate committee testimony by Patrick Kelley, associate administrator for the SBA’s Office of Capital Access, the SBA would begin a pilot phase, accepting applications based on prioritization in the ARPA, which earmarked $5 billion for applicants who had $500,000 or less in 2019 gross receipts. ARPA also requires that during the first 21 days of the grants, applications from restaurants owned and operated or controlled by women, veterans, or socially and economically disadvantaged individuals be prioritized.
Most restaurants and bars that lost revenue last year over 2019 will be eligible to apply for grants, but there are some restrictions. Any restaurant or bar that is part of a publicly traded company or is owned by a government entity won’t be eligible. In addition, owners that operate more than 20 restaurants are ineligible. However, if you are a franchise owner and don’t control more than 20 locations, you may be eligible to apply.
Grants under the Restaurant Revitalization Fund may only be used for specific expenses, including payroll, mortgage obligations, rent, utilities, maintenance, inventory, supplier costs, operational expenses, paid sick leave, and any other expenses the SBA determines to be essential to maintaining the eligible entity. The “covered” period for these expenses must have occurred between Feb. 15, 2020 and Dec. 31, 2021.
Even if they can’t apply for a grant just yet, restaurant and bar owners can get ready for the application process now by registering for free with the government, using the System of Award Management, or SAM. On the SAM site, users should create an account to help them interact with the SBA and other federal agencies. They should also sign up to receive a DUNS number. This takes a couple of days to process. Then, they should register their Taxpayer ID and DUNS number on the SAM website. This should take a couple of weeks to process, but then they’ll be ready to apply for a grant. In the meantime, it would also be a good idea to work with an accountant to be able to show that the business lost gross revenue in 2020 compared to the previous year.
Targeted Economic Injury Disaster Loan (EIDL) Grants
The targeted EIDL Advance became law in December 2020 and is an emergency grant that businesses and nonprofits in low-income communities can use as working capital. These organizations must have suffered a reduction in revenue of greater than 30% and have 300 or fewer employees. The Targeted EIDL Advance provides advance funds of up to $10,000 to applicants that previously received an EIDL Advance for less than that amount, or to those who applied but did not receive funding because the program had run out of funds.
In this circumstance, the SBA is reaching out those who qualify for the Advance with instructions to determine eligibility and submit documentation.
Shuttered Venue Operator Grants (SVOG)
Eligible shuttered venue operators (think live venue promoters, theatrical producers, performing arts organizations, museum operators, zoos, aquariums, movie theaters and talent reps) can apply for grants equal to 45% of their gross earned revenue, with the maximum amount available for a single grant award of $10 million. (The program has reserved $2 billion for eligible applicants with up to 50 full-time employees.)
Like the aid for restaurants, the SBA expects to be able to open applications for SVOGs in early April, with those who have suffered the greatest economic loss to receive grants first. The funds can be used for a variety of expenses, which are explained on the SBA website.
Get Help from a Trusted Adviser
Sorting through the details of the different loans and grants available to small businesses can be daunting, and it’s at times like these when a trusted adviser can provide much needed counsel. AMDG Business Advisory Services has helped several small businesses apply for relief during COVID-19. If we can be of assistance to your business, please don’t hesitate to contact us.