Summary of Business Provisions in American Rescue Plan Act of 2021

March 11, 2021

COBRA Health Care Coverage

Section 9501 – Employees have new COBRA health care coverage continuation options.  Unemployed former employees can obtain premium assistance from April 1, 2021 through September 30, 2021.

Rental Assistance to tenants – Indirect Assistance for Landlords

Section 3201 – Low-income tenants can qualify for emergency rental assistance benefits out of a pool of $1.2B.  The benefits are managed by the state and local governments.   These sums are in addition to the assistance provided in December under the Consolidated Appropriates Act of 2021.

Section 3202 – Emergency housing vouchers.  Low-income tenants, at risk of becoming homeless, can receive vouchers out of a pool of $5B.

Very Small Businesses – New EIDL Advances (SBA – Economic Injury Disaster Loans)

Section 5002 – Businesses, with fewer than 11 employees, that suffered a 50% loss of business can qualify for a $5,000 EIDL advance.  EIDL advances are not taxable.  Section 9672.

Restaurants – Direct Grants and More PPP Loan Assistance to Restaurants

Section 5003 – Restaurants (includes – “restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products, or other similar place of business” including  restaurants in airport terminals) can qualify for PPP loan assistance with a more relaxed definition of “affiliation” for including employees and receipts of related companies.   However, the business can not have more than 20 locations (as of March 13, 2020).

Direct grants (“Restaurant Revitalization Fund”) to restaurants also are available from the SBA to pay for: payroll, mortgage, rent, utilities, maintenance, certain building improvements (outdoor seating, walls, floors, decks, furniture, and equipment), supplies, food and beverage costs, operational expenses, and paid sick leave.  Any sums not used timely have to be returned to the government.  Applicants cannot have applied for other federal pandemic assistance.  These grants are not taxable and associated tax deductions are allowed.  Act. Sec. 9673.

Note – Pennsylvania also is offering state funded grants to restaurants hard hit by the COVID virus.   Applications for Allegheny County restaurants will be available on March 15, 2021.  https://www.alleghenycounty.us/economic-development/hospitality-industry-recovery-program.aspx.  Information for other Pennsylvania counties can be found here: https://dced.pa.gov/cedo/

Employee Retention Tax Credit – Payroll Tax Credit for the Employer

Section 9651 (26 USC § 3134) –  Congress expands access to the Retention Credit to “recovery startup businesses” (started business after February 15, 2020).  The Retention tax credit is based on the first $10,000 in wages.   This supplements IRS guidance issued in January and March 2021. https://www.irs.gov/newsroom/irs-provides-guidance-for-employers-claiming-the-employee-retention-credit-for-2020-including-eligibility-rules-for-ppp-borrowers; Notice 21-20, https://www.irs.gov/pub/irs-drop/n-21-20.pdf

For questions regarding this subject, please contact  S. John Kelly at jkelly@smgglaw.com.