Authored by Tom Denaway
The 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act and the recently passed American Rescue Plan Act of 2021 (ARP) provide substantial assistance opportunities for state and local governments and the businesses in your jurisdictions.
Below is an overview of several significant direct-to-business assistance opportunities and how these programs may be applicable to businesses within your community. Consider sharing these resources with your business community to help ensure that all relief funding options are being explored as well as to determine if your organization has a role in assisting local businesses access these programs.
The Employee Retention Credit (ERC) program applies to businesses that were adversely impacted by COVID-19 either through a significant decline in gross receipts or government-imposed restrictions causing partially suspended operations leading to a reduction in sales. Restaurants and related hospitality-type businesses are most likely to be eligible for assistance under this program as there were likely limits to the level of operation allowed (hour and capacity restrictions) but not a complete shutdown of the business. The ERC allows for the business entity to receive a tax credit for a portion of the wages paid to employees for each quarter in which the business was eligible. When originally adopted, the ERC was mutually exclusive to the Paycheck Protection Program (PPP).With recent legislative changes, businesses that utilized PPP funding are now also eligible for the ERC program. The credit is claimed by completing appropriate tax forms and automatically awarded to businesses that meet the eligible criteria. The tax credit is not a competitive award, and should be evaluated by any business that realized either a significant decline in gross receipts or had operations partially suspended by governmental restrictions.
The Paycheck Protection Program (PPP) is a popular loan program originally created under the CARES Act. PPP provides loans, some of which can be forgiven depending on eligibility, to assist businesses with weathering the impact of the coronavirus pandemic. Recently, Congress passed the PPP Extension Act of 2021, which will keep the loan program open through June 30, 2021 with the loan application deadline extended to May 31, 2021.Businesses that did not apply initially for PPP loans may consider reviewing eligibility to access the programs, while those that did receive PPP loans should maintain compliance and monitoring with the terms of loan forgiveness. Baker Tilly is available to help businesses with program applications and compliance.
The Economic Injury Disaster Loan (EIDL) is a loan program administered by the U.S. Small Business Administration (SBA). The EIDL provides loan assistance of up to $500,000 to small businesses impacted by the coronavirus pandemic. These loans are not forgivable and have repayment terms of 30-years at 3.75% interest for businesses and 2.75% for not-for-profit organizations. The loans have no pre-payment penalty or fees. Loan proceeds are available to be used with working capital and normal operating expenses and include a collateral requirement for loans over $25,000.
The Restaurant Revitalization Fund (RRF) provides grants to support eligible food service businesses impacted by the pandemic. Eligible applicants include restaurants, food trucks, caterers, taverns, bakeries, etc. The program prioritizes socially and economically disadvantaged businesses, and includes set asides for small businesses. The amount of funding an applicant can receive is determined by a formula based on the difference in gross revenues between 2019 and 2020. The program is currently accepting applications and is administered by the SBA.
The Shuttered Venue Operators Grant (SVOG) provides grants to arts and entertainment venues and operators impacted by the pandemic. Eligible applicants include live music venues, theatrical producers, performing arts organizations, movie theaters, certain museums, etc. Eligible applicants may qualify for grants equal to 45% of gross earned revenue. $2 billion is reserved for eligible applications with fewer than 50 full-time employees. The program is currently accepting applications and is administered by the SBA.
The ARP provides $10 billion to fund the State Small Business Credit Initiative (SSBCI), which allocates funding to state development finance agencies to capitalize or create small business support and investment programs. The programs can include capital access programs, loan participation and guaranty programs, venture capital and equity programs and revolving loan funds. Local and regional economic development organizations, municipal entities and small businesses should contact your state’s development finance agency to understand the final support available.
Baker Tilly’s public sector and small business specialists are available to assist your community with American Rescue Plan funding strategies and take advantage of direct assistance opportunities. For more information, or to learn more about how we can help protect and enhance your entity’s value, contact our team.