On Thursday, March 11, 2021, President Biden signed the $1.9 trillion American Rescue Plan Act of 2021 (the “Act”) into law. The bill includes several provisions specific to small business relief, including expanded Paycheck Protection Program (“PPP”) loan eligibility for certain non-profits, new grants specific for bars and restaurants, and updates to the Shuttered Venue Grant Program. Below is a high-level summary of many (but not all) relevant provisions. We will continue to monitor the bill and anticipated guidance and make updates as appropriate.
Modifications to the Paycheck Protection Program
Under the Act, the PPP is expanded to provide loans to additional categories of not-for-profit entities. Any 501(c) organization that is exempt from taxation under Section 501(c) is now eligible to apply for a PPP loan. In order to be eligible however, the not-for-profit organization must not employ more than 300 employees.
The Act only provides for an additional $7.25 billion in funding to the PPP loan program and does not extend the PPP’s current application period, which is set to end on March 31, 2021.
Restaurant Revitalization Fund Grants
The Act provides $28.6 billion in funds for the newly created Restaurant Revitalization Fund (“RRF”). Funds will be administered directly through the SBA and a business can receive a grant up to $5 million per location, up to $10 million total. Grant amounts will equal the amount by which the businesses’ gross receipts decreased in 2020 as compared to 2019, minus the amount of any PPP loans received by the business. An “eligible entity” is any business where the public or patrons assemble for the primary purpose of being served food or drinks, including restaurants, food trucks, food carts, caterers, bars, taprooms, and brewpubs. The grant funds may be used to cover nearly any operating costs the business incurred as a direct result of, or during, the COVID-19 pandemic.
Any business applying for a RRF grant must certify that “the uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations of the eligible entity.” Businesses who have applied or received a grant under the Shuttered Venue Grant Program are not eligible to apply for a RRF grant.
The complete details of the RRF grant application process are not available yet but we will continue to monitor as information becomes available. We do know that the SBA will administer the grants and the Act provides that during the initial 21-day period the SBA must prioritize awarding grants to eligible entities that are owned and controlled by women, veterans, or socially and economically disadvantaged small business concerns.
Updates to the Shuttered Venue Grant Program
The Act appropriated an additional $1.25 billion in funding for the existing Shuttered Venue Grant Program. Importantly, it also amends the existing program to provide that recipients of a Shuttered Venue Grant may also receive a PPP loan and other SBA financial assistance. The SBA has not yet opened an application for the Shuttered Venue Grants. We will continue to monitor this program and provide updates as the application becomes available.
If you would like more information on the small business relief programs described above, please contact a member of our Corporate practice group at 585.232.6500 or 716.853.1616.
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