The $1.9 trillion American Rescue Plan Act that President Joe Biden signed into law on March 11 contains a number of provisions intended to help small businesses, especially restaurants.
It authorizes another $7.25 billion for the Paycheck Protection Program, which offers forgivable loans to small businesses and other organizations hurt by the pandemic. The loans will only be forgiven, however, if at least 60% of the money is used to support payroll expenses and the remainder goes to mortgage interest, rent, utilities, personal protective equipment or certain other business expenses.
The additional money is intended to expand eligibility for the loans to include more nonprofit organizations than were eligible before, as well as digital news services providing local news and public health guidance during the pandemic.
While the legislation itself doesn’t extend the program, which was set to expire on March 31, the House and Senate approved a two-month extension of the deadline to May 31, which Biden is expected to sign into law. It also grants the Small Business Administration an additional 30 days after that to process applications that are still pending.
The original deadline had been a concern because there already is a backlog of applications still pending approval by the SBA. And any loan that hadn’t been approved by March 31 would not have been funded.
That means banks had to decide how much longer they wanted to accept new applications, since it now takes 24 to 48 hours for a bank to hear back from the SBA on whether a submitted loan application has been approved.
In cases where applications haven’t been approved, the SBA may request more information, or flag a business owner as ineligible. Clearing up those issues can take days or weeks longer.
As of March 21, the SBA has approved 8.25 million PPP loans totaling $718.1 billion since Congress created the program last spring, according to data from the federal agency.
More money for restaurants, venue operators and minority-owned businesses
Other provisions in the American Rescue Plan intended to help small businesses include:
Money to help states assist their small business economies: Through the State Small Business Credit Initiative, the legislation allocates $10 billion for state governments to help leverage private capital and make low-interest loans and other investments to help their small business economies recover.
More money for underserved businesses: The legislation earmarks $15 billion to the Economic Injury Disaster Loan grants program to be given to small businesses in underserved areas, especially those that are minority-owned.
Special relief for restaurants: The American Rescue Plan includes nearly $29 billion to create a grant program that provides direct relief to restaurants.
More money for operators of closed venues: Another $15 billion will be added to the Shuttered Venue Operators Grants program, created by the previous economic aid package. The grants are intended to help those who run museum, theater, concert and other venues that had to shut down due to Covid restrictions. The bill also allows such operators to apply for PPP loans in addition to these grants.
Additional funding for the Small Business Administration: To help the SBA administer all the new programs that have fallen under its purview as a result of the pandemic, the bill allocates another $1.325 billion to its budget.