The American Rescue Plan (ARP) of 2021 is now a reality. The $1.9 trillion bill is mostly known for the $1400 payments to individuals earning up to $75,000 and couples earning up to $150,000. The payments phase out fully for those individuals making $80,000 and couples making $160,000.
The ARP’s provision on unemployment insurance continues to extend benefits for the self-employed and “gig” workers, along with those who have exhausted their regular jobless benefits, with a $300 weekly boost in jobless benefits into September.
Best of all, tax relief on the first $10,200 in unemployment payments for workers in households earning up to $150,000 a year will provide much welcome tax-free payments.
But beyond the individual benefits, there is a lot in the ARP for independent small business owners such as run specialty retailers. You need to be up to speed on it to be able to take advantage of what the government is again offering in a pandemic world. Among the key provisions:
SMALL BUSINESS FINANCING PROGRAM.
Creators of the ARP hope to leverage $35 billion in government funds into $175 billion in additional small business lending and investment with an investment in successful state, local, tribal and non-profit small business financing programs. The goal is to provide low interest loans and venture capital to help entrepreneurs and small businesses innovate, create and maintain jobs and provide the essential goods and services that communities depend one.
THE PAYROLL PROTECTION PROGRAM.
Already taking applications for second-round loans, the Paycheck Protection Program (PPP) gets an additional $7.25 billion. Although just a small fraction of the amounts allocated in previous legislation, new rules allow more non-profits to apply for loans designed to help borrowers meet their payroll and operating costs and can, potentially be forgiven.
THE EMERGENCY INJURY DISASTER LOAN PROGRAM.
The ARP earmarks $15 billion to the Emergency Injury Disaster Loan (EIDL) Program, which provides long-term, low-interest loans from the SBA. Severely impacted small businesses with fewer than 10 workers will reportedly be given priority for some of these funds.
COMMUNITY NAVIGATOR SERVICES.
This has been funded to the tune of $100 million to provide outreach, education and technical assistance with the SBA’s programs. Community Navigators, community organizations or community financial institutions provide services to women-owned businesses as well as those owned and operated by veterans or the socially and economically disadvantaged.
EMPLOYEE RETENTION CREDIT.
To encourage employers to keep workers on their payroll, last year’s CARES Act created the Employee Retention Credit (ERC). The ERC allows 70 percent (up from 50 percent) of a run specialty retailer or other business’s qualified wages to be immediately refundable via reductions in the required employment tax deposits.
PAID SICK AND FAMILY LEAVE.
Last year lawmakers guaranteed many workers quarantining because they contracted COVID-19 two week’s pay. They also provided an additional 10 weeks of paid family leave to those staying home with children whose schools were closed. Although these benefits expired in December, 2020, ARP will allow tax credits for wages voluntarily paid through October 1, 2021.
And, no new law would be complete if it left out taxes. Consider the following business taxes already on the drawing board:
- Raising the top corporate tax rate to 28 percent from 21 percent and phasing out the 20 percent qualified business income deduction.
- Imposing tax punishments on businesses that shift jobs overseas and enhancing tax breaks for businesses that expand domestic jobs.
- Addressing climate change with enhanced tax credits for electric vehicles; energy-efficient homes & businesses; carbon recapture, use & storage; and eliminating tax breaks for fossil fuels
These provisions – and taxes – are only a small part of the overall ARP. There are many more items included in the bill, which is one of the largest relief measures Congress has ever considered. Obviously, professional guidance will be required to maximize the benefits any run specialty retailer may wish to explore.