April 27, 2021 | Last Updated on: February 10, 2023
As of May 28, 2021, the Paycheck Protection Program has run out of funding. You can learn more about the PPP with our COVID-19 resource hub.
On March 11, 2021, President Joe Biden signed the American Rescue Plan Act of 2021 into law. The $1.9 trillion economic stimulus bill will help the U.S. recover from the health and economic effects of the COVID-19 pandemic.
The Plan aims to stimulate economic growth and aid job creation with the vaccine rollout. There’s a lot encompassed within the legislation, so we wanted to break it down and explain a few key points:
The American Rescue Plan is in effect now and business owners and their employees need to know about new assistance programs that will help them during the pandemic. This is the first comprehensive COVID-19 relief package of 2021, and the first one during the Biden administration.
On January 14, before he was inaugurated as president, Biden announced his plan to help the economic recovery and spur vaccine distribution.
The Biden administration had anticipated large spending for small business relief from the start, and the CBO noted an increase in direct spending. The bill provides billions to help American works and businesses weather this storm.
Gene Sperling, a former national economic advisor under Presidents Clinton and Obama, was put in charge of coordinating the rollout of the bill. A “Help is Here” tour kicked off with President Biden, Vice President Kamala Harris, and members of the Cabinet promoting the bill across the country.
The 242-page American Rescue Plan consists of eleven sections:
Most of this does not pertain to small businesses and employees, however, it is important for small business owners and individuals to understand how this bill can impact them. For example, there are tax incentives included in the bill that are meant to help families and tax relief for business owners during the pandemic. The bill also helps federal agencies like FEMA with vaccine distribution.
We have gone through the bill and are covering some of the key points in the legislation for business owners and individuals. There is a lot here, and you need to know how it could impact you.
There are not many outwardly individual-focused provisions in this bill. The main selling point is the $1,400 direct payments to individuals, which have provided a financial boost for millions of Americans.
There is also a 15 percent increase in food stamp benefits for individuals and families. This increase is occurring through September 2021.
A lot of the aid to individuals comes from the bigger spending for governments, tax credits, small businesses, and health care.
There are a lot of new tax provisions in the stimulus package that will help American taxpayers save money in the coming year. These will take effect for 2021 so that the IRS is not swamped during this year’s tax cycle. Here are the five changes to the tax code that you need to know:
This bill does not include tax cuts for wealthy individuals or corporations in the private sector – although there were three tax increases on large corporations and wealthy individuals. Most of the tax credits are meant for small businesses and families.
The money to state and local governments is hugely important to businesses and individuals, because they help with business funding and programs people need to work. Addressing budget shortfalls can lead to no public transit cuts and increased local contracts for businesses.
One of the major pieces of this legislation is addressing the public health crisis. As we move forward with mass vaccinations, the federal government is stepping in to provide funding and support.
There is also a children’s health insurance program to ensure mandatory coverage of COVID-19 vaccines. All of these programs will help ensure a safe return to business, and safety for everyone.
The coronavirus pandemic decimated the economic plans for the last two fiscal years. As the U.S. starts to look into the future, funding is needed to spur economic development, including important necessities like food and transportation.
Businesses and employees have been some of the hardest hit by the pandemic. From layoffs to closures and from Paycheck Protection Program loans to paid leave, money is needed to keep Main Street open.
“The American Rescue Plan Act enables the SBA to continue to lift up the cornerstones of our communities,” the Small Business Administration’s Senior Advisor Michael Roth said upon the passage of the bill. It will help “the mom-and-pop businesses and nonprofits” and lead to neighborhood revitalization.
We looked at the specific features of the American Rescue Plan that will help small businesses and their employees.
The American Rescue Plan Act allocates over $50 billion to small business owners. The plan allows the SBA to continue to administer aid while working on new efforts as well. The American Rescue Plan focuses on small businesses and hard-hit industries, which includes:
Employees are integral to running a business, and many have had difficulty finding work or returning to work due to the pandemic. In addition to the direct payments to individuals, this bill extends some important provisions for employees to ensure they are not left behind.
The bill does not discriminate between low-income workers and those who have not been able to find full-time work. Instead, it focuses on providing additional funding for those who have been the hardest hit during this public health crisis. The economic impact of this bill cannot be understated. It helps businesses secure more business loans and ensure they can stay in business during this unprecedented time.
This is the third major piece of COVID-19 economic legislation after the CARES Act, which was a 2.3 trillion stimulus bill accounting for around 11 percent of GDP. The American Rescue Plan is “about 8.8 percent of 2020 GDP,” which is good especially since GDP is growing and nearing pre-COVID-19 levels.
With President Biden in office, he is going back to the lessons learned from the American Recovery and Reinvestment Act of 2009 (ARRA), which passed by the Obama administration at the height of the Great Recession.
As Neel Kashkari, President, Federal Reserve Bank of Minneapolis said, “In the last recovery after the financial crisis, it took 10 years to rebuild our labor market. We cannot have another 10-year recovery, that is far too long. The cost to society and the cost to families is far too steep.”
With an unemployment rate that soared during the past 12 months, the American Rescue Plan focuses on a relief program that will help spur the U.S. economy and promote growth.
As always, keep checking our blog here at Biz2Credit for more timely and useful information surrounding any other stimulus packages from the federal government as well as other small business programs in general. We continue to work hard to keep our readers up-to-date with the latest information on the various opportunities available to small businesses across the nation.
March 20, 2023
