As a part of the American Rescue Plan Act, restaurants and small businesses are slated to receive billions of dollars of federal aid to help alleviate the suffering caused by the Covid-19 Pandemic.
Among the most afflicted by Covid-19, many small, family-owned businesses and restaurants were forced to close their doors as the economy came to nearly a complete standstill. While things like curbside pickup and online delivery services have provided some help to struggling businesses, many still need help to make ends meet as they recover from the effects of Covid-19.
The American Rescue Plan Act contains $7.25 billion for the Paycheck Protection Program, which provides businesses with forgivable business loans. Loans provided through the Paycheck Protection Program are only forgivable if business owners use 60 percent of the funds to cover payroll expenses — the rest should be spent on PPE, rent, mortgage, and other business expenses.
The additional $7.25 billion included in the American Rescue Plan Act for the Paycheck Protection Program is expected to increase eligibility for forgivable business loans. Under the new plan, certain non-profits and local news organizations are also eligible for aid.
Although the relief bill will expand eligibility for the Paycheck Protection Program, anyone seeking to apply will need to do so before March 31. All loan requests for the Paycheck Protection Program will be rejected if they are not approved by the end of the month.
Because of the tight deadline on applications, many of the largest banks participating in the program need to determine their own cut-off date for applications. Because an application can take 24-48 hours to process if everything goes well, or up to three weeks if there are any issues to resolve, many new applications may not be processed in time for the cut-off.
To avoid running out of time to process loans, banks like the Bank of America have stopped taking loan applications so that they have time to finish processing what they already have. If other banks follow suit, many small businesses may be unable to take advantage of the additional funds allocated to the Paycheck Protection Program.
In response, several organizations are calling for an extension to the deadline to allow more businesses to take advantage of the loans. Extending the deadline can help quicken economic recovery from the Covid-19 Pandemic and enable more businesses to return to normal operations.
In addition to the money added to the Paycheck Protection Program, the American Rescue Plan Act will send targeted aid to several types of businesses that were most impacted by Covid-19.
Under the “State Small Business Credit Initiative,” states will receive a total of $10 billion to create low-interest loans for small businesses. Additionally, under the American Rescue Plan, the “Economic Injury Disaster Loan” program will receive $15 billion to give to small businesses in underserved communities. The aid specifically is intended to target minority-owned businesses.
Further, restaurants will receive about $29 billion and owners of closed businesses will receive $15 billion through the “Shuttered Venue Operators” grant program.