The American Rescue Plan Act was signed by President Joe Biden on March 11, 2021, which includes provisions related to the Paycheck Protection Program, EIDL, and other items of interest to the banking industry, including the following:
2021 Recovery Rebate to Individuals
The new law offers another stimulus payment to individuals. In general, an eligible taxpayer is to receive the sum of $1,400 ($2,800 in the case of a joint return) plus $1,400 for each dependent of the taxpayer. Persons who are a nonresident alien individual, a dependent of another taxpayer, or an estate or trust is not considered eligible. Taxpayers with adjusted gross income over $75,000 or in the case of a joint return over $150,000 are also not eligible for the direct payment. The IRS has already taken steps necessary to send ACH files and to mail payments.
Currently, there is no exemption in the new law from garnishment. WBA is working with others to encourage quick, standalone legislation to protect the new stimulus payment from garnishment orders.
Modifications to PPP
The new law adds additional funding into the program, increasing the CARES Act commitment of $806,450,000,000 to $813,700,000,000. The new law adds COBRA premium assistance costs as allowable payroll costs under PPP.
The new law also expands eligibility to “an additional covered nonprofit” which is a nonprofit other than a 501(c)(3),(4),(6), or (19), and is exempt from tax under 501(a) of the Internal Revenue Code. To be eligible, the additional covered nonprofit entity cannot receive more than 15% of its receipts from lobbying activities; the costs of the lobbying activities of the nonprofit entity did not exceed $1,000,000 during the most recent tax year of the additional covered nonprofit entity that ended prior to February 15, 2020; and the nonprofit entity employs not more than 300 employees.
The new law also makes eligible an Internet publishing organization. This includes a business concern or organization that was not eligible before the enactment of the new law that is assigned a NAICS code of 519130, certifies in good faith it is an Internet-only news publisher or Internet-only periodical publisher and is engaged in the collection and distribution of local or regional and national news and information. The organization is eligible to receive a covered loan for the continued provision of news, information, content, or emergency information. The entity cannot employ more than 500 employees, or the size standard established by SBA for that North American Industry Classification code, per physical location of the business concern or organization. The business concern or organization must make a good faith certification that proceeds of the loan will be used to support expenses at the component of the business concern or organization that supports local or regional news.
The amendments apply only to applications for forgiveness of covered loans that are received on or after the date of enactment of the American Rescue Plan Act.
Targeted EIDL Advance
The law appropriated an additional $15,000,000,000 to the EIDL program. $5,000,000,000 is to be used in amounts of $5,000 to covered entities that suffered an economic loss of greater than 50% which employ not more than 10 employees.
Relief to Restaurants
The new law creates a Restaurant Revitalization Grant Program for those that suffered pandemic-related revenue loss. “Restaurants” include food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products, or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink.
An eligible restaurant that receives a grant may use the grant funds for certain expenses incurred as a direct result of, or during, the COVID–19 pandemic, including: payroll costs, payments of principal or interest on any mortgage obligation (which shall not include any prepayment of principal on a mortgage obligation), rent payments, including rent under a lease agreement (which shall not include any prepayment of rent), utilities, and certain maintenance expenses.
The new law creates an emergency rural development grants program for rural health care, funding for USDA Office of Inspector General for oversight of COVID-19 related programs, and farm loan assistance and USDA assistance and support for socially disadvantaged farmers and ranchers.
The new law provides emergency rental assistance not to exceed 18 months, including for the payment of rent, rental arrears, utilities and home energy costs and arrears, and other expenses related to housing to be defined. Appropriations were also made for homelessness assistance and supportive services program.
The new law also creates a Homeowner Assistance Fund meant to mitigate financial hardships associated with the COVID-19 pandemic. Funds are to be provided to eligible entities for the purpose of preventing homeowner mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services, and displacements of homeowners experiencing financial hardship after January 21, 2020, through qualified expenses related to mortgages and housing.
Qualified expenses include: mortgage payment assistance, financial assistance to allow a homeowner to reinstate a mortgage or to pay other housing-related costs related to a period of forbearance, delinquency, or default, principal reduction, facilitating interest rate reductions, payment assistance for utilities, including electric, gas, home energy, and water, internet service, including broadband internet access service, homeowner’s insurance, flood insurance, and mortgage insurance, and homeowner’s association, condominium association fees, or common charges.
The new law also offers relief in the areas of nutrition, education, public transportation, and an extension of unemployment assistance.
WBA will report on more of the American Rescue Plan Act as programs begin and as Treasury implements the various new or revised programs. Click here to view the bill.
By, Alex Paniagua