Congress Passes and President Biden Signs American Rescue Plan Act of 2021 Providing Loans, Grants, and Relief for Small Businesses and Others | Practical Law

Congress Passes and President Biden Signs American Rescue Plan Act of 2021 Providing Loans, Grants, and Relief for Small Businesses and Others | Practical Law

On March 10, 2021, Congress passed the American Rescue Plan Act of 2021 (ARPA), a $1.9 trillion COVID-19 relief bill that includes financing, grants, and other financial assistance to a variety of small businesses, restaurants, and shuttered venue operators, as well as airlines, airline workers, and other sectors of the transportation industry. President Biden signed ARPA into law on March 11, 2021.

Congress Passes and President Biden Signs American Rescue Plan Act of 2021 Providing Loans, Grants, and Relief for Small Businesses and Others

by Practical Law Finance
Published on 17 Mar 2021 • USA (National/Federal)
On March 10, 2021, Congress passed the American Rescue Plan Act of 2021 (ARPA), a $1.9 trillion COVID-19 relief bill that includes financing, grants, and other financial assistance to a variety of small businesses, restaurants, and shuttered venue operators, as well as airlines, airline workers, and other sectors of the transportation industry. President Biden signed ARPA into law on March 11, 2021.
On March 10, 2021, in response to continued economic fallout from the COVID-19 pandemic, Congress passed the American Rescue Plan Act of 2021 (ARPA) (Pub. L. 117-2, H.R. 1319 (Mar. 11, 2021)). The $1.9 trillion, 242-page relief bill includes a third round of stimulus by extending and enhancing programs created under the CARES Act, enacted in March 2020, and the Consolidated Appropriations Act, 2021 (CAA-21), enacted in December 2020, and by creating new programs. These programs provide financing, grants, and other financial assistance across a broad swath of the economy, including small businesses, restaurants, and shuttered venue operators, as well as airlines, airline workers, and other sectors of the transportation industry. President Biden signed ARPA into law on March 11, 2021.
ARPA revises the terms of or adds new programs for:
  • Paycheck Protection Program (PPP). Loans under Section 7(a)(36) of the Small Business Act (15 U.S.C. § 636(a)(36)) (PPP Loans) and Section 7(a)(37) of the Small Business Act (15 U.S.C. § 636(a)(37)) (Second Draw PPP Loans).
  • Grants to Revitalize Restaurants. US Small Business Administration (SBA) grants for restaurants that incurred losses due to COVID-19 (ARPA, Title V, § 5003).
  • Economic Injury Disaster Loans (EIDL) Emergency Grants. Revisions to the emergency grants available for entities eligible for loans under the SBA's economic injury disaster loan program.
  • Grants for Shuttered Venue Operators. SBA grants (SVO Grants) for operators of performing arts venues, museums, and other cultural institutions (ARPA, Title V, § 5005).
  • Community Navigator Pilot Program. A pilot program for grants to and contracts or cooperative agreements with private nonprofits, tribes, state and local governments, and others to improve access to SBA COVID-19 assistance programs and resources (ARPA, Title V, § 5004).
  • Payroll Support to Air Carriers and Contractors. Financial assistance to air carriers and contractors serving air carriers, established under Title IV, Subtitle B of the CARES Act, as expanded by CAA-21.
  • Other Financial Assistance to Transportation. Financial assistance to urban transportation, Amtrak, airports, and other sectors of the transportation industry.
This Legal Update highlights the key small business, lending, and other financial assistance provisions in ARPA but is not intended as a detailed summary of the broad-reaching legislation. Practical Law will continue to supplement this Legal Update and related resources with further developments, including agency regulations and interpretive guidance as they become available.

Additional Funding and Expanded Eligibility for Paycheck Protection Program

ARPA adds $7.25 billion to the PPP and expands the PPP to make forgivable loans available to new borrowers and to make additional forgivable loans available to borrowers that are currently eligible for them, including certain small businesses added by CAA-21 (ARPA, Title V, § 5001). The additional funding is available for both PPP Loans and Second Draw PPP Loans.
ARPA expands eligibility for the PPP by:
  • Relaxing restrictions on the total number of employees employed by:
    (§ 5001(a)(1)(B)(i).)
  • Expanding eligibility for PPP Loans and Second Draw PPP Loans to include:
    • additional nonprofit organizations, except for those primarily engaged in lobbying activities and those specified in 13 C.F.R. § 120.110 (except for paragraphs (a) and (k)); and
    • certain internet-only news publishers that are engaged in the collection and distribution of local or regional and national news and information that were previously excluded from the PPP.
    (§§ 5001(a) and (b).)
ARPA also excludes COBRA health insurance premiums from the payroll costs that are used to determine the amount of PPP indebtedness that may be forgiven (§ 5001(c)).
For information on the initial PPP, see CARES Act: Stimulus for Small Businesses Under the SBA Checklist.

New $28.6 Billion SBA Program of Restaurant Revitalization Grants

ARPA appropriates $28.6 billion for a new program of grants for restaurants administered by the SBA and covering the period from February 15, 2020 through December 31, 2021 (Restaurant Revitalization Grants). For purposes of the program, what is a restaurant is defined broadly as any business where the public assembles primarily to be served food or drink (including alcohol) and includes, for example, food trucks, food carts, caterers, and tasting rooms, but excludes restaurants that:
  • Are operated by a state or local government.
  • Together with affiliates, owned or operated more than 20 locations on March 13, 2020.
  • Have received an SVO Grant or have an application pending for an SVO Grant.
  • Are publicly traded companies.
(§§ 5003(a)(4) and (b)(2)(A).)
A Restaurant Revitalization Grant for a restaurant:
  • Cannot exceed $10 million.
  • Is limited to $5 million for each physical location of the restaurant.
  • Is determined by the amount of the restaurant's losses less the amount of any PPP Loans or Second Draw PPP Loans it received. A restaurant's losses equal:
    • if the restaurant operated for all of 2019, the amount by which its 2019 gross receipts exceed its 2020 gross receipts;
    • if the restaurant was not in operation all of 2019, the amount by which its average monthly 2019 gross receipts multiplied by 12 exceeds its average monthly 2020 gross receipts multiplied by 12; or
    • if the restaurant opened on or after January 1, 2020 or has not opened when it applies for a Restaurant Revitalization Grant, the amount of its eligible payroll costs less the amount of its 2020 gross receipts.
(§ 5003(a)(7) and (c)(4).)
Restaurant Revitalization Grants are targeted at restaurants that may be in greater need of assistance:
  • During the first 21 days after the launch of the program, the SBA is required to prioritize restaurants that are:
    • small business concerns owned and controlled by women and veterans; and
    • socially and economically disadvantaged small business concerns.
    (§ 5003(c)(3).)
  • During the first 60 days after enactment of ARPA, $5 billion (out of the $28.6 billion appropriation) is earmarked for restaurants whose 2019 gross receipts were $500,000 or less (§ 5003(b)(2)(B)(i)).
Restaurant Revitalization Grants may be used for:
  • Eligible payroll costs.
  • Mortgage principal and interest.
  • Rent.
  • Utilities.
  • Maintenance expenses, including the cost of constructing outdoor seating.
  • Supplies, including personal protective equipment and cleaning materials.
  • Food and beverages.
  • Certain supplier costs.
  • Operating expenses.
  • Paid sick leave.
For more information on Restaurant Revitalization Grants, see Small Business Administration (SBA) Restaurant Revitalization Fund Grants Summary.

Additional Appropriation for Economic Injury Disaster Grants

ARPA appropriates an additional $15 billion for the emergency grants available under Section 1110 of the CARES Act (15 U.S.C. § 9009) , as expanded by CAA-21 (EIDL Emergency Grants), for entities eligible for loans under the SBA's economic injury disaster loan program under Section 7(b)(2) of the Small Business Act (15 U.S.C. § 636(b)(2)). Of this amount, the SBA must use:
These grants are in addition to any EIDL Emergency Grants already received by the entity (§ 5002(b)(2)(B)(iii)).
For information on the initial EIDL, see CARES Act: Stimulus for Small Businesses Under the SBA Checklist.

Additional Funding for the SBA Shuttered Venue Operators Grant Program

ARPA appropriates an additional $1.25 billion for the SBA Shuttered Venue Operators Grant (SVOG) program created under CAA-21, bringing the size of the SVOG program to $16.25 billion, and it expands program eligibility to include recipients of PPP Loans and Second Draw PPP Loans (§ 5005).
As originally established under CAA-21, the SVOG program excluded recipients of PPP Loans and Second Draw PPP Loans from eligibility for SVO Grants. ARPA eliminates this exclusion, but it reduces the amount that an SVO Grant recipient would otherwise be able to receive during the SVOG priority period by the total amount of PPP Loans and Second Draw PPP Loans it receives on or after December 27, 2020. The SVOG priority period is the first 28 days after the SVOG program is launched, during which the SBA is required to target SVO Grants to applicants in the most dire need. The SBA currently expects to launch the SVOG program in early April.
Of the additional $1.25 billion appropriated by ARPA for the SVOG program, $500,000 is earmarked for technical assistance to help applicants navigate the complex SVOG application process.
For more information on the SVOG program, see Small Business Administration Grants for Shuttered Venue Operators Summary Checklist.

New SBA Community Navigator Pilot Program

ARPA directs the SBA to create a Community Navigator Pilot Program, designed to improve access to the SBA's numerous COVID-19 assistance programs and resources for small businesses owned by women, veterans, and socially and economically disadvantaged groups. It does so by making grants to or entering into contracts or cooperative agreements with private nonprofits, state and local governments, tribes, and others to ensure that community groups, institutions, and other organizations deliver free outreach, education, and technical assistance services to these disadvantaged groups (§§ 5004(a)(3) to (7) and (9) and (b)(1)).
To fund this program, ARPA appropriated:
  • $100 million for the Community Navigator Pilot Program itself (§ 5004(b)(2)).
  • An additional $75 million for the SBA to promote, provide information about, and conduct outreach and education regarding, these services (§ 5004(c)(4)).
The SBA can make grants under the Community Navigator Pilot Program until December 31, 2025 (§ 5004(d)).

Extension of Airline Worker Support

ARPA extends CARES Act and CAA-21 programs supporting airline workers' wages, salaries, and benefits by providing:
  • $14 billion of financial assistance for air carriers.
  • $1 billion of financial assistance for contractors serving air carriers.
(§ 7301(b)(1).)
These amounts are allocated:
  • To each air carrier in the same proportion as the air carrier received out of the $15 billion of financial assistance provided under CAA-21.
  • To each contractor in an amount equal to the amount the contractor received from the $1 billion of financial assistance provided under CAA-21.
(§ 7301(b)(2).)
ARPA directs the Secretary of the Treasury (Secretary) within ten days of enactment (March 21, 2021) to begin making payments to air carriers and contractors that submit satisfactory requests for financial assistance (§ 7301(b)(3)(C)).
ARPA subjects recipients of financial assistance to terms and conditions similar to those imposed by CAA-21, including:
  • Refraining from furloughing employees.
  • If it is a public company, refraining from purchasing its securities.
  • Refraining from paying dividends or capital distributions.
  • Limiting the compensation it pays to highly compensated employees for a period of two years ending on April 1, 2023.
  • If deemed appropriate by the Secretary, providing Treasury with compensation in the form of warrants, equity, or senior debt.
(§§ 7301(b)(3)(A) and (b)(4).)

Other Financial Assistance to Transportation

ARPA appropriates almost $30.5 billion for public transportation grants to be administered by the Federal Transit Administration, including:
  • $26.1 billion for urban transportation (§ 3401(b)(1)).
  • $1.7 billion for capital investments in transportation (§ 3401(b)(4)).
  • $2.2 billion of additional assistance for:
    • operations related to cleaning and sanitizing; and
    • costs incurred to maintain operations and avoid layoffs and furloughs.
    (§ 3401(b)(7).)
ARPA contains several other appropriations to respond to the effects of the COVID-19 pandemic on the transportation sector, including:
  • $1.7 billion of grants for the National Railroad Passenger Corporation (Amtrak) (§ 7101).
  • $8 billion of financial assistance for airports to prevent, prepare for, and respond to the COVID-19 pandemic (§ 7102).
  • $3 billion of payroll assistance for aviation manufacturing companies (§ 7202).

Practical Implications

ARPA's small business lending, grants, and other relief provisions will continue to provide much needed economic assistance to small businesses which have struggled during the COVID-19 pandemic to keep their doors open, keep their staff employed, and meet their financial obligations.
For a continuously updated collection of resources addressing COVID-19, see: