Recently, President Biden and Vice President Harris have begun to travel across the nation to highlight the latest federal stimulus bill. April is Financial Literacy Month, therefore it is important we touch on what checklists to have ready, what resources to use, and what this means for women of color-owned small businesses. Societal norms, systemic biases, and a global pandemic may continue to hold women back financially; which is why we should prepare and tailor a plan of action accordingly with this upcoming stimulus plan.
The $1.9 trillion American Rescue Plan was signed into law on March 11, 2021, two weeks ago. This legislation includes critical support for children and families and critical targeted support for small businesses. The plan earmarks about $50 billion in aid for small businesses. It translates to new changes to the existing Paycheck Protection Program, an increase in funding grants for entertainment venues and restaurants, and more. The law will enable organizations to continue to lift the cornerstones of our communities. Here is what women of color businesses should know.
CHANGES TO THE CURRENT PPP
The Paycheck Protection plan has been a huge relief for small businesses during the COVID-19 crisis. The Small Business Administration provided $690 billion in loans to 7.6 million small businesses under the CARES Act. The American Rescue Plan Act will provide an additional $7.25 billion in funding and will expand PPP eligibility to include additional nonprofits such as certain labor organizations. Though the PPP loans have been the centerpiece for many businesses to stay afloat during the pandemic, it comes with certain restrictions and borrowers should remain vigilant in maintaining clear documentation when applying.
Even though the American Rescue Plan Act is more targeted, it is important to note it is also a lot smaller, and the current deadline for PPP loan applications ends on March 31, 2021. However, the allocated percentage being smaller puts pressure on lawmakers to aim to extend it. Currently, there is a bill in the house and in the Senate that proposes to extend the deadline two months through the end of May.
It is important for small business owners to move quickly and prepare by speaking to advisors, accountants, payroll processors. For minority small businesses, they will have a window in the first two weeks to apply and they will be prioritized.
If you’re considering applying for the PPP, here’s what you should know:
RESTAURANTS ACT – Restaurant Revitalization Fund
The American Rescue Plan carves $28.6 billion in grants for independent restaurants and bars. The Restaurant Revitalization Fund will be administered by the Small Business Administration. If eligible, restaurant owners can apply directly to the SBA grants to cover eligible expenses from the beginning of February 15, 2020. Once the SBA publishes the rules and opens the application processes, applicants must certify that “the uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations of the eligible entity.”
To prepare for a grant application, the business must first apply for DUNS (Data Universal Numbering System). Restaurants with more than 20 locations are excluded and women and minority-owned eateries will be prioritized. Any restaurant applying for both a grant and a PPP loan must ensure that the program’s requirements are met.
Economic Injury Disaster Loan Program
The ARP Act will allocate $15 billion for Economic Injury Disaster Loan Advance grants. This means that small businesses in low-income communities that have no more than 300 employees and as determined by their gross receipts, have had a loss of more than 30% between March 2, 2020 and December 31, 2021, will be eligible. Businesses that were not able to obtain the full amount when they initially applied will have prioritized windows to do so.
The second window will be for those who have endured a loss of 50 percent and have fewer than 10 employees. The third will be for those who have had losses of between 30 percent and 50 percent and have fewer than 10 employees. You can check if your business is eligible here and apply.
Community Navigator Program
This SBA-led effort will encourage guidance and support by leveraging existing community partners to enhance outreach to underserved communities and businesses.
It will be spearheaded by culturally knowledgeable SBA partners who conduct targeted outreach in specific sectors in the entrepreneurial community, and who understand the intricacies of where critical assistance is needed. The initial pilot for the Community Navigator Program approach will target Native American and women-owned small businesses.
Financial Relief for Childcare Providers
The ARP Act will allocate $39 billion to childcare providers that may be used for:
- Employee payroll
- Operating Expenses
- Financially assisting customers
- Purchase PPE
It is important that with more federal investment on the way of being distributed at an even wider array of intermediaries, women of color-owned businesses stay informed and attentive of application dates and windows. It is important to move effectively and swiftly in applying over the next few weeks. Small businesses are the fuel of this country and it is important that this organization is a holistic effort in order for it to have maximum impact.