This article is only for educational purposes and does not constitute legal, financial, or tax advice. Make sure you consult a professional regarding your unique business needs.
Hey BFF’s
Last week President Biden signed the American Rescue Plan Act of 2021 – a $1.9 trillion economic relief package. This bill provides additional relief for families and businesses on a grander level. Not only does it offer a third round of stimulus checks, but it’s providing assistance to small businesses including restaurants (for the first time), student loan forgiveness is tax–free through 2025, extended unemployment benefits, and much more.
Stimulus checks, where are you?
Stimulus checks are on the way. Or maybe you already received yours. The question is how are you going to spend it? I’m normally telling you to save, invest, and donate. This go-round, I’d like to switch it up a bit. I still want you to save, but I also want you to spend. The purpose of the stimulus checks is to help stimulate the economy.
How Sway?
The more we spend within our communities the more we can help revive them. Small businesses have suffered the most due to the pandemic. If you have not built emergency savings for you and your family, fund it first. At a minimum, you should have $1,000 saved for each person in your household.
If you already have your emergency fund(s) aligned:
- Save 50% – 50% of all funds. Not just the funds allocated to you. If you are a family of four you may receive up to $5,600 and you should save $2,800.
- Enjoy 40% – Do something exciting with your family. You deserve it. Take a safe vacation or staycation and have fun! Treat yourself to something new, go out to dinner, and most importantly support your local mom and pops small businesses. They are relying on us.
- Remaining 10% – Donate. Yes, find a local charity or break it into smaller bills and randomly bless as many people as you can, until you run out.
Small Business Relief
The Small Business Administration received additional funding for two existing relief programs. The Paycheck Protection Program, which is expected to expire March 31, 2021, received additional funding of $7.25 billion to support the initiative. Economic Injury Disaster Loan Program received $15 billion.
Also, the American Rescue Plan Act allocated $28.6 billion to launch the “Restaurant Revitalization Fund,” which will be managed through the SBA. Eligible entities include restaurants, food trucks, bars, caterers, lounges, with less than 20 locations and not publicly traded entities. Money received can be used to cover payroll costs, paid sick leave, utilities, maintenance, rent and mortgage payments, food and beverage expenses, and other authorized costs.
The SBA will provide priority access to minority-owned, women-owned, and veteran-owned businesses. I recommend preparing now. Make sure you are registered with the government so they can recognize you. Have your Duns & Bradstreet number handy. It is free to acquire. After you receive it you want to register your business with the government at SAM.gov.
If you received the PPP loans they will count as revenue. EIDL (economic injury disaster loan) and ERTC (employee retention tax credit) will not.
Student Loan Forgiveness
Before the American Rescue Plan Act of 2021, student loan borrows would be taxed on the portion of their debt that was forgiven by the government. For example, if you are on a student income-repayment plan and you made your last payment of $250 to get $50,000 forgiven. You would be taxed on the $50,000 because it counts as earned income. Under the new act, you will not be burdened with a massive tax bill. Sounds great to me.
Unemployment relief
Through the Federal Pandemic Unemployment Compensation (FPUC) program the additional $300 a week, which was supposed to end on March 14, 2021, has been extended through September 6, 2021.
The Pandemic Unemployment Assistance (PUA) program is geared for employees who may not qualify for traditional unemployment insurance. This program was scheduled to end on March 14, 2021 and has been extended through September 6, 2021.
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