The American Rescue Plan Act will help small businesses recover post-COVID by providing critical assistance to businesses across the country and delivering $50 billion in aid and relief.
Minority-owned businesses have struggled to get small-business relief loans
The COVID-19 pandemic brought on great financial difficulties for businesses across the nation. Small businesses were greatly affected, with women- and minority-owned small businesses hit the hardest.
Since last April, workers of color have faced the highest rates of pandemic-related unemployment. Data shows that Black and Latino people are now facing greater rates of unemployment than during the 2008 Great Recession. Minority-owned small businesses have also faced greater difficulties accessing capital and relief loans.
The Paycheck Protection Program, which launched in March 2020, has now become the largest small-business support program in U.S. history, sending $734 billion in forgivable loans to struggling companies. It has helped nearly 7 million businesses stay afloat, but it has also been plagued by complex, ever-changing rules that have hindered many businesses from getting much needed relief loans.
Many of the businesses affected by the changing rules and confusion have been minority-owned businesses. From language barriers to unfair biases, minority business owners have struggled to gain access to capital and bank loans from major banks. Many have since turned to their communities and smaller, local banks to find relief, but new changes to the program under President Biden are now pushing to funnel more money toward women- and minority-led businesses.
You might be interested: PPP Loan forgiveness: $50,000 loans for small business and self-employed
Changes to PPP and SBA loans under the American Rescue Plan
New Funding and Changes to the Paycheck Protection Program (PPP). The bill includes $7.25 billion in additional funding for the Paycheck Protection Program (PPP) and changes eligibility for the PPP, including:
- Expanding eligibility for 501(c) nonprofits. It also makes local offices of larger nonprofits eligible for PPP assistance as long as those locations are not larger than 500 employees for first PPP loans or 300 employees for second PPP loans, expanding access to vital relief for nonprofit organizations that are critical to local services and the economy.
- 1st PPP Draw loan deadline: on or before 31 May 2021 (businesses must have been in business from 15 Feb 2020)
PPP loans have:
- A fixed interest rate of 1% that is non-compounding and non-adjustable
- No requirement for collateral or personal guarantees
- No fees or prepayment penalties
- A 5 year maturity
New Programs per the American Rescue Plan Act
Supplemental Targeted EIDL Advance Payment:
- A $5 Billion fund for $5k payments to those hardest hit
Restaurant Revitalization Fund & Grants – Coming soon
- A $28.6 billion fund for grants to eligible entities in this hard-hit industry
- Max $5 million grant/location and aggregate max $10mil grant
How to Apply
If you have a small business and would like to apply for any of these SBA programs, visit www.sba.gov to learn more about COVID-19 Small Business Guidance and Loan Resources. Under SBA’s Coronavirus Relief Options page, you can learn about how to apply for a variety of programs including:
- Paycheck Protection Program (PPP)
- Economic Interruption Disaster Loan (EIDL)
- SBA Express Bridge Loans
- SBA Debt Relief for 7(a), 504, & Microloans
- Shuttered Venue Operators Grant program
Steps to finding a lender:
- Contact SBA resource partner: Sba.gov/local-assistance
- Complete application
- SBA issues loan #
Need more help? Check out our other PPP resources