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How American Rescue Plan Act will help minority-owned small businesses recover post-COVID

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. 

Photo by Gene Gallin on Unsplash

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. 

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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

lack of access to capital

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: 

  1. Paycheck Protection Program (PPP) 
  2. Economic Interruption Disaster Loan (EIDL) 
  3. SBA Express Bridge Loans 
  4. SBA Debt Relief for 7(a), 504, & Microloans 
  5. Shuttered Venue Operators Grant program

Steps to finding a lender:

Need more help? Check out our other PPP resources

American Rescue Plan

How the $1.9 Trillion “American Rescue Plan” will help communities rebuild post-COVID

The twin disasters of the COVID-19 pandemic and economic fallout have left families reeling from sickness, unemployment, and increases in food anxiety. Communities of color have especially been disproportionately affected. In December alone 140,000 jobs were lost, a majority of which were held by women and people of color. As President Biden steps into office, it is crucial that these issues be addressed with the recovery plan that will aim to combat these crises. 

American Rescue Plan

financial economy recovery after coronavirus impact design

Communities of color disproportionately affected

Since 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. 

Additionally, people of color are heavily represented in industries that have been hit the hardest by the pandemic such as: service, production, transportation, construction, and maintenance occupations. And those who do have jobs are more likely to be employed in high-risk, high contact front-line positions, disproportionately increasing their risk of exposure to COVID-19.

With communities suffering through economic and health crises and unemployment rates at a record high, it’s clear that extensive recovery efforts will be needed to turn the tides. 

When speaking on the issue, Alejandra Castillo, CEO of YWCA USA and former National Director of the Minority Business Development Agency for the Obama Administration said:  

“We know from the past that we cannot just invest at the top and hope for trickle-down impact, this pandemic has amplified what many of us on the ground already knew: that women and communities of color have long faced social and structural infrastructure divestment. We need to re-imagine the health and prosperity of communities and build a comprehensive social and physical infrastructure plan that will create well-paying jobs. To truly do this we need to play to where the future of our economy is going as well as the future of work.”

As President Biden begins to enact recovery measures and legislation, economic security will be a top concern. Additionally job creation will be critical in the post-COVID future as vulnerable communities continue to face insurmountable challenges. 

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Biden’s “American Rescue Plan” Highlights 

As a first step toward addressing the nation’s economic and health crises, President Joe Biden has laid out a $1.9 trillion emergency recovery plan. 

The wide-ranging package entitled the “American Rescue Plan” aims to combat the twin crises with provisions delivering direct aid to American families, businesses and communities, and a major focus on COVID testing and vaccine production and delivery.

The “American Rescue Plan” will provide emergency measures to meet the nation’s immediate economic and health-care needs, to be followed in February by a broader relief plan. 

Biden’s proposal is divided into three major areas: $400 billion for provisions to fight COVID-19 with more vaccines and testing, while reopening schools; more than $1 trillion in direct relief to families, including through stimulus payments and increased unemployment insurance benefits; and $440 billion for aid to communities and businesses, including $350 billion in emergency funding to state, local and tribal governments.

The proposal would also increase stimulus payments from $600 to $1,400 per person. Additionally, the plan would expand a tax credit for children to $3,600 a year per child under 6, as well as $3,000 a year for children under 17. It would also extend eligibility for the credit to millions of very poor families and would dramatically boost the Earned Income Tax Credit, a benefit for workers, from $530 to $1,500.

 Other new initiatives in the recovery plan include: 

  • A combined 14 weeks of paid sick and family medical leave for millions of workers
  •  Grants to more than 1 million small businesses, 
  • $35 billion toward making low-interest loans available
  • Increase the federal minimum wage to $15 per hour 
  • And fund other necessary relief efforts such as food and water assistance, food stamps, and funding for U.S. territories such as Puerto Rico

Biden has also called for an increase in federal unemployment benefits, from $300 per week to $400 per week for millions of jobless Americans. These benefits would also be extended through September, preventing millions of people from losing their jobless aid in March under current law.

These are only first steps, and there is clearly much work to be done to reverse the economic and health crises that have devastated the nation and its most vulnerable communities.