Although the light at the end of the tunnel is looking closer than ever, the long-term effects of COVID-19 are yet to be gauged. Unfortunately, this likely means that more economic blows will be felt by many individuals across the globe. In the United States, the Biden government is trying to make ends meet, especially with the help of the latest COVID package.
Formally known as the American Rescue Plan, this legislation has been designed to “rescue” individuals and businesses, designed with specific relief measures to be rolled out. It’s a law amounting to $1.9 trillion, ensuring that individuals suffering from unemployment and small businesses with outstanding debt and taxes can find relief once more.
Since the bill is aplenty, we first take a look at the sections directly addressing the needs of employers and individuals. Here’s how the American Rescue Plan can impact businesses:
1 – Stimulus checks
Another plan to address COVID impacts necessitates the need for stimulus checks, which are essentially economic impact payments allowing individuals to receive a relief package consisting of cash. The stimulus package under the new law is similar to the CARES Act, but a few key differences must be taken into consideration.
Unlike the previous cash aid, individuals can now receive up to $1,400 per person, while $2,800 can be received per married couple. It’s important to note that the amount you receive will still vary depending on the AGI, or the adjusted gross income.
So long as they meet the following AGI criteria, the person, couple, or household will receive the full stimulus check amount. That said, AGIs must be less than:
- For individuals: $75,000
- For heads of households: $112,500
- For married couples: $150,000
Note: It’s also highly possible to receive an additional $1,400 for every qualifying dependent you may have. They could be full-time students younger than 24 or even adult dependents. Should the AGI be above the amounts stated, you’ll only be receiving a reduced stimulus check amount.
2 – An increased EIDL funding
All advanced payments will now fall under the economic Injury Disaster Loan (EIDL) program, which has been granted an additional $15 billion in funding as part of the new COVID relief plan. It’s an option that can be pursued by small businesses and employers through the Small Businesses Administration (SBA), so long as they meet the following criteria:
- The business has no more than 300 employees
- The business has suffered an economic downturn or loss of more than 30%
Should a small business be deemed eligible for the EIDL program, they can receive up to $10,000 cash aid.
3 – An increased PPP funding
Thanks to the American Rescue Plan, the Paycheck Protection Program (PPP) has also been granted additional funding of $7.25 billion. This program is aimed at providing small businesses with forgivable loans, all of which cover up to 24 weeks of payroll and non-payroll costs, provided that they are deemed as qualified:
- All payroll costs must be 60% of the loan proceeds
- All non-payroll costs must be 40% of all loan proceeds
The Bottom Line
While things slowly return to normal, experts postulate that the long-term effects of the pandemic are still yet to arise. Most speculate that a recession may soon be coming, but for now, relief packages such as the American Rescue Plan provide temporary relief for individuals and businesses across the country. To learn more about the new law, stay tuned for part two!
For accounting and bookkeeping services in Virginia, Head Start Biz Solutions has you covered. We offer you consulting and real solutions, specifically aimed at solving dilemmas that may affect your current business health. We also allow you to plan for the future, which is vital in these trying times. Reach out to us today to learn more or get a free assessment.