The 2nd Small Business Stimulus Package

Topics: Coronavirus (COVID-19)

Summary: Small businesses across the country have suffered in the wake of the COVID-19 pandemic. Find out about the second stimulus package passed by Congress that helps support small businesses.

On December 27, 2020, President Trump signed into law the 2021 Consolidated Appropriations Act, a new $900 billion relief package, featuring direct stimulus payments of $600 to qualified adults and $600 per child. The package also secured $325 billion to help small businesses and nonprofits recover from the pandemic, which includes $284 billion invested into Paycheck Protection Program (PPP) loans for small businesses. This second stimulus package was passed nine months after passing the Coronavirus Aid, Relief, and Economic Stimulus (CARES) Act, and just after the release of the first effective vaccine.

How Will Small Businesses Benefit from the New Stimulus Package?

The updated small business stimulus package expands eligibility for a first or second PPP loan to nonprofits and local media, such as newspapers, radio and TV broadcasters – industries that were not eligible for loans in the first round. The revived program provides $15 billion for live performance venues, independent movie theaters and other institutions that suffered, and are still suffering, lengthy shutdowns throughout the pandemic.

The package also allocates $20 billion for targeted grants through the Economic Injury Disaster Loan program through the Small Business Administration (SBA) and provides tax deductions for meal expenses. It also includes funding for what are considered very small businesses and lending through community-based lenders such as Community Development Financial Institutions (DDFIs) and Minority Depository Institutions (MDIs). An additional $3.5 billion is included for ongoing SBA debt relief payments, and $2 billion in  enhancements to SBA lending. 

The new bill also ensures businesses will be eligible to deduct payroll costs and other expenses covered by PPP loans. A tax credit that subsidizes wages for businesses suffering during the crisis will also be expanded.

Reviving the Paycheck Protection Program for Small Business Support

Congress originally created the Paycheck Protection Program to cover payroll costs, mortgage interest, rent and utilities over the eight-week period after the loan was made, provided that employee and compensation levels were maintained. Unfortunately, the funds were depleted quickly, causing Congress to pass a new bill in late April to offer an additional $310 billion for small business relief.

In bringing back the Paycheck Protection Program, businesses become eligible to receive a second loan.  Many small businesses missed the first round of PPP loans, and this new package provides additional funding for them. This time, PPP loans will be capped at $2 million and available only to borrowers with fewer than 300 employees who experienced losses in revenue of 25% or more in 2020 compared to 2019. The original PPP program closed on August 8, 2020, after around 5.2 million businesses applied for and received the loans.

Small Business Resources 

The CARES Act offered various programs and initiatives designed to assist small businesses through the coronavirus pandemic duration. The new stimulus bill provides new financial resources to support them along with a few additions. These programs and initiatives include:

Paycheck Protection Program (PPP) Loans

PPP Loans provide capital to cover the costs of retaining employees, such as for salary and wages, healthcare benefits, sick time, retirement benefits and more. Small businesses that are interested in applying for PPP Loans should contact an SBA Lender that they have an existing banking relationship with. 

‚ÄčSmall Business Debt Relief Program 

Allows for forgiveness of a portion of PPP loans. The new stimulus bill makes it easier to apply for forgiveness. More expenses also qualify for forgiveness, including payment for software, cloud services, account and HR, property damage from civil unrest, PPE and supplier costs. At least 60% of the PPP loan must be spent on payroll expenses. 

Grants for Arts, Live Events, Museums and Theaters 

Venues that offer in-person cultural events are eligible for grants that do not need to be repaid. A total of $15 billion was set aside for these loans. 

Economic Injury Disaster Loans (EIDL) and Emergency Economic Injury Grants (EEIG) 

Provide loans and grants to small businesses and private nonprofits harmed by COVID-19. 

State Resources 

While the stimulus bill is managed at a federal level, states are offering various coronavirus resources for small businesses as well. State governors continue to update the public each day, with announcements that are impacting both small businesses and the employees they serve.

To learn more or to apply for assistance, please visit the U.S. Department of Treasury’s website:, or review a sample application by clicking here.

Unemployment Benefits for Workers

With small businesses experiencing business disruptions because of shelter in place orders and social distancing rules, many face difficult decisions when it comes to their workers. Millions of workers have already applied for unemployment benefits over the past few weeks. The stimulus package provides federal funding for expanded unemployment benefits coverage and increased benefits available to individuals whose job or ability to work was impacted by COVID-19.

The stimulus package expands unemployment benefits by providing:
  • An additional $300 in weekly benefits until March 14, 2021
  • Benefits to workers who are not traditionally eligible, such as the self-employed or independent contractors (such as freelancers and gig workers) 

‚ÄčAmTrust Supports Our Small Business Insureds

AmTrust’s support to our small business policyholders and our appointed agents has never wavered throughout the pandemic. We've created a library of resources regarding the coronavirus and funding resources to help you small businesses, agents and others stay informed, safe and healthy. For more information about our small business insurance solutions, please contact us today.

This material is for informational purposes only and is not legal, tax or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is accurate, appropriate or suitable for any specific business, tax or legal purpose. Readers seeking resolution of specific questions should consult their business, tax and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.

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