Paul Durham | April 21, 2021
Since the start of the COVID-19 pandemic, lawmakers have provided significant economic assistance to support struggling businesses. Unfortunately, businesses started during the crisis have been ineligible for most of that aid. For example, businesses started after February 15, 2020 remain ineligible for the Paycheck Protection Program, and New Hampshire’s popular Main Street Relief Fund and Self Employed Livelihood Fund were only available to businesses that could show lost revenues when compared to 2019 receipts. With the recent passage of the American Rescue Plan Act of 2021 (“ARP”), start-ups should be aware of at least one new opportunity for relief.
Employee Retention Credit (“ERTC”) Expansion
The Employee Retention Credit (“ERTC”) was originally enacted by the Coronavirus Aid, Relief, and Economic Security Act and subsequently modified by the Consolidated Appropriations Act, 2021. Without delving into the more complex details of the credit, the ERTC can generally be described as a refundable tax credit that businesses can claim on qualified wages, including certain health insurance costs, paid to employees. A business is generally eligible for the ERTC if it has been subject to a full or partial shut-down or has experienced a decline in gross receipts when compared to its 2019 activities. This has meant that, to take advantage of the credit, businesses must have existed long enough to demonstrate historic revenue losses or to have been subject to one of the early government shutdown orders.
However, among other things, ARP expanded the ERTC to cover so-called “recovery start-up businesses.” These are new businesses that began operations after February 15, 2020 and have $1 million or less in average annualized gross receipts. Recovery start-up businesses can now claim the credit without showing suspended operations or reduced receipts, subject to a total limit of $50,000 per quarter. IRS guidance regarding eligibility, timing, and calculation of the ERTC can be found here.
Other ARP Funding and NH Senate Bill 107
Other than the ERTC expansion, stimulus opportunities for start-ups remain limited. The New Hampshire Senate recently passed NH Senate Bill 107, which would (i) require new state programs funded by federal relief funds to include businesses that were not eligible for grants from the Main Street Relief Fund because the businesses were established after May 26, 2019, and (ii) preclude other eligibility requirements that would disqualify businesses that began operation on or after May 26, 2019. However, this bill is still working its way through the New Hampshire House and would need to be signed into law. Even if the bill were to be passed, it is unclear when or if new state programs might become available. All we know for sure is that, under the ARP, significant additional federal funds will be flowing into the state in the coming months. We will update this post and others as information of programs becomes available.