Immediate Assistance for Businesses Impacted by COVID-19 Including Temporary Tax Relief and $500 Million in Grants
This afternoon, Governor Gavin Newsom announced additional efforts to provide immediate assistance for California businesses in the midst of the COVID-19 pandemic. Some of these relief efforts, based off recommendations made by the Governor’s Task Force on Business and Jobs Recovery, include:
Tax Relief for Businesses Impacted by COVID-19
Earlier this year, Governor Newsom signed an Executive Order allowing taxpayers to apply for penalty and interest relief for 90 days for any taxpayer reporting less than $1 million in sales on their tax return. Through November 22nd, some 9,287 plans with almost $149 million in tax relief have taken advantage of this program.
The Governor will direct the California Department of Tax and Fee Administration to do the following:
• Provide an automatic three-month extension for taxpayers filing less than $1 million in sales tax on the return and extend the availability existing interest and penalty free payment agreements to companies (with up to $5 million in taxable sales)
• Broaden opportunities for more businesses to enter into interest-free payment arrangements.
• Expand interest-free payment options for larger businesses particularly affected by significant restrictions on operations based on COVID-19 transmissions.
$500 Million for New COVID Relief Grant for Small Business
The Governor announced the creation of a $500 million COVID Relief Grant administered by the California Office of the Small Business Advocate (CalOSBA) at the Governor’s Office of Business and Economic Development for small businesses that have been impacted by COVID and the health and safety restrictions. Funds would be awarded to selected intermediaries with established networks of Community Development Financial Institutions to distribute relief through grants of up to $25,000 to underserved micro and small businesses throughout the state by early 2021. Non-profits would also be eligible for these grants. CalOSBA is establishing the program and will make it available to small businesses as soon as possible – for updates on availability visit here.
Increase Funding for the California Rebuilding Fund by $12.5 Million
Last week, the Governor announced the opening of the California Rebuilding Fund which makes available $25 million to help impacted small businesses rebuild from the economic crisis and keep local economies strong. This program is built to be a resource in the market for the next year as businesses pivot and recover.
An increase of $12.5 million, bringing the total investment to $37.5 million, would allow the Fund to be fully capitalized. The additional funding will help the 3rd party administrator of the fund raise $125 million to make more low-interest loans to small businesses with less access to loans from traditional banking institutions.
Today’s announcements build on the state’s ongoing business support throughout the pandemic, including the Main Street Hiring Tax Credit, which authorizes $100 million in hiring tax credit for qualified small businesses. The credit is equal to $1,000 per qualified employee, up to $100,000 for each small business employer. The application opens tomorrow, December 1. A full list of existing state support for businesses can be found here.