CALIFORNIA PROVIDES NEW EMERGENCY RELIEF TO BUSINESSES
As the number of coronavirus cases climb exponentially and additional restrictions are put in place, California Governor Gavin Newsom announced on November 30, 2020 additional measures to aid small businesses struggling from the effects of coronavirus outbreak restrictions.
The announced relief and support for businesses consists of three components:
Tax Relief for Businesses Impacted by COVID-19
In April, the Governor issued 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.
The Governor will now direct the California Department of Tax and Fee Administration to provide the following additional relief:
- Provide an automatic three-month extension for taxpayers filing less than $1 million in sales tax on the return and extend the availability of 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; and
- Expand interest-free payment options for larger businesses 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 program to be administered by the California Office of the Small Business Advocate (CalOSBA) for small businesses that have been impacted by COVID and health and safety restrictions. Funds will be awarded to selected intermediaries with established networks of Community Development Financial Institutions to distribute relief through grants of up to $25,000 to 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. Updates can be found here.
Increase Funding for the California Rebuilding Fund by $12.5 million.
California will establish a California Rebuilding Fund, which will make available $25 million to help impacted small businesses rebuild from the economic crisis. An increase of $12.5 million will allow the Fund to be fully capitalized. The additional funding will help the 3rd party administrator of the fund raise $125 million to make low-interest loans to small businesses with less access to loans from traditional banking institutions.
Although everyone is holding out hope for a widely-distributed vaccine and a return to normalcy, and a broad federal stimulus package, the short-term outlook regarding COVID-19 and its effect on the economy remains grim. More health and safety restrictions are on the horizon. The Governor’s November 30th announcement is a welcome one, but businesses need to prepare for the pandemic to continue well into 2021. We are here to help. If you have questions about what relief you can obtain for your business, please do not hesitate to contact us for assistance.
