California will be offering a number of relief options for businesses impacted by COVID-19 restrictions, Governor Gavin Newsom announced this week.
The Governor’s November 30 news release noted that applications opened this week for the Main Street small business hiring tax credit.
Moreover, the state is creating a $500 million COVID-19 relief grant program, and a temporary tax relief program which, if fully utilized, is estimated to have billions in impact.
In addition, the state will expand the California Rebuilding Fund by $12.5 million, bringing the program’s total investment to $37.5 million. These efforts are informed by recommendations made by the Governor’s Task Force on Business and Jobs Recovery.
Hiring Tax Credit
The California Department of Tax and Fee Administration (CDTFA) began accepting applications on December 1 for a small business hiring credit against California state income taxes or sales and use taxes.
The credit (authorized by SB 1447) is available to certain California qualified small business employers that receive a tentative credit reservation. A total of $100 million is available for credits equal to $1,000 per qualified employee, up to $100,000 for each small business employer.
More information on requirements and the list of information needed to complete the credit reservation application are available at www.cdtfa.ca.gov. The CDFTA warns that the system will not allow applicants to save the application if they exit before completing and submitting the application
Relief Grant for Small Business
The California Office of the Small Business Advocate (CalOSBA) will be administering the $500 million COVID Relief Grant at the Governor’s Office of Business and Economic Development for small businesses that have been impacted by COVID-19, 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 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 business.ca.gov.
Tax Relief Program
In April 2020, the Governor, through Executive Order, allowed 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 22, 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 of existing interest- and penalty-free payment agreements to companies with up to $5 million in taxable sales;
• Expand interest-free payment options for larger businesses particularly affected by significant restrictions on operations based on COVID-19 transmissions; and
• Broaden opportunities for more businesses to enter into interest-free payment arrangements.
California Rebuilding Fund
Lastly, the state is providing an additional $12.5 million to the California Rebuilding Fund, which helps 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.
The additional funding will help the third 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.