Governor Newsom Announces Additional Assistance for Businesses
The Governor announced that California will provide additional assistance for businesses impacted by COVID-19 restrictions.
The Main Street Small Business Tax Credit applies to businesses that (1) had 100 or fewer employees as of Dec. 31, 2019, and (2) suffered a 50% or greater decrease in income tax gross receipts when comparing second quarter 2020 to second quarter 2019.
Employers who satisfy those two conditions may receive a credit of $1,000 for each net increase in qualified employees between April 1, 2020, and June 30, 2020, compared to July 1, 2020, and Nov. 30, 2020. The calculation is based on the employer’s average monthly full-time-equivalent employee counts for the three-month period (April-June 2020) compared to the five-month period (July-November 2020).
For each net increase, the employer can claim a $1,000 credit toward state personal income or qualified sales or use taxes.
California small businesses can apply online Dec. 1, 2020, through Jan. 15, 2021. The credit will be allocated on a first-come, first-served basis until the $100 million available is exhausted.
Tax Relief for Businesses Impacted by COVID-19
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.
New relief includes:
- An automatic three-month income tax extension for taxpayers filing less than $1 million in sales tax
- Extends the availability of existing interest and penalty free payment agreements to companies with up to $5 million in taxable sales and
- Provides expanded 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 Grants 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.
Click here to sign up for updates and information on when the application process opens.
Increased Funding of $12.5 million for the California Rebuilding Fund
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.
The California Rebuilding Fund is a loan program to support California’s small businesses—especially those located in economically disadvantaged and historically under-banked areas of the state. Businesses who employed 50 or less full-time equivalent employees (FTEs) and had gross revenues of less than $2.5 million or below in 2019 are eligible to apply. For more information, please click here.
To fill out a pre-application and be matched with a participating community lender, please click here.
