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States to Offer Millions in Grants, Tax Deferrals and Other Covid-19 Relief For Businesses

December 4th, 2020

More financial relief is on the way for businesses taking repeated hits from the Covid-19 pandemic, under a series of programs announced by Gov. Gavin Newsom on Monday.

The announcement arrives as many parts of California are on the cusp of seeing more restrictive stay-at-home orders return as Covid-19 cases are spiking across the state. California is developing a new $500 million Covid Relief Grant program for small businesses impacted by the pandemic. The program would provide grants of up to $25,000 to small businesses and nonprofits. The funds would be distributed through community development financial institutions and could arrive by early next year, according to the governor’s office.

California’s Office of the Small Business Advocate is “working quickly to establish the program,” according to the Governor’s Office of Business and Economic Development. The state is also rolling out tax relief options. The temporary tax deferrals include an automatic three-month income tax extension for taxpayers filing less than $1 million in sales and the expansion of interest-free payment agreements to companies with up to $5 million in taxable sales, according to the governor’s office. The deferrals would also provide expanded interest-free payments to industries heavily impacted by the coronavirus restrictions such as bars, restaurants, hair salons, and personal services businesses.

Newsom announced an expansion of the “California Rebuilding Fund” by $12.5 million, bringing the state’s total investment to $37.5 million. The lending program is aimed at offering flexible, affordable capital and free advisory services through community-based lenders.

Meanwhile, the application window for the new $100 million hiring tax credit program opens today, Dec. 1. Under the Main Street Hiring Tax Credit, companies are eligible to receive a $1,000 tax credit for each employee they rehire, and a maximum of $100,000 in tax credits.

More information about the program, including how to apply, is available here.

“We have to lead with health to reopen our economy safely and sustainably while doing all we can to keep our small businesses afloat,” Newsom said, in a prepared statement. “With this financial assistance and tax relief, California is stepping up where the federal government isn’t. By providing potentially billions in immediate relief and support, our small businesses can weather the next month as we continue partnering with the Legislature to secure additional funding and investments in small businesses in the new year.”

Newsom has consistently urged the federal government to step up funding, and added that as of Monday it had been 248 days since the federal government’s flagship relief package — the Coronavirus Aid, Relief and Economic Security Act, or CARES Act — was passed.

As the California Legislature looks to its next legislative cycle, Covid-19 relief will likely be top of mind. A proposal to create new incentives for businesses that retain or expand their number of jobs is currently being developed, Newsom said. Next year could also see laws aimed at waiving or modifying fees for industries that have been heavily impacted by the pandemic, according to the governor. The state will also be moving forward with a previously proposed plan to accelerate the distribution of infrastructure funding.

This is just a sample of what other states will also attempt to approve to help out small businesses. 

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