General Update regarding the California Small Business Covid-19 Relief Grant Program
California has launched several new programs, including some temporary tax relief, to help eligible small businesses, employers and employees impacted by COVID-19.
Enclosed below is a summary of key reliefs provided by California.
The California Small Business COVID-19 Relief Grant Program
The California Small Business COVID-19 Relief Grant Program announced that it will take applications from California small businesses impacted by COVID-19 for grants of between $5,000 and $25,000. The application period begins at 8 a.m. on December 30, 2020 and continues until 11:59 p.m. on January 8, 2021.
Eligible businesses are those with between $1,000 and $2.5 million in annual gross revenues based on their most recently filed tax return and include sole proprietorships and non-profits.
The grant amount that will be awarded is:
- $5,000 for businesses with annual revenue of $1,000 to $100,000;
- $15,000 for businesses with annual revenue greater than $100,000 up to $1 million; and
- $25,000 for businesses with annual revenue greater than $1 million up to $2.5 million.
Grants will be awarded based on the following prioritization:
- Geographic distributions based on COVID-19 health and safety restrictions;
- Industry sectors most impacted by the pandemic; and
- Underserved small business groups (e.g., veterans, low-income or rural communities, and women or minority owned businesses).
Get your documentation in order to be prepared to apply when the application window opens.
- Application Certification: Signed certification used to certify your business
- Business Financial Information:
- Most recent tax return filed (2019 or 2018) – provided in an electronic form for online upload, such as PDF/JPEG or other approved upload format.
- Copy of official filing with the California Secretary of State, if applicable, or local municipality for the business such as one of the following: Articles of Incorporation, Certificate of Organization, Fictitious Name of Registration or Government-Issued Business License.
- Government Issued Photo ID: Such as a Driver’s License or Passport
One complete application will qualify you to be considered for both rounds, please only apply once.
Applying through multiple organizations will delay your application from being processed.
Owners of multiple businesses, franchises, locations, etc. will be considered for only one grant and are required to apply for the business with the highest revenue.
Grant awards will be announced beginning the week of January 13, 2021.
Details about the program and how to apply are available at:
Main Street Small Business Hiring Tax Credit
The California Department of Tax and Fee Administration (CDTFA) administers the reservations where you can apply for one. The total amount of credit available is $100 million and will be allocated on a first come-first-served basis. To claim the credit, taxpayers must obtain a tentative credit reservation between December 1, 2020, and January 15, 2021.
The credit can offset either sales and use tax, or income and franchise tax. Taxpayers must make this election as to which tax they will offset when applying for their reservation.
Eligible taxpayers must:
- Have had 100 or fewer employees on December 31, 2019
- Have had a 50% reduction in their gross receipts for the period of April through June 2020 when compared to the same period in 2019
- Must not file or be eligible to file a combined report
Each taxpayer is eligible for up to $100,000 in credit. The amount of credit is $1,000 per increase in qualified employees, as measured in average monthly full-time-employee equivalents. The increase is measured by comparing the period from July through November 2020, to the period from April through June 2020.
A list of the information that will be required when you apply for a tentative credit reservation as well as a list of FAQs is available on the CDTFA’s website:
Please note that the above summary is DRAFT and PRELIMINARY and subject to change without notice as more details become available. Our goal this year continues to make the tax return preparation for all our clients as smooth and stress free as possible for everyone. We will continue to share any new updates/developments with you to ensure you and your clients are well informed with the latest tax news on the federal and state levels. Should you have any questions, please do not hesitate to contact our team member or myself.
We thank you in advance for your cooperation and happy new year.