On Wednesday, December 23, the California Office of the Small Business Advocate (CalOSBA) released information about the $500 million California Small Business COVID-19 Relief Grant Program. Previously announced in November by California Governor Gavin Newsom, this program supports small businesses and nonprofits impacted by COVID-19. This award is considered a grant and not a loan that would need to be paid back.

Grants will be awarded in amounts ranging from $5,000 to $25,000, and eligibility is based on a business’ annual revenue as documented in the most recent tax return. CalOSBA’s new website provides additional information.

Eligible Businesses Annual Revenue                                Grant Amount Available per Business

$1,000 to $100,000………………………………………………………..$5,000

Greater than $100,000 to $1,000,000……………………………..$15,000

Greater than $1,000,000 to $2,500,000………………………….$25,000

Eligibility

• Applicants must be operating in a physical location in California and must be able to satisfy a list of criteria including but not limited to: Business must meet the definition of an “eligible small business”
• Business or nonprofit must be active and operating since at least June 1, 2019
• Business must be currently operating or have a clear plan to re-open once the state of California permits re-opening of the business
• Business must provide financial information including the most recent tax return filed and organizing documents (California Secretary of State filing, if applicable, Articles of Incorporation, Certificate of Organization, Fictitious Name of Registration or Government-Issued Business License)
• Business must provide government-issued photo ID

Applicants with multiple business entities, franchises, or locations may only apply for one grant, using their eligible small business with the highest revenue. Please note, the website includes a list of additional ineligible businesses.

An “eligible small business” means (i) a “small business” (sole proprietor, independent contractor, 1099 work, and or registered “for-profit” business entity (e.g., C-corporation, S-corporation, limited liability company, partnership) that has yearly gross revenue of $2.5 million or less (but at least $1,000 in yearly gross revenue) based on most recently filed tax return) or (ii) a “small nonprofit” (registered 501(c)(3) or 501(c)(6) nonprofit entity having yearly gross revenue of $2.5 million or less (but at least $1,000 in yearly gross revenue) based on most recently filed Form 990)

Eligible Costs

Eligible costs (incurred due to business interruptions, business closures, or costs incurred due to the COVID-19 pandemic) include:

• All employee expenses including payroll costs; health care benefits; paid sick, medical, or family leave; and insurance premiums
• Working capital, overhead (including rent, utilities, mortgage principal and interest payments (excluding mortgage prepayments)), debt payments (principal and interest) incurred before March 1, 2020
• Costs associated with re-opening business operations after being fully or partially closed due to state-mandated COVID-19 health and safety restrictions and business closures
• Costs associated with complying with COVID-19 federal, state, or local guidelines for re-opening with required safety protocols, including but not limited to equipment, plexiglass barriers, outdoor dining, PPE supplies, testing, and employee training expenses
• Any other COVID-19 related expenses not already covered through grants, forgivable loans, or other relief through federal, state, county, or city programs.

Application Deadline

There will be two rounds of applications. The first round of applications will be accepted starting on Wednesday, December 30, 2020 until Friday, January 8, 2021. The second round of applications will open at later date to be announced.

The state of California is currently providing several incentives, and other local county or city jurisdictions may provide incentives as well. It is important to note that eligible businesses who have received other incentives (such as PPP loans, EIDL, or other local incentives) may still be eligible for this program as long as grant proceeds are not used to cover the same expenses covered by other incentives.

UPDATE: New Dates & Deadlines (as of 1/6)

• The new closing date for Round 1 is January 13, 2021 at 11:59pm. Applicants have until that date to submit applications, update pending applications, and upload documents.
• As a reminder, this process is not first-come, first-served or a rolling approval process. All eligible applicants will be considered for the grant at the close of Round 1 on 1/13/21 at 11:59pm and not before.

Our expert team of state and local tax professionals at Geffen Mesher is ready and prepared to help navigate this grant for your business and can be reached at SALT@gmco.com.