California provides US $ 500 million in virus aid to small businesses
Governor Gavin Newsom announced Monday that California will be offering options that provide temporary tax breaks for eligible businesses affected by COVID-19.
CALIFORNIA, USA – The COVID-19 pandemic has hit small businesses significantly this year, creating challenges for businesses, employees and owners. According to a survey of the majority of small businesses in August, data showed that 44% of small businesses are at risk of closure.
To support these businesses, Governor Gavin Newsom announced Monday that the state would offer temporary tax breaks and $ 500 million aid to small businesses affected by COVID-19 restrictions. The governor’s office says the total tax relief, if fully used, will have an estimated billions in impact.
Due to the COVID-19 pandemic, which has soared to record levels in recent weeks, many companies are struggling to stay afloat after months of restrictions and lower sales. Newsom says the tax breaks and grants are meant to be used to provide relief until lawmakers can meet and work with them in the New Year to provide further relief.
“California’s small businesses are the best of the California dream, and we can’t let this pandemic take that away,” said Governor Newsom. “We have to lead healthily in order to reopen our economy safely and sustainably, and at the same time do everything we can to keep our small businesses alive. With this financial support and tax break, California is stepping up where the federal government isn’t. With instant help and support worth billions of dollars, our small businesses can get through the next month if we continue to work with lawmakers to secure additional funding and small business investments in the new year. “
California has 4.1 million small businesses, 99.8% of the total number of businesses in the state, and more than 7 million workers in California, which is 48.5% of the state’s total workforce, according to a press release from the governor’s office.
Data published by the Census Current Population survey noted that minority-owned companies are disproportionately affected by the coronavirus pandemic. African American-owned active businesses decreased 41%, Latinx decreased 32%, Asians decreased 25%, and immigrants decreased 36%.
What exactly are these tax break programs?
1. Billions in sales tax deferrals
Governor Newsom said companies will receive an automatic 3-month renewal for taxpayers on sales tax less than $ 1 million. Interest-free payment arrangements will be extended to larger companies with sales tax of up to $ 5 million. These tax deferrals will also extend to industries heavily affected by the coronavirus, including bars, restaurants, hair salons and more.
2. Emergency package
Working with lawmakers, California will provide up to $ 500 million in COVID-19 relief funds. The state will provide grants of US $ 25,000 each to small businesses, nonprofits, and cultural institutions in need. The program will serve as a bridge until California officials can take further action with lawmakers in January 2021.
The CA Rebuilding Fund aims to provide US $ 125 million in public-private investment relief funds to small businesses. It will increase government funding to a total of $ 37.5 million. Applications for the CA Rebuilding Fund opened last weekend. 86 million applications have already been submitted. 68% of these funds were matched with different owners, 46% with female owners and 50% owned by indigenous people and people of color.
4. Tax credit for $ 100 million hiring on Main Street
Main Street Hiring Credit approves $ 100 million tax credits for qualifying small businesses. Credit is $ 1,000 per qualified employee, up to $ 100,000 for each small business employer. Main Street Hiring Credit applications will open starting Tuesday, December 1st. A full list of existing government support to businesses is available here Here.
5. Tax breaks to encourage entrepreneurship
California will offer $ 100 million to waive franchise taxes for new businesses in the state and exclude PPP loans from state taxes.
6. $ 100 million in small business support
$ 50 million COVID-19 disaster relief guarantees were introduced earlier this year through an executive order that lawmakers have now doubled to $ 100 million. $ 24.9 million has already been approved. 83% of the beneficiaries were women, minority companies with low to middle income. 217 loans were approved for the $ 50 million small business program for a total of $ 109 million.
Relief for Small California Businesses related to COVID-19
More people than ever are seeking medical help due to the coronavirus as the number of active cases rises across California.