California businesses have been granted a break by recent legislative developments:
1 – The COVID-19 Small Business Relief Grant program has been expanded to $4 billion. This makes California’s small business relief program the largest in the US.
2 – Small businesses have also been given a $6.2 billion tax cut to relieve the financial burden of the pandemic.
Here’s what you need to know:
Small Business Relief Grant Program
The application portal for the grant program is currently closed, but it is expected to reopen once the newly announced funding has been processed.
The previous eligibility for the grants has been that businesses must:
- Have gross yearly revenue of more than $1000 and less than $2.5 million (based on its most recent available tax return).
- Operate and have a physical address in California; and
- Have been in operation prior to June 1, 2019.
Sole proprietors, independent contractors, 1099 employees, C-corps, S-corps, Co-ops, LLCs, partnerships, and limited partnerships have all been deemed eligible entities under past eligibility requirements.
While it remains to be seen whether the eligibility requirements will change with the new funding, business owners who did not formerly apply may want to consider getting their documents together for the anticipated round.
Paycheck Protection Program Loan Forgiveness Tax Relief
The Tax Code was amended at the end of April to exclude forgiven loans from certain Coronavirus aid packages from company gross income for the 2020 (and future) tax years. The tax breaks apply to up to 85% of the more than 1 million California businesses which received federal loans.
Specifically, the bill excludes:
Applications for forgiveness of about $159 billion worth of loans have not yet been received by the federal government. Here’s the SBA fact sheet on applying for loan forgiveness.
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