Governor Newsom unveils tax relief and cash grants for small businesses
California small businesses will have more time to remit sales tax collections to the state, allowing them to use those dollars “for any obligations you may have,” Governor Gavin Newsom announced.
The sales tax extension is one of three new measures to support small businesses.
Newsom also said an emergency credit will be used to give small businesses up to $25,000 in cash grants.
Additionally, more money is being set aside for a new business reconstruction fund that is the brainchild of Janet Yellen, a member of Newsom’s Business Advisory Task Force and President-elect Joe Biden’s candidate for office. of US Treasury Secretary.
With more shelter-in-place orders likely and with California counties slipping into the most severely affected purple tier, more action is needed to protect non-essential businesses such as restaurants, hair and nail salons, bars and other hospitality businesses, Newsom said. during an online briefing on Monday.
“We need to be more aware than ever of the economic impact and consequences of these new restrictions,” he said.
The plan could provide billions of dollars in temporary tax relief, the governor’s office said in a statement.
It extends an executive order Newsom signed in April that provided about $149 million in tax relief to nearly 10,000 small businesses that applied for it.
Newsom’s office said it would ask the State’s Tax and Fee Administration Department to grant automatic three-month extensions to small businesses with sales of $5 million or less and up to $1 million in sales tax.
Large businesses impacted by COVID-19 restrictions can also apply for tax payment extension plans.
The extensions amount to “a float,” Newsom said.
“You can keep this money. You can use this money for all your obligations,” he said. To apply, “just fill out a form”.
Sales tax filing dates vary by business, with tax payments due monthly, quarterly, or annually.
Incumbent Sen. John Moorlach, R-Costa Mesa, noted that while a tax deferral will help retailers and restaurants, it won’t help those who don’t collect sales taxes.
“It’s an interesting strategy,” he said of Newsom’s plan. But, he added, “if you have a service like an accountant or a lawyer, you don’t generate sales tax. It’s not universal. »
Under a $500 million “COVID Relief Grant Program,” cultural institutions and nonprofits, as well as small businesses, can apply for up to $25,000 in cash grants.
Newsom will also increase the state’s $25 million commitment to the California Rebuilding Fund by $12.5 million.
The fund — proposed by the governor’s 80-member Task Force on Business and Jobs Recovery — is a public-private partnership designed to make capital available to businesses over the next year to recoup losses caused by the pandemic. The program will provide loans of up to $100,000 through community lenders.
Newsom’s office said the fund is expected to reach $125 million using funds from private, philanthropic and public sources.
Increased support for small businesses will emerge from the state’s next legislative session, Newsom said, including incentives to retain existing employees and hire new ones. Other proposals would remove or reduce fees for hard-hit businesses like bars, restaurants and hair salons and increase spending on infrastructure and economic development programs.
“These programs (announced on Monday) will be a bridge over the next two weeks to what we will be working on with the Legislative Assembly,” Newsom said. “We have a whole list of things that we are actively engaged in.”
Newsom touted business initiatives already taken, including state and local payments to restaurants that have provided nearly 18 million free meals to seniors. The state has also provided up to $100 million in disaster relief loan guarantees for businesses that do not have established credit.
But all of that relief won’t be enough without additional help from the federal government, which passed its latest relief package — the CARES Act — seven months ago.
“We can’t wait,” Newsom said. “We need to move these mediums forward to help these small businesses that put it all on the line.”