State-funded COVID-19 relief program includes additional $ 2 billion in grants for small businesses in California

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Dentists and other small business owners suffering from a pandemic in California may receive immediate relief from a $ 7.6 billion legislative package signed by Governor Gavin Newsom yesterday.

The state-funded package provides additional funding of $ 2.1 billion for small business grants, $ 600 in separate one-time payments for eligible taxpayers and households, as well as additional financial assistance and resources for help individuals, families, businesses and essential child care services.

A measure still under negotiation would allow business owners who have received loans from the Paycheck Protection Program to deduct eligible PPP-funded expenses from their state income tax returns, aligning the law of the State on Federal Law. The ADC sent a letter of support for the measure calling for swift action from the Legislature and the Newsom administration since tax season is already underway.

$ 2.1 billion in new funding for small business grants of up to $ 25,000

the California Relief Grants Program, which provides direct grants ranging from $ 5,000 to $ 25,000 to small businesses affected by the pandemic, received an additional $ 2.1 billion in new funding, a fourfold increase from the $ 500 million distributed to applicants during cycles 1 and 2.

The first application round opened at the end of December 2020, while the second round opened on February 2 and ended on February 18. So far, the bonus amounts have been based on the annual income of each company, as shown in the company’s latest income tax return.

The California office of the Small Business Advocate administers the program and the state-appointed intermediary, Lendistry, distributes the funds. Details of the next application round will be published shortly on the Relief Grants Program website.

The measure would comply with state law with federal law, provide additional tax relief

Details are still being worked out and are expected to be confirmed as early as next week, but one of the relief measures would allow recipients of PPP and economic disaster loans to deduct up to $ 150,000 of eligible expenses funded. through loans. Passage of the measure (Assembly Bill 80) would bring state tax laws in line with recent changes in federal tax law, eliminating an additional financial burden on California businesses that are still struggling during the economic downturn. .

In California, the average PPP loan amount for dental organizations was $ 37,370, according to a study published last November in Dental Economics. This number falls well below the proposed cap of $ 150,000, which should indicate that the vast majority of dental employers who have received first- or second-draw P3 loans will benefit from state tax relief.

The CDA has urged the Legislative Assembly and the Newsom administration to pass the measure since its introduction last week and before companies finalize their tax returns. Other big supporters include the California Medical Association, the California Restaurant Association, the California Optometric Association, and the Family Business Association of California.

Direct stimulus payments to eligible individuals

The package also provides the following direct one-time payments:

  • $ 600 to households benefiting from the California EITC for 2020
  • $ 600 to taxpayers with an individual tax identification number but who were unable to receive federal payments of $ 1,200 and $ 600
  • Payments of $ 600 to households with ITINs and incomes below $ 75,000

ITIN taxpayers who also qualify for the California EITC would therefore receive a total of $ 1,200 and can expect to receive their payments soon after filing their 2020 tax returns, according to the. governor’s press release. The release provides details of the additional package relief for individuals, families, heavily impacted licensees, community college students, child care services and farm workers.

Watch the CDA press room and social media for updates on the reopening of the California Relief Grants Program and the adoption of the state tax relief measure.

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