Small businesses in California will get more time to turn over sales tax collections to the state, allowing them to use those dollars “for any obligations you may have,” Gov. Gavin Newsom announced Monday, Nov. 30, during an online press briefing.
The sales tax extension is one of three new measures to prop up small businesses.
Newsom also said an emergency appropriation will be used to give small businesses up to $25,000 in cash grants.
In addition, more cash is being set aside for a new business rebuilding fund that’s the brainchild of Janel Yellen, a member of Newsom’s business advisory task force and President-elect Joe Biden’s nominee for U.S. Treasury Secretary.
With further shelter-in-place orders expected and California counties slipping into the most severely impacted Purple Tier, more action is needed to protect non-essential businesses like restaurants, hair and nail salons, bars and other hospitality businesses, Newsom said.
“We have to be more mindful than ever about the economic impact and consequences of these further 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 granted about $149 million in tax relief to nearly 10,000 small businesses that applied for it.
Newsom’s office said he will direct the state Tax and Fee Administration Department to grant automatic three-month extensions to small businesses with $5 million or less in sales and up to $1 million in sales tax collections.
Larger businesses affected by COVID-19 restrictions can apply for tax payment extension plans as well.
The extensions amount to “a float,” Newsom said.
“You can hold that money. You can use that money for any obligations you have,” he said. To apply, “just fill out a form.”
Under a separate $500 million “COVID Relief Grant program,” cultural institutions and non-profit organizations, as well as small businesses, can apply for up to $25,000 in cash grants.
Newsom also will 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 recover from losses caused by the pandemic. Newsom’s office said the fund is expected to grow to $125 million using money from private, philanthropic and public sources.
More support for small business will emerge from the next state legislative session, Newsom said, including incentives to retain existing employees and hire new ones. Other proposals would waive or reduce fees for heavily impacted businesses like bars, restaurants and hair salons and would increase spending for infrastructure and economic development programs.
“These programs (announced Monday) will be a bridge over the next couple of weeks to what we will work on with the Legislature,” Newsom said. “We have a whole list of things we are actively engaged in.”
Newsom touted business initiatives already taken, including state and local payments to restaurants that have provided almost 18 million free meals to seniors. The state also has provided up to $100 million in disaster relief loan guarantees for businesses lacking established credit.
But all this relief won’t be enough support without more help from the federal government, which passed its last relief package — the CARES Act — seven months ago.
“We can’t wait,” Newsom said. “We need to get moving on these supports to help these small businesses who are putting everything on the line.”
Source: Orange County Register