California COVID Relief Package Includes Individual Payments and Small Business Assistance
California legislators passed a COVID-19 relief package that includes $600 payments to individuals and grants of up to $25,000 for small businesses.
On February 23, 2021, California Governor Gavin Newsom signed into law a $7.6 billion pandemic relief package that includes $600 payments to low-income residents, $2 billion in tax-free grants to small businesses, and waivers on license renewal fees for businesses impacted by the pandemic. The package also includes additional funds for childcare services, financial aid for community college students, and rental relief. The provisions in the package were largely from Newsom’s state budget proposal in January. The package brings California’s total state stimulus to just under $10 billion. The key provisions in the relief package include:
Payments to individuals
SB 88 provides one-time payments of $600 to taxpayers who qualified for the state Earned Income Tax Credit in 2020 (usually incomes of less than $30,000), and taxpayers who file their tax returns using federal Individual Tax Identification Numbers (ITINs), earn less than $75,000 a year, and did not receive the most recent federal stimulus checks December due to their immigration status. Taxpayers who qualify for both categories would receive $1,200.
The program will also provide one-time payments of $600 to lower-income households enrolled in the California Work Opportunity and Responsibility to Kids Act (CalWORKS), Cash Assistance Program for Aged, Blind, and Disabled Legal Immigrants (CAPI), and the Supplemental Security Income/State Supplemental Program (SSI/SSP).
Grants for small businesses
SB 87 provides an additional $2 billion for grants of up to $25,000 for businesses with annual revenues between $1,000 and $2.5 million in 2019 income that have been impacted by the pandemic. The agreement is an increase from the current $500 million in grants. The bill reserves $50 million of this for nonprofit cultural institutions. To distribute the grants, the bill establishes the California Small Business COVID-19 Relief Grant Program in the newly established Office of Small Business Advocate (CalOSBA).
Eligible recipients are sole proprietors, independent contractors, 1099 employees, C-corporations, S-corporations, cooperatives, limited liability companies, partnerships, limited partnerships, and nonprofits. The organization must have begun operations prior to June 1, 2019, be currently active and operating, or have a clear plan to reopen when the state permits reopening of the business.
The bill prioritizes grants according to geographic distribution based on COVID-19 health and safety restrictions; industry sectors most impacted by the pandemic; nonprofit mission services most impacted by the pandemic; underserved small business groups that have faced historic barriers to access to capital and networks, and are defined as businesses majority owned and operated on a daily basis by women, minorities or persons of color, and veterans, or businesses in rural and low-wealth communities; and disadvantaged communities. The grants would not be subject to state income tax.