Dentists and other small business owners suffering from an ongoing pandemic in California can get immediate relief through a $ 7.6 billion legislative package signed yesterday by Governor Gavin Newsom.
The government-funded package provides additional funding of $ 2.1 billion for small business grants, $ 600 for separate one-time payments for qualified taxpayers and households, and additional financial assistance and resources to support individuals, families, businesses, and critical childcare services .
A measure is still under negotiation that would enable business owners who have received Paycheck Protection Program loans to deduct eligible PPP-funded expenses from their state income tax returns, thereby bringing state law into line with federal law. CDA has sent a letter of support for the move urging the legislature and the Newsom administration to act swiftly as tax season is already underway.
$ 2.1 billion in new funding for small business grants of up to $ 25,000
The California Relief Grant Program, which gives direct grants between $ 5,000 and $ 25,000 to small businesses affected by the pandemic, received additional new funding of $ 2.1 billion – a fourfold increase from the $ 500 million – Dollars distributed to applicants in Rounds 1 and 2.
The first round of applications opened at the end of December 2020, while the second round opened on February 2 and closed on February 18. So far, the bonus amounts are based on each company’s annual revenue as documented in the company’s most recent tax return.
The California office of the Small Business Advocate administers the program, and the federally appointed intermediary Lendistry distributes the funds. Details on the next application cycle will be published shortly on the utility’s website.
The measure would bring state law in line with federal law and offer additional tax breaks
The details are still being worked out and are expected to be confirmed next week. One of the measures in the relief package would allow recipients of PPP and Disaster Loan for Economic Violation to withdraw up to $ 150,000 in eligible loan-funded expenses. Passing the measure (Bill 80) would align state tax law with recent changes in federal tax law, removing another financial burden on California companies that still struggle during the economic downturn.
In California, the average PPP loan amount to dental organizations was $ 37,370, according to a study published in Dental Economics last November. That figure is well below the proposed $ 150,000 cap, which should suggest that the vast majority of employers of dentists who have received PPP loans for first or second draws will benefit from the state tax break.
CDA has urged the Legislature and Newsom Administration to pass the measure since it was launched last week and before companies finalize their state tax returns. Other key 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 qualified people
The package also offers the following direct one-time payments:
- $ 600 for households receiving the California EITC for 2020
- $ 600 to taxpayers with unique tax identification numbers who were unable to receive federal payments of $ 1,200 and $ 600
- $ 600 payments to households with ITINs and incomes less than $ 75,000
ITIN taxpayers who also qualify for the California EITC would therefore receive a total of $ 1,200 and could receive their payments soon after filing their 2020 tax returns, according to the governor’s press release. The press release provides details on the package’s additional relief for individuals, families, severely affected licensees, community college students, critical childcare and farm workers.
Please visit the CDA newsroom and social media for information on the reopening of the California Relief Grant program and the passing of the state tax break.