July 7, 2021

NYS COVID-19 Pandemic Small Business Recovery Program: Applications Officially Open

By Taylor Fay, Staff Accountant, Tax & Business Services

NYS COVID-19 Pandemic Small Business Recovery Program: Applications Officially Open Coronavirus Resource Center

With the world beginning to open up again after a nationwide pandemic, small businesses are looking to build themselves back up from the turmoil that COVID-19 may have caused. Looking to help resolve these financial dilemmas, New York State Governor Andrew Cuomo recently announced that applications are now open for the Small Business Recovery Program.

What does this mean for small businesses?

With funding of $800 million, the Small Business Recovery Program provides New York businesses with the opportunity to apply for grants of up to $50,000. This grant funding is expected to be used only for COVID-related expenses incurred during the height of the pandemic to help keep businesses afloat.

Who is eligible for the grant?

Small and micro-businesses, as well as small for-profit independent arts and cultural organizations, are eligible if the business was in operation as of March 1, 2019, and continues to be in operation as of the date of the application. According to governor.ny.gov, priority will be given to any socially or economically disadvantaged business owners. This includes minority-owned, women-owned, veteran-owned, or service-disabled veteran-owned businesses. This also includes businesses that are located in economically distressed communities.

How is a small business and micro-business defined?

As stated on nysmallbusinessrecovery.com, a small business is independently owned and operated, not dominant in its field, and employs 100 or fewer persons. A microbusiness is essentially the same, but employs 10 or fewer persons. The eligible business must reside in New York State, be incorporated in New York State, and be licensed or registered to do business in New York State.

Who is not eligible for the grant?

  • Non-profits, churches and other religious institutions.
  • Government-owned entities or offices of elected officials.
  • Businesses primarily engaged in political or lobbying activities.
  • Businesses that received funding from the SBA Restaurant Revitalization Fund Grant Program.
  • Landlords and passive real estate businesses.
  • Illegal businesses and enterprises.

What must eligible small businesses and micro-businesses demonstrate?

  1. 2019 or 2020 gross receipts between $25,000 and $500,000.
  2. Positive net profit on 2019 business tax return.
  3. At least 25% loss in annual gross receipts in a year-to-year comparison as of December 31, 2020, for the same period in 2019.
  4. Total business expenses on the 2020 business income tax return greater than the grant amount.
  5. Not have qualified for business grant assistance under the federal American Rescue Plan Act of 2021 or any other available federal COVID-19 economic recovery or business assistance grant programs, including loans forgiven under the federal Paycheck Protection Program, or are unable to obtain sufficient business assistance from such federal programs.

What qualifies as a COVID-related expense?

To qualify as a COVID-related expense for the grant money, the expense must have been incurred between March 1, 2020, and April 1, 2021. These expenses include payroll costs, commercial rent or mortgage payments for NYS-based property, payment of local property or school taxes, insurance costs, utility costs, costs of personal protection equipment (necessary to protect worker and consumer health and safety), heating ventilation and air conditioning costs, other machinery or equipment costs, and supplies or materials necessary for compliance with COVID-19 health and safety protocols.

How do you apply for the grant?

The grant application officially opened on June 10, 2021. Any small business can apply online at lendistry.com. The grant will be calculated using the business’ New York annual gross receipts from its 2019 tax return. Businesses have the potential of receiving a grant ranging from $5,000 to $50,000. The program will last until funding is exhausted.

What impact will a grant have on future tax returns?

Presently, legislation has been proposed to waive taxes on the grants from this program. New York has posted an FAQ on Small Business Recovery Program grants at nysmallbusinessrecovery.com/faq which will include updates on FAQ and the taxability of the grants.

For more information on the Covid-19 Pandemic Small Business Recovery program, please contact your Marcum tax advisor.