Information for Businesses
October 13, 2020 Update
In response to the COVID-19 pandemic, both the Federal and State government’s have issued disaster declarations paving the way for Federal and State assistance.
The City of Morgan Hill and the Economic Development Team are deeply grateful for your efforts during these unprecedented times. We know how much this is affecting you and we recognize that the damage to some businesses is irreparable.
Business Reopening Protocols and Information
The City of Morgan Hill has put together reopening best practice guidelines for the following industries: office work spaces, restaurants, logistics/warehousing, manufacturing, retail and outdoor gardens. You can find the checklists Here.
Business Resiliency Roundtables
Recognizing that we are in this together and that more than ever we need each other, we are going to convene virtual Business Resiliency Roundtables. These meetings will be organized by industry and will feature a guest speaker that can offer insight on industry resources. You will also be able to also hear from your peers and share what you are doing to thrive in this new world. Finally, if you want to help, we have identified some ways that you can get involved, either by donating your time and expertise or by donating money to organizations that are working to keep small businesses afloat.
- Financial Resources Round Table (April 10): Video (link)| Slides (pdf)
- Tourism Round Table (April 17): Video (link) | Slides (pdf)
- Communications Resources Round Table (April 22): Video (link) | Slides (pdf)
- Manufacturing Round Table (April 24) Video (link) | Slides (pdf)
- Retail Round Table (May 1) Video (link)
- Restaurant Roundtable (May 19) Video (link) | Slides (pdf)
The Small Business Development Centers have published materials on small business resiliency including guides and templates. These are excellent resources to review as business models continue to evolve. Learn how to make your business plan more resilient to natural hazards and business shocks.
Loan Programs and Resources
Note that this situation remains fluid and information about programs is still evolving. These are the known resources available to businesses currently. The information will start with the different loan programs that are available to Morgan Hill businesses along with SBA funding that has recently become available due to Federal and State disaster declarations.
The State of California Treasurer’s Office Small Business Resources Page has a great deal of information available for businesses including grants and other programs by County and City.
In addition to their Grant Program, Facebook is offering several other resources.
EBay Up & Running Program. Offers a free basic online storefront for three months to impacted businesses that do not currently sell online.
IRS Deferrals and Credits
If your business does not qualify for Paycheck Protection Program or the Economic Injury loan from SBA or you did not receive funding under those programs you can take advantage of Employee Retention Credit (“ERC”) from the Internal Revenue Service. The ERC provides a refundable payroll tax credit for 50% of the wages paid by employers during the COVID-19 pandemic up to $5,000 per employee per quarter. This credit is applied to the employer’s quarterly tax liability reported on Form 941.
In addition, Employers and self-employed individuals can defer payment of the employer share of Social Security taxes incurred to December 31, 2020. More guidance from the IRS and Payroll Tax deferral can be found by visiting the IRS website.
Any business that claimed a loss in tax year 2018, 2019, or 2020, may be able to carry that loss back five years. More guidance from the IRS and Payroll Tax deferral can be found by visiting the IRS website.
- Verizon-LISC Small Business Recovery Grant Application: 2nd Application round closed Please sign up to be alerted for next round.: LISC will use the Verizon funding to provide grants of up to $10,000 to businesses facing immediate financial pressure because of COVID-19—especially entrepreneurs of color, women-owned businesses and other enterprises in historically under-served communities who don’t have access to flexible, affordable capital.
- The GoFundMe.org Small Business Relief Fund will provide micro-grants to qualifying small businesses negatively impacted by the COVID-19 pandemic.
- Hello Alice - Business for All Grant Program | $10,000 grants for small businesses
- Grow Morgan Hill Fund: A small business loan program specific to business located in Morgan Hill.
- California IBank: Program provides loan guarantees in support of small businesses. Small Business Finance Center
- Jump start loan program: Small business loans over 5 years from $500 to $10,000
- Opportunity Fund: Micro loans starting at $2,500 up to $250,000.
- California Treasurers Office: The California Capital Access Program (CalCAP) is a loan loss reserve program supporting small business lending.
- Federal Reserve Main Street Lending Program: Businesses with up to 15,000 employees or up to $5 billion in annual revenue are now eligible, Loan size for two of the options starts at $500,000. For details please visit the Federal Reserve website. These loans will be issued through your lender.
- Federal Disaster Loans for Businesses, Private Nonprofits, Homeowners, and Renters (Federal Declaration)-Economic Injury SBA Loan (see below)
Information on SBA Economic Injury Loans
What is an SBA-approved Economic Injury Disaster Loan?
If your business or not-for-profit has suffered substantial economic injury in a declared disaster area, you may be eligible to apply for an SBA Economic Injury Disaster Loan. These loans generally offer up to $2 million in assistance to businesses experiencing temporary loss of revenue. The key terms of these loans are:
- A 3.75% interest rate for small businesses without credit available elsewhere. (Businesses able to get credit elsewhere are not eligible.)
- A 2.75% interest rate for nonprofits.
- A maximum 30-year term, determined on a case-by-case basis, based upon each borrower’s ability to repay.
How does a business apply for an Economic Injury Disaster Loan?
A business should be able to apply to the SBA either online or by mail. The applicant must provide substantial financial detail to analyze the applicant’s creditworthiness. You can use the services of a CPA or a technical expert, but the SBA will not pay for these services.
Free advice can be sourced from local Technical Assistance providers.
Partners available to help prepare loan paperwork include:
- Small Business Development Center SBDC. Morgan Hill’s SBDC rep is Senior Business Advisor Allie Lopez- firstname.lastname@example.org or 408.579.9943
- Service Corp of Retired Executives SCORE
- Minority Business Development Agency MBDA
What is the maximum loan amount limit?
Disaster loans generally max out at $2 million, but if a business is a major source of employment the SBA has the authority to waive that limit.
What can the loan be used for?
These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The loans are not approved to refinance the long-term debts of a business.
What credit requirements does the SBA use to determine the application?
The SBA typically use the following criteria when considering an application:
- An acceptable credit history
- An ability to repay
- Collateral is required for all loans over $25,000
Does the SBA take into account any insurance policy that may be applicable?
Yes. If a business has business interruption insurance, or other relevant claims, then the SBA may reduce the amount of the loan.
What evidence demonstrates economic injury?
Examples can include:
- Financial statements from the bank and cash flow statements demonstrating the impact on the business prior to and since the onset of the disaster.
- Written evidence of cancelled orders that have a material impact on the cash flow or profitability of the business since the onset of the disaster.
- Proof of layoffs or reduced hours for staff as a consequence of a decline in income or cancelled orders.
IRS Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic (Federal Government)
The Secretary of the Treasury has been instructed “to provide relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency". Please read the grant of relief offered to all taxpayers.
Notice 2020-17 (PDF), Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic.
The Governor of California issued an executive order that outlines other programs to assist businesses and employees.
Families First Coronavirus Response Act (FFCRA)
Emergency Paid Leave and Expanded Family and Medical Leave: the U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor announced that private small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act. Employers are encouraged to visit the U.S. Department of Labor website and IRS website for additional information on purpose, qualification, and frequently asked questions. (Currently not applicable to State and local governmental units).
2019 California tax returns (State of California)
This relief includes moving the various tax filing and payment deadlines that occur on March 15, 2020, through June 15, 2020, to July 15, 2020. This includes:
- Partnerships and LLCs who are taxed as partnerships whose tax returns are due on March 15 now have a 120-day extension to file and pay by July 15.
- Individual filers whose tax returns are due on April 15 now have a 90-day extension to file and pay by July 15.
- Quarterly estimated tax payments due on April 15 now have a 90-day extension to pay by July 15.
The FTB’s July 15 extended due date may be pushed back even further if the Internal Revenue Service grants a longer relief period. For more information visit: https://www.ftb.ca.gov/about-ftb/newsroom/covid-19/extensions-to-file-pay.html
Sales Tax (State of California)
California Department of Tax and Fee Administration (CDTFA) has the authority to assist individuals and businesses impacted by complying with a state or local public health official’s imposition or recommendation of social distancing measures related to COVID-19. This assistance includes granting extensions for filing returns and making payments, relief from interest and penalties, and filing a claim for refund.
For more information please contact CDTFA: https://www.cdtfa.ca.gov/services/covid19.htm
Small Business Relief Payment Plans (CDTFA)
Effective April 2, 2020, small business taxpayers, those with less than $5 million in taxable annual sales, can take advantage of a 12-month, interest-free, payment plan for up to $50,000 of sales and use tax liability.
Santa Clara County Property Tax
County Department of Tax and Collections understands and shares the public’s anxiety and concern about the impacts of the COVID-19 pandemic. While we cannot change the April 10 deadline for the Second Installment of Property Taxes because critical county services, schools, and local financial obligations are dependent on those scheduled revenues, we can waive penalties, costs, or other charges resulting from tax delinquency due to reasonable cause and circumstances related to this crisis.
Property owners can take advantage of the partial payment program and make multiple partial payments on the installment due. https://www.sccgov.org/sites/dtac/tax/Pages/property-taxes-due-april-10.aspx
While the property tax deadline has now passed and was not extended, Department of Tax and Collections did offer an option for partial payments and once paid in full the application for waiver of any penalties due to Covid-19 related hardship.
How it works: Once you have your bill, towards the bottom right-hand side of the screen, locate the link pictured and click on it. Regarding the cancellation of penalty, they will be requiring supporting documentation to prove the hardship and that can all be provided via their secure online portal. You do not need to go into the county offices to do any of this, the links here will provide the roadmap. The County will work with taxpayers who seek cancellation of penalties for delinquent taxes, consistent with Revenue and Taxation Code Section 4985.2. Taxpayers can Request a Cancellation of Penalty online or by mail after April 10, based on each taxpayer’s situation as a result of the shelter in place order. Penalties and costs may be waived upon the full payment of the base tax.
Payroll (State of California)
Employers experiencing a hardship as a result of COVID-19 may request up to a 60-day extension of time from the EDD to file their state payroll reports and/or deposit state payroll taxes without penalty or interest. A written request for extension must be received within 60 days from the original delinquent date of the payment or return. For questions, employers may call the EDD Taxpayer Assistance Center toll-free from the U.S. or Canada: 1-888-745-3886.
Workshare Program (State of California)
Employers can apply for the Unemployment Insurance (UI) Work Sharing Program if reduced production, services, or other conditions cause them to seek an alternative to layoffs.
The Work Sharing Program helps employees whose hours and wages have been reduced:
- Receive UI benefits.
- Keep their current job.
- Avoid financial hardships
More details and forms are available at: https://www.edd.ca.gov/Unemployment/Work_Sharing_Program.htm
The California Department of Insurance has put together an FAQ on business insurance recognizing that COVID-19 is affecting many businesses throughout the state. The Department iissued guidance for businesses regarding insurance coverage and particularly about Business Interruption Insurance coverage.
City of Morgan Hill water and wastewater services
To assist our residents and businesses during these uncertain times, Morgan Hill will not assess late penalties nor terminate services due to delinquency through June. We ask customers to reach out to Utility Billing for more information or request a payment arrangement.
Transient Occupancy Tax (Hotels Only)
To assist our Hoteliers, Morgan Hill will waive the penalties on late TOT payments for up to 30 days after the Shelter-In-Place Order is lifted. Please note that interest on late payments still apply.
Pacific Gas & Electric
PG&E has made service modifications for Impacted Customers.
- Suspended service disconnections for non-payment and waive new service deposit requirements for residential and small business;
- Implemented flexible payment plan options; and
- Provided additional support for low-income and medical baseline customers.
If a customer is experiencing financial hardships and has trouble paying their bill due to the economic impact of COVID-19, they can help. Please call PG&E at 1-800-743-5000.
RELATED TO EMPLOYEES (FOR EMPLOYERS)
Employers can receive payroll tax relief for providing employees with up to 80 hours for paid sick leave for those unable to come to work due to COVID-19 illness. Employers are compensated through reduced payroll tax payments. In addition, compensation is available to allow employees to take care of a family member or their child due to school closure. Additional information about the caps on compensation amounts, the duration of additional leave, and potential for small business exemptions is available through the Department of Labor www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave.
Many providers of telework applications including local companies Cisco and Zoom are offering free or discounted access to their products which can be accessed through Open For Business. The State human resources website and Federal human resources website may provide good insights into the benefits and limitations of allowing employees to keep productive if they are unable to go to the job site.
County of Santa Clara Eviction Moratorium Includes Small Businesses:
The County of Santa Clara adopted a moratorium on residential and commercial evictions related to COVID 19. If the eviction is due to financial inability to pay rent or medical issues resulting from the coronavirus, commercial and residential tenants are safe from eviction through August 31 unless extended.
Santa Clara County has issued an Ordinance covering March 24 through to August 31, unless otherwise extended, ordering that small businesses located in the County renting or leasing real property for commercial, business, income-producing, or otherwise non-residential use, cannot be evicted for nonpayment of rent if such business suffered substantial loss of income due to COVID-19. Refer to County Ordinance NS-9.289 for further details. The County’s ordinance relies on U.S. Small Business Administration (SBA) definitions of small businesses based on industry. Find detailed information and an FAQ on the Santa Clara County moratorium page.
On August 31, 2020, the State of California legislature enacted Assembly Bill No. 3088, effective immediately, that provides state-wide eviction and foreclosure protections for many tenants and property owners suffering from economic hardship due to COVID-19.
For small business tenants who qualify for protection under the County’s ordinance, the County's eviction moratorium has been extended through November 30, 2020. Protected small business tenants have up to 6 months after the moratorium expires or terminates to repay at least 50% of the past-due rent, and up to 12 months after the moratorium expires or terminates to repay in full the past-due rent.
The residential tenant protections of the County’s eviction moratorium are deemed to have expired on August 31, 2020 and replaced by state law protections.