Assistance Programs For Small Businesses in California - What’s Available?

No matter the size of your business, the costs of operating it can feel overwhelming during these challenging times. This is why the state of California has created a number of programs to support small businesses as they recover from the COVID-19 pandemic.

From loans to grants and administrative assistance programs, California offers financial aid in an effort to promote economic growth within the state. If you run your own small business and feel you could benefit from these programs, this article will guide you through what there is and how to access it.

Disaster Loan Relief Guarantees

If your business endured losses due to the COVID-19 pandemic or another type of emergency, the Disaster Loan Relief Guarantees may be able to help. Designed to provide access to banking systems, this program is a viable option for small businesses to secure loans.

What is it?

Through the Disaster Loan Relief Guarantees program, state governments function as a guarantor for financial institutions that lend money to small businesses. When a bank offers small businesses loans that cover losses related to COVID-19, the state guarantees 95% of all loans up to $1 million. By guaranteeing these loans, the state of California minimizes risk for financial institutions and creates opportunities for small businesses to gain access to capital.

If you receive one of these guaranteed loans, you can use the funds to continue your business or manage losses caused by the pandemic.

Who is eligible?

If you own a company with less than 750 employees in the state of California, this program could help you overcome emergency situations.

According to the Office of the Controller’s website, the Disaster Loan Relief Guarantees are available to businesses located in low-income areas, non-profit organizations, and immigrant communities.

How do you apply?

The first step to receiving this benefit is to request a loan with one of the participating organizations. This list includes all certified lenders up to the date of publication. If your lender is not on this list, they can register to become part of the program.

It’s important to point out that the state of California doesn’t decide the terms of the loan. The requirements to apply, interest rate and other details of the loan are up to the lender.

If you need help with your application, you can reach out to a Small Business Development Center near you.

California Rebuilding Fund

Financed by non-profit organizations, community leaders, and the state government, the California Rebuilding Fund is a program that provides support to small businesses affected by COVID-19.  This initiative focuses mainly on low-income areas and companies with little access to capital.

What is it?

The California Rebuilding Fund consists of flexible loans of up to $100,000 or 100% of your average monthly income prior to the COVID-19 pandemic. It also offers advisory services to help business owners get back on their feet after the pandemic.

Unlike other assistance programs, this fund doesn’t offer any type of debt forgiveness. The loans provided by this program must be paid back within 5 years, at a fixed interest rate of 4.25%.

Who is eligible?

Companies that are eligible must have less than 50 employees and a gross income that was under $5 million in 2019. They must also provide proof that their business suffered economic and operational losses directly related to the pandemic.

How do you apply?

Using your business profile information, this program connects you with a Community Development Financial Institution. They’ll help you fill out your application and review your request. If your loan is approved, you’ll make payments directly to the financial institution that let you borrow the funds.

Small business license fee exemptions

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If your business requires a license to operate in the state of California, this temporary waiver can help you keep your permit even if you cannot afford to pay the annual license fee.

What is it?

Due to the COVID-19 pandemic, California made certain businesses exempt from paying up to two years of the state license fees due between March 1, 2021 and February 28, 2028.

Who is eligible?

To qualify for this program, the state requires that you paid for your license renewal through December 31, 2020. This waiver is only available to those businesses that were forced to close their location and stop operations due to health restrictions that were put in place to avoid the spread of the virus.

Some types of eligible businesses include restaurants and businesses that serve alcoholic beverages, barber shops and cosmetologists. The state website California.gov provides a complete list of the types of businesses that qualify for this federal aid.

If you need specific information for barber shops and cosmetologists, the Fee Relief Information page provides answers to some of the most frequently asked questions.

How do you apply?

To verify your eligibility, you can use the state’s official search engine. If your business has a past due balance, you can request the fee waiver on the same website.

Economic Injury Disaster Loan (EIDL)

The Economic Injury Disaster Loan (EIDL) stopped accepting new applications as of December 31, 2021. However, these help those who applied before this deadline. Business owners who only used part of their approved loan amounts can also request additional funds.

What is it?

EIDL loans use federal funds to offer financial assistance to small businesses and non-profit organizations. The main purpose of this money is for business owners to cover costs that they couldn’t afford due to the pandemic. The maximum EIDL loan amount is $500,000.

Who is eligible?

As previously mentioned, the EIDL program closed in 2021. To qualify, applicants had to have fewer than 500 employees, and be one of the following: non-profit organization, religious organization, sole proprietorship, or independent contractor. In addition they had to prove they’d suffered losses due to the pandemic and were based in the United States.

How to request more funds?

Although EIDL is now closed, the U.S. Small Business Administration states that they are still processing applications that were received before the deadline.

Applicants who only accepted a portion of the funds approved have up to two years to request the rest of the money, even if it’s after December 31, 2021.

SBA debt forgiveness

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In order to help small businesses hold onto their employees during COVID-19, the Small Business Administration (SBA) offered two rounds of loans through the Paycheck Protection Program (PPP). Now that this program has closed, business owners who received loans could be eligible for debt forgiveness.

What is it?

If you benefited from the Paycheck Protection Program, SBA debt forgiveness means that you may not have to pay your full PPP loan back. According to law AB80, forgiven loans are not subject to taxes and expenses paid with these funds are tax deductible.

Who is eligible?

To qualify for a PPP loan, business owners had to provide proof of losses greater than 25% during the first trimester of the pandemic.

To qualify for loan forgiveness, the SBA states that these companies must have maintained employment levels for a period of at least 8 to 24 weeks after receiving the loan. They also needed to spend the loan on salaries and eligible expenses, and use at least 60% of their profits to cover payroll costs.

How do you apply?

In order to request loan forgiveness you’ll have to start the process within 10 months of having completed your loan period. If you’re within this window, you can request a forgiveness form from your lender. Include the required payroll documentation and return the completed form to the lender. They will let you know if the SBA accepts your request and what percentage of the loan was condoned.

Fourth stimulus check

Although a large part of the population is still struggling financially, it doesn’t look like the U.S. government will approve a fourth stimulus check. To counter the effects of inflation and unemployment, some states have offered their residents additional assistance.

The state of California has provided two rounds of the Golden Gate Stimulus, as a way to help families and individuals. As for small businesses, California also offers support through loans, grants and tax credits.

If you are eligible for any of these state programs, remember that PODERcard  can help you manage your money. SABEResPODER is here to help you reach your financial goals!