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CALIFORNIA HISPANIC CHAMBER OF COMMERCE COMMENDS GOVERNOR NEWSOM’S FOCUS ON SMALL BUSINESSES 

 

Governor proposes using $1.5 billion in federal aid to give to small business owners hurt by the pandemic

 May 19, 2021 – SACRAMENTO, CA – The California Hispanic Chambers of Commerce commends Governor Newsom for his focus on small business as part of his recovery and revitalization plan tied to his $267.8 billion revised budget.  He has proposed adding $1.5 billion to a program providing grants of up to $25,000 to small businesses harmed by the COVID-19 pandemic in California, allowing thousands more to get financial help. The announcement comes on the heels of a $76 billion surplus in the state budget plus $27 billion in federal aid.

 “We are pleased that Governor Newsom has recognized the importance of small businesses and the role they play in bolstering the state’s economy in his May revise budget proposal,” said Julian Canete, President & CEO, California Hispanic Chambers of Commerce. “The pandemic has taken a toll on California’s business community with many businesses shuttering or downsizing to stay viable during this difficult time. Any assistance offered by the Governor to help the business community recover, restart and thrive will pay huge dividends to the state’s economy by creating a robust business climate, putting people back to work, and increasing revenue for state and local government coffers.”   

 Given the critical role of small business in California’s economy, Governor Newsom proposed using the $1.5 billion in federal aid to give to small business owners hurt by the pandemic and promised new funding for other business assistance programs. If approved by the Legislature, the aide will provide grants to an estimated 150,000 small businesses.

 He has also proposed an augmentation of $50 million for a total increase of $100 million to the small business loan guarantee program to fill gaps in available federal assistance. Additionally, to support innovation and the creation of new businesses, the Governor’s proposal also includes earlier proposals to support new business creation by exempting first-year businesses from the $800 minimum franchise tax.

 Some of the highlights in Governor Newsom’s proposal addressing the business community include:

 

$1.5 billion additional dollars for the California Small Business COVID-19 Relief Grant Program, bringing the total investment to $4 billion.

 

$6.2 billion tax cut recently passed by the Legislature and signed by the Governor, which provides partial federal tax conformity on the treatment of Paycheck Protection Program (PPP) loans and Emergency Impact Disaster Loans.

 

$895 million from the State Small Business Credit Initiative, a federal program recapitalized in the American Rescue Plan, which will strengthen some state programs that support financing of small businesses.

$360 million in additional California Competes Tax Credit authority, including the establishment of a $250 million grant program, to incentivize businesses to relocate to California.

 

$250 million to address revenue impacts on ports to drive economic activity, goods movement, and regional employment.

 

$200 million to expand sales tax exclusions through the California Alternative Energy and Advanced Transportation Financing Authority to promote, grow and incentivize green manufacturing in CA.

 

$147 million for the Main Street Small Business Tax Credit to assist small businesses that have hired and retained workers since the second quarter of 2020.

 

$95 million to allow California’s tourism industry, one of the largest economic drivers in the state, to come roaring back from the pandemic.  (more information below)

 

A yet-to-be announced tax proposal to help small businesses recoup some of their tax benefits lost from the 2017 the State and Local Tax (SALT) deduction.

 

The Stanford Latino Entrepreneurship Initiative reported last year that 86% of Latino business owners felt the immediate impact from the pandemic, a rate higher than other ethnic groups. Additionally, Latino business owners found assistance was also harder to come by because they had less cash on hand when requesting Covid assistance in the form of PPP loans and were only half as likely as their White counterparts to receive the federal loans. As a group, Latinos are expected to comprise almost 30% of the nation’s population by 2050, compared to 18% today. Latino-owned businesses are a growing sector of the economy and contribute significantly to its overall strength. If they continue to struggle, it will surely have a negative impact on the overall U.S. economy.

 

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