Governor’s Recovery Plan to Add $575 Million to Small Business Grant Program

Yesterday, Governor Gavin Newsom released a preview of his budget plan to help California businesses recover from the COVID-19 pandemic.

The Governor’s Equitable Recovery for California Businesses and Jobs plan contains business and workforce recovery elements, including adding $575 million to the $500 million previously allocated for the California Small Business COVID-19 Relief Grant.

CalChamber President and CEO Allan Zaremberg welcomed the Governor’s announcement on help for small businesses. “CalChamber looks forward to working with the Governor, the administration and the legislature to get much-needed relief to California’s beleaguered small businesses, as soon as possible,” he said.

Legislative leaders were responsive as well. In a joint statement, Senate President Pro Tem Toni Atkins (D-San Diego) and Assembly Speaker Anthony Rendon (D-Lakewood) said: “Californians are hurting and need immediate assistance to weather the current crisis. A unified effort is critical to success and we look forward to working with the Governor on the specifics of his, and legislative, proposals to take early action in providing meaningful additional relief. As we work toward passing a final budget in June, we must continue on the responsible path of ensuring our actions strengthen California and our communities, and not add to the economic challenges we are facing.”

Small Business Grants

The small business COVID-19 program offers grants of $5,000–$25,000, depending on the annual revenue of the small business, to help micro and small businesses adapt operations for the coronavirus. The grants will be distributed statewide, with priority given to regions and industries affected by the pandemic, disadvantaged communities and underserved small business groups. Nonprofits are eligible for these grants.

Owners of multiple businesses, franchises, locations, etc. will be considered for only one grant and are required to apply for the business with the highest revenue.

The first round of applications for the grant program began on December 30, 2020 and closes January 13 (an extension from the original closing date).

Approval notifications for the first round of applications will start on January 15, according to the website. Applicants who submitted their application and submitted all documentation in the first round do not need to reapply; qualified applications will be rolled over automatically into the next funding round for consideration.

Deadlines for the second round of applications had not been determined as this article was being written.

More information about eligibility requirements and the grant process are available at

Jobs Initiative

The $777.5 million California Jobs Initiative proposal aims to preserve California competitiveness. Programs targeted for added funding focus on job creation and retention, regional development, small businesses and climate innovation.

  • California Competes Tax Credit (CalCompetes). The new CalCompetes grant program incentivizes businesses to locate in California to stay, grow and create quality full-time jobs in the state. The program will support job creation and infrastructure investments ($430 million).
  • Extended Main Street Small Business Tax Credit to encourage hiring new employees and rehiring former employees ($100 million). As of January 4, nearly 9,000 taxpayers had reserved more than $54 million of the existing credit, according to the Governor’s office.
  • Mitigating the state and local tax (SALT) deduction limitation for S-corporation shareholders.
  • The California Dream Fund to seed entrepreneurship and small business creation in underserved communities ($35 million).
  • Additional funds for the Small Business Finance Center of the California Infrastructure and Economic Development Bank (IBank) to provide small business and disaster loan guarantees ($50 million to be leveraged to provide $250 million in loans) and for the California Rebuilding Fund ($50 million).
  • Expanded sales tax exclusions through the Treasurer’s Office to reduce the cost of manufacturing equipment in order to promote innovation and meet the state’s climate goals ($100 million).

The funding also includes $12.5 million allocated in late 2020, in partnership with the Legislature, to fully capitalize the California Rebuilding Fund to support $125 million low-interest loans to underserved businesses.

Workforce Development

The budget will propose $353 million in one-time and ongoing investments to help California workers adapt to changes in the economy due to COVID-19. Funds will go to apprenticeship and High Road Training Partnerships and toward encouraging greater collaboration and coordination among the state’s institutions of higher learning and local workforce partners.

Fee Waivers

The budget will propose $70.6 million for fee waivers to individuals and businesses most affected by the pandemic, including barbers, cosmetologists, manicurists, bars and restaurants. The waivers aim to help those who have been unable to operate or are operating at reduced capacity during the pandemic.