Tax Alert: Ohio Small Business Relief Grant and Other Covid-19 Funding Opportunities

On Monday, the Ohio State Controlling Board approved a package of more than $419.5 million in CARES Act funding to help Ohioans impacted financially by the pandemic.

The package includes:

• $125 million for small businesses (25 or fewer employees)
• $100 million for higher education
• $62 million for rural and critical access hospitals
• $50 million for 47 community action agencies
• $37.5 million for the Bar and Restaurant Assistance Fund
• $25 million for nonprofits
• $20 million for arts organizations

Ohio Small Business Relief Grant

Governor Mike DeWine has designated up to $125 million of funding received by the State of Ohio from the federal CARES Act to provide $10,000 grants to small businesses to help them through the current crisis. The program, which will begin accepting applications November 2, 2020, will be administered by the Ohio Development Services Agency.

The Small Business Relief Grant (SBRG) is designed to provide necessary relief to Ohio businesses that have been negatively impacted by the effects of Covid-19. Governor DeWine has determined that these grants are necessary to respond to the public health emergency. The SBRG will be administered by the Ohio Development Services Agency (“Development”).

ELIGIBILITY REQUIREMENTS

Part 1: Eligible Businesses

A business as defined in these Terms and Conditions that meets all of the following criteria may receive funding from the SBRG:

• The applicant business is a for-profit entity (corporation, LLC, partnership, joint venture, sole proprietor)
• The applicant business is an employer firm with at least one and no more than 25 Ohio employees paid via W2 wages as of January 1, 2020, determined either by a headcount or full-time equivalent employee calculation. (Note: A headcount calculation should include both part-time and full-time employees. A full-time equivalent calculation equals the total hours compensated for all W2 employees in calendar year 2019 divided by 2,080.)
• The applicant business has a physical location in Ohio and earns at least 90% of annual revenue based on activities performed in and taxable to Ohio
• The applicant business has been in continuous operation since January 1, 2020, except for interruptions required by Covid-19 public health orders, and has the ability to continue operations as a going concern, taking into account a potential program grant
• The applicant business has experienced revenue loss or incurred unplanned costs substantially caused by Covid-19 and a grant is necessary to help it recover from the impact of Covid-19
• The applicant business is in good standing with the Ohio Secretary of State, the Ohio Department of Taxation and any other governmental entity charged with regulating the business
• If applicable, the applicant business has fully utilized any other government support received (including grants and loans) for business expenses incurred due to Covid-19, or that can be utilized for business expenses incurred due to Covid-19

Part 2: Ineligible Businesses

A business as defined in these Terms and Conditions that falls within one or more of the following categories is ineligible to receive funding from the SBRG:

• The applicant business is a non-profit entity
• The applicant business is publicly traded
• The applicant business is operated by a governmental agency or entity
• The applicant business is a club, as defined in section 4301.01 of the Revised Code
• The applicant business is primarily engaged in political or lobbying activities or political issue advocacy
• The applicant business operates as a sexually oriented business as that term is defined in Section 2907.40 of the Ohio Revised Code
• The applicant business engages in conduct regulated by the state casino control commission or operates Video Lottery Terminals as that term is defined in Section 3770.21 of the Revised Code
• A majority legal interest in the applicant business is owned by individuals who are under the age of eighteen
• The applicant business is a hospital, ambulatory surgical center, private school or long-term care center
• The applicant business is primarily engaged in the sale, cultivation or distribution of cannabis products
• The applicant business is primarily engaged in the sale or distribution of liquor, not including restaurants or bars
• The applicant business primarily sells tobacco products, cigarettes, electronic smoking devices or vapor products as those terms are defined in Section 2927.02 of the Revised Code
• The applicant business is a utility provider
• The applicant business is a financial institution that makes loans or issues credit to the public, including, but not limited to, banks, credit unions, payday lenders or any other similar business
• The applicant business has not and will not, during the period beginning October 26, 2020 and ending on December 31, 2020, receive another grant under the SBRG

USES OF FUNDS

Part 1: Eligible Costs

SBRG funds can be used to reimburse eligible businesses for the following Covid-19-related expenses incurred between March 22, 2020, and the date the application was submitted relating to their Ohio business location(s) as long as the costs do not violate state or federal law and are not otherwise specified as “ineligible costs”:

• Personal protective equipment to protect employees, customers or clients from Covid-19
• Measures taken to protect employees, customers or clients from Covid-19
• Mortgage or rent payments for business premises (personal residences explicitly excluded)
• Utility payments (excludes utilities for personal residences and cellular phones not used primarily for business purposes)
• Salaries, wages or compensation paid to contractors or employees, including an employer’s share of health insurance costs
• Business supplies or equipment

Part 2: Ineligible Costs

SBRG funds may not be used for the following expenses:

• Costs for non-Covid-19-related expenses
• Costs incurred for federal, state or local tax obligations
• Costs incurred for non-business purposes
• Costs incurred for political purposes
• Costs incurred for which the business has or will receive reimbursement from another source, including any other government loan or grant program and insurance proceeds (i.e., PPP loan, Employee Retention Tax Credit, EIDL loans)

SBRG APPLICATION PROCESS

Beginning on November 2 at 10:00 am, businesses can submit an application for the SBRG at businesshelp.ohio.gov. Individuals will be required to log in or create a new OH|ID, which provides users with secure access to Ohio services and programs.

A business is only eligible to receive one grant under this program, and entities with the same FEIN will be considered one business for purposes of determining eligibility for the program. Businesses will be required to provide the following information to submit an application:

• Applicant Business Name
• Applicant Business Address (must be an Ohio location and not a personal residence)
• Applicant Business County
• Applicant Business Federal Employment Identification Number (FEIN)
• Applicant Business Industry Type
• Applicant Business Ownership Demographic Information
• Applicant Business Type (corporation, LLC, partnership, joint venture, sole proprietor)
• Number of years the applicant business has been in operation
• Amount of funding received by the applicant business from other federal, state or local pandemic-related financial relief programs
• Applicant Business Representative Name
• Applicant Business Representative Phone
• Applicant Business Representative Email (will be used for all communication with the applicant)
• Number of W2 Employees of the applicant business as of 1/1/2020
  • Applicants will be required to attach documentation verifying that the applicant business had at least one and no more than 25 Ohio employees paid via W2 wages as of January 1, 2020, determined either by a headcount or full-time equivalent employee calculation. The attachment must clearly identify the applicant business name and must match the name submitted in the application. No more than one document can be attached, and ONLY the following documentation will be accepted to prove the number of Ohio W2 employees:
    • If using headcount:
      • Payroll records from the period that included January 1, 2020, verifying that the applicant business had at least one and no more than 25 Ohio employees paid via W2 wages as of January 1, 2020;
      • A copy of year-end documentation (calendar year 2019) filed with the Ohio Department of Taxation verifying that the applicant business had at least one and no more than 25 Ohio employees paid via W2 wages;
      • Ohio Department of Jobs and Family Services unemployment tax quarterly report for year-end (calendar year 2019) verifying that the applicant business had at least one and no more than 25 Ohio employees paid via W2 wages;
      • Ohio Bureau of Workers Compensation application, true-up, or business policy for 2019 verifying that the applicant business had at least one and no more than 25 Ohio employees paid via W2 wages.
    • If using a full-time-equivalent calculation:
      • Payroll records for calendar year 2019, along with a calculation verifying that the applicant business had at least one and no more than 25 Ohio full-time equivalent employees paid via W2 wages during calendar year 2019. Full-time equivalents are calculated by dividing the total number of W2 wage hours compensated by the applicant business in calendar year 2019 by 2,080.
• Verification that the applicant business has incurred business costs during the 60-day period prior to the application being filed
  • Applicants will be required to attach documentation verifying that business costs were incurred by the applicant business during the 60-day period prior to the application being filed. The attachment must clearly identify the applicant business name and must match the name submitted in the application. No more than one document can be attached, and ONLY the following documentation will be accepted to prove business costs incurred:
    • Payroll records for any period in the last 60 days prior to the application;
    • Utility bills charged to the business named in the application for any period in the last 60 days prior to the application;
    • Rent or mortgage payments for business premises (only payments for non-residential properties will be accepted) charged to the business named in the application for any period in the last 60 days prior to the application;
    • Supplies or equipment purchased by, leased, financed or charged to the business named in the application in the last 60 days prior to the application;
• A copy of the applicant business’ most recently filed federal or State of Ohio income tax return. The return must clearly identify the business name and must match the name submitted in the application. The applicant business may upload only the first page of the tax return if the entire document cannot be uploaded.
• Certification that the applicant agrees to be subject to these Term and Conditions of the SBRG.

Upon submission of a complete application, the applicant will receive an email from Development confirming that the application has been received. Submission of a complete application does not ensure applicant will be awarded a SBRG. If funding remains available at the time the application is filed, Development staff will review the application to determine eligibility for a SBRG.

If Development determines that an application is ineligible, the documentation attached does not meet the requirements outlined in these Terms and Conditions, or SBRG funding is no longer available, the business will be notified via email that the application has been rejected. Applicants will not be given the opportunity to cure defects in a submitted application. Businesses will be allowed to reapply if their application is determined to be incomplete or is rejected, unless the application is rejected due to SBRG funding being exhausted.

If Development determines that an application is eligible for an SBRG award, the applicant business will be notified via email. Within seven days of being notified of award eligibility, the applicant business must log back in to the application at businesshelp.ohio.gov to complete an Acknowledgement of Eligibility and Acceptance of Funds. Additionally, the applicant business will be required to verify information provided in the application to ensure timely issuance of funds. Upon completion of these steps and resubmission of the application, Development will finalize processing of the award and the applicant will receive a grant in the amount of $10,000 via check sent to the address identified in the application.

AWARD PROCESS

Part 1: Amount of Award

Each business that meets the criteria as defined in these Terms and Conditions and submits a complete application will be eligible for a $10,000 grant. A business is only eligible to receive one SBRG – entities with the same FEIN will be considered one business for purposes of the program. If an applicant does not submit a complete application, including all attachments required to verify eligibility, the application will be rejected. Applicants will not be given the opportunity to cure defects in a submitted application. Businesses will be allowed to reapply if their application is determined to be incomplete or is rejected.

Part 2: Distribution of Award Funds

Grants shall be awarded on a first come, first served basis in accordance with the following guidelines:

• $500,000 will be allocated to eligible businesses in each of Ohio’s 88 counties on a first come, first served basis. The remainder of funding available ($81 million) will be awarded on a first come, first served basis regardless of the business’ location in Ohio.
• If Development does not receive eligible applications sufficient to award the full $500,000 to businesses in each County by November 23, 2020, the remaining funds allocated to that County will be awarded on a first come, first served basis regardless of the business’ location in Ohio.

CERTIFICATIONS AND PUBLIC RECORD

Part 1: Certifications of Applicant

By providing the signature of a duly authorized representative on an application, an applicant is certifying to Development and the State of Ohio that each of the certifications on Page 3 of the application is true as of the date of signature and that each of the documents submitted is a real and true copy of records of the applicant business. By providing a signature on an application, the applicant also acknowledges that any person who knowingly makes a false statement to obtain an award of financial assistance may be required under Section 9.66(C) of the Revised Code to repay such financial assistance and shall be ineligible for any future economic development assistance from the State of Ohio, any state agency, or political subdivisions. Also, any person who provides a false statement to secure economic development assistance may be guilty of falsification, a misdemeanor of the first degree, pursuant to Section 2921.13(F)(1) of the Revised Code.

Part 2: Public Records

Information, documents or other materials submitted to Development as part of an application are public records unless a statutory exception exists under Section 149.43 of the Revised Code or other relevant law that exempts the information, document or other material from public release.

BAR AND RESTAURANT ASSISTANCE FUND

The Bar and Restaurant Assistance Fund is designed to assist Ohio’s on-premise liquor permit holders. Governor Mike DeWine has designated $38.7 million of funding received by the State of Ohio from the federal CARES Act to provide $2,500 assistance payments to on-premise liquor permit holders to help them through the financial difficulties experienced during the Covid-19 pandemic. The program, which will begin accepting applications November 2, 2020, will be administered by the Ohio Development Services Agency.

Links and more information on assistance programs can be found at https://businesshelp.ohio.gov.

If you have any questions related to the Ohio SBRG or other Covid-19-related funding, contact your Clark Schaefer Hackett representative or contact one of our Government Funding Advisors by clicking here.