Update: N.Y. Expands Eligibility for $800M Grant Program to Help Small Businesses Recover from the COVID-19 Pandemic

As part of its state budget, New York allotted one billion dollars in financial relief for small businesses, including $800 million for its Pandemic Small Business Recovery Grant Program. This program mirrors the Paycheck Protection Program (PPP) in its efforts to provide relief for businesses financially impacted by the pandemic between March 1, 2020 and April 1, 2021.

The application portal opened June 10, 2021. Gov. Kathy Hochul announced an expansion to eligibility beginning Aug. 25 that allows more businesses experiencing financial hardship to apply. Any newly eligible business as of Aug. 25 will have its application processed beginning Sept. 8.

Grants range from $5,000 to $50,000 and, unlike some relief programs during the pandemic, are based on annual gross receipts and not employee count. Newly expanded eligibility requirements include increases on the revenue a business had in 2019 and the amount a recipient of a Paycheck Protection Program loan received.

Priority is being given to minority- and women-owned businesses as well as veteran-owned businesses that are socially and economically disadvantaged.

How Does a Business Qualify for a Small Business Recovery Grant?

These grants are for small and micro-businesses, as well as for-profit arts and cultural organizations that have been impacted by the COVID-19 pandemic. Applicants must be in operation when they apply and have started on or before March 1, 2020. Businesses currently closed due to COVID-19 restrictions are eligible to apply.

Eligible businesses must demonstrate a loss of annual gross receipts of at least 25 percent (by Dec. 31, 2020 in comparison to 2019) or any other economic challenge that resulted from the COVID-19 pandemic. This could include hardships resulting from compliance with protocols (health and safety) that created a need to for the business to close, interrupt operations or modify itself.

Applicants must also have annual gross receipts from 2019 between $25,000 and $2.5 million — an increase from the original $500,000 — and must also not have owed any federal, state or local taxes prior to July 15, 2020. Additional qualifications must be met and potential applicants should familiarize themselves with the complete list of eligibility requirements before applying. There also are certain business and entities that are ineligible, including non-profits, churches and businesses that conduct political or lobbying activities.

Businesses that received federal assistance during the pandemic such as PPP loans of $250,000 or less (originally $100,000 until Hochul's announcement) and Shuttered Venue Operator Grants of $150,000 or less are eligible. However, any business that received a Restaurant Revitalization Fund award is ineligible for a New York state recovery grant.

What Funding is Available from the Small Business Grant Program?

New York state small business grant awards are based on the 2019 annual gross receipts of an eligible business. There are three grant levels in the program.

• $5,000 per business for annual gross receipts between $25,000 and $49,999
• $10,000 per business for annual gross receipts between $50,000 and $99,999
• 10% of annual gross receipts (with a maximum grant amount of $50,000) for businesses with annual gross receipts between $100,000 and $500,000

What Can NY State Small Business Recovery Grants Be Used For?

Similar to PPP loans, New York state recovery grants must be used to cover COVID-19-related expenses and/or losses such as the following:

• Payroll
• Rent or mortgage on New York-based property
• Utilities
• Personal protective equipment (PPE) to help ensure safety and health of workers and customers
• Insurance
• Property and school taxes associated with the location of business
• Cost of materials used to comply with health and safety protocols related to COVID-19

These costs must have been incurred by a business between March 1, 2020 an April 1, 2021.

What Are the Requirements of a Small Business Grant?

Businesses must provide proof of gross receipts loss from their 2019 and 2020 business income tax returns, which includes various IRS forms or schedules based on the type of business (LLC, sole proprietor, etc.).

Additionally, documents that provide proof of the location of the business such as a lease or utility bill, as well as Individual Tax identification Numbers (ITIN) and other pertinent information (names, addresses, for example) for any owners with more than 20% ownership.

A full list of the required documents is available on the state’s website.

Paychex Can Help

Even as the COVID-19 pandemic slows, businesses face regulatory and guidance challenges during reopening including finding funding to cover incurred losses. Paychex continues to monitor legislation and offer support and resources on our COVID-19 Help Center.

This article was published originally on June 1, 2021.

Additional Resources

• New York created a website on funding information