New Federal Relief Program Offers Plenty of New Financial Options for North Bay Businesses Affected by New Closures
Like a creative and belated Christmas stocking, the $ 900 billion federal relief program offers North Bay a little bit of everything – from $ 284 billion in loans to $ 110 billion in tax benefits.
“In Congress, they call this Christmas tree legislation,” said David Colgren, spokesperson for CalCPA, a 45,000-member accountants association with 14 chapters across California.
The long-awaited stimulus – signed on Sunday – includes another round of paycheck protection program business loans and excise tax credit extensions that benefit producers of wine, beer and distilled spirits.
It also includes $ 15 billion in arts and entertainment funding to help devastated concert halls and cultural institutions. Sonoma County Museum Executive Director Jeff Nathanson has pledged to look into this. The museum has been closed since March.
“We hope that we will benefit from the new relief plan,” he said. “We are delighted that this type of support has been approved because this cultural sector has long been ignored. I am sure we will be eligible for this grant.
The $ 2.3 trillion federal spending program that also avoids a shutdown and funds the federal government to the tune of $ 1.4 trillion may not be the final answer to the suffering of COVID-19, but it is is a good start for the wine country, according to representative Mike Thompson, D-St. Helen.
“I see this as a bridge to get to where we want to be,” Thompson told the Business Journal. “When you legislate, you never let the perfect be the enemy of the good. We had to act. It’s just sad it took so long.
The Fifth District congressman noted “a great disappointment” that disaster relief did not make this latest relief bill, especially since tax breaks for corporate meal expenses called “three martini lunch” did it.
“That was never the answer. These restaurants are closed, ”he said.
Tax money is pouring in
Thompson pushed for and approved an extension of excise tax credits that benefits wineries and breweries, which Russian River Brewery president Natalie Cilurzo said was “super excited.”
Tax breaks that were passed three years ago and made permanent now provide a tax credit of $ 1 and 90 cents for every gallon produced up to 30,000 and 100,000, respectively. Small brewers can keep the $ 3.50 per barrel tax rate on their first 60,000 barrels. The previous rate was double that amount, which represents “a saving of 50%” for Cilurzo.
Russian River Brewery produced nearly 40,000 barrels this year, Cilurzo said.
“We’re closed and just rolling with the punches. In the city center, we only do take out and we have put 42 people on leave, ”she said.
However, this time Cilurzo passes on the PPP financing.
“We got $ 2 million in the first round. I have no doubts that this money should go to small businesses, ”she said, further considering her business to be a midsize business. “I hope (others) will take my example.”
On the other hand, Judd Wallenbrock, CEO of C. Mondavi & Family, who runs Charles Krug Winery in Napa Valley, is considering applying for another PPP loan.
The winery received $ 1.9 million in the first round of the $ 660 billion program, one of more than 4,100 low-interest loans supported by the federal government. About $ 1.4 billion was processed over six months ago in Napa, Sonoma, Marin, Mendocino and Solano counties.
“We are absolutely going to drop it. It was a good thing we did in the first round. We’re not making a profit and that has kept people employed, ”Wallenbrock said.
The economic blow of C. Mondavi & Family could be twofold with the pandemic and the forest fires.
“We are quite uncertain of the impact of the fires,” he said.
Whites and lighter reds are okay, but the verdict has always fallen on the rugged, iconic reds from the Napa Valley winery.
Filing a forgiveness request on the first PPP loan is also questionable, Wallenbrock added.
If this were the case, C. Mondavi & Family would not be the only one to decline. Some companies that have received PPP loans through the US Small Business Administration have applied for a remission. Many said the forms and process were confusing, and the Internal Revenue Service had put a damper on tax benefits.
Ultimately, the SBA improved the forms to simplify the process.
And the IRS – which has warned businesses to refrain from asking for a pardon and setting aside expenses as a “double deduction” – has been overruled by the new rules for that back-up plan. This time, the bill proposes a tax deduction on expenses associated with canceled PPP loans.
Another important step in the program is that loan recipients with fewer than 300 employees can apply for P3 funding a second time. But the company will have to show that it experienced a 25% drop in revenue in any quarter of 2020 compared to 2019.