The governor has signed into law two more pieces of legislation that will provide additional COVID-19 relief for our state’s small businesses.

Tax Exemption of Qualified Grants (House Bill 1095)

House Bill 1095 protects businesses from paying taxes on qualified grants such as Paycheck Protection Program loans, EIDL advances, Working Washington Small Business Grants, and any other assistance grants issued by government entities during the Coronavirus public health emergency. As defined in the bill, a “qualifying grant” refers to an amount received, or relief from debt or other legal obligation received, under a government-funded program to address the impacts of COVID-19 that gave rise to the state of emergency. The grant may be from a government entity, through a non-government third party authorized by the government to distribute funds, or from a private entity that receives some form of financial benefit from the government for providing relief. The bill exempts these funds from business & occupation tax, public utility tax, and retail sales tax.

Additional Funding for Small Business Assistance Grants (House Bill 1368)

House Bill 1368 allocates an additional $2.2 billion to Coronavirus-related relief measures. The funding comes from the federal government and will be used for several purposes, including business assistance grants, K-12 public schools, public health programs, and housing and rental assistance programs. Of the $2.2 billion, $240 million was allocated for additional grants for small businesses that have been adversely impacted by COVID-19.

Specifically, $150 million of the funds will go towards providing support with business operations.

To be eligible to receive assistance, the business must:

• Apply for the grant (applications not yet available);
• Have reported annual revenue of $5 million or less for calendar year 2019;
• Have expenses that are necessary to continue business operations, which do not include federal, state, or local tax, fee, license or other government tax;
• Attest that those business expenses are not funded by any other government or private entity;
• Have experienced a reduction in business income directly or indirectly as a result of COVID-19; and
• Agree to abide by federal, state, and local public health guidance and directives regarding COVID-19 within their business operations.

The remaining $90 million is reserved for assisting with reopening costs for businesses that temporarily completely closed operations. It is important to note that reopening costs include but are not limited to upgrading physical workplaces to adhere to new safety or sanitation standards; procuring required personal protective equipment for employees and patrons; updating business plans; employee costs such as payroll, training, and onboarding; rent, lease, mortgage, insurance, and utility payments; and securing inventory, supplies, and services for overall business operations.

To be eligible for a grant under the reopening section, the business must:

• Apply for the grant (applications not yet available);
• Have reported annual revenue of $5 million or less for calendar year 2019;
• Demonstrate that the business was previously actively engaged in business, and, as a result of the governor’s “Stay Safe Stay Healthy” order, temporarily closed down all operations (demonstration of active engagement in business can be shown through taxable activity reported to the Department of Revenue);
• Have expenses that are necessary to reopen operations, which do not include a federal, state, or local tax, fee, license, or other government tax;
• Attest that those business expenses are not funded by any other government or private entity; and
• Agree to operate in accordance with federal, state, and local public health guidance and directives relating to COVID-19.

Funding for both small business grant options will be made available under the Working Washington grant program and administered through the Washington State Department of Commerce. Qualified businesses may receive up to $75,000 in grant money. However, if an employer has already received a Working Washington small business grant, the grant awarded under this bill may be reduced.

How and When Can I Apply?

The Washington State Department of Commerce expects the application portal to open by mid-March. More information is available on their COVID-19 Small Business Resources web page. WSDA will update members once the application portal becomes available.

WSDA will continue to advocate for COVID-19 relief throughout the 2021 legislative session and keep members apprised of any developments.