$50 Million in Funding Available for = Small=20 Businesses in Tennessee
DOWNLOAD PDF =- DeHart,= =20 Kevin W. Levy,= Jr.,=20 Ralph =20 =20
-
Industry Alerts =
=20
$50 MILLION IN FUNDING AVAILABLE FOR SMALL BUSINESSES IN =
TENNESSEE=20
THROUGH SUPPLEMENTAL EMPLOYER RECOVERY GRANT =
PROGRAM
Tennessee=20
Governor Bill Lee recently announced that the Supplemental Employer =
Recovery=20
Grant ("SERG") program will distribute $50 million in federal =
Coronavirus Relief=20
Funds through the Tennessee Department of Revenue ("TDOR") to help =
Tennessee=20
small businesses cover eligible direct expenses or costs incurred as a =
result of=20
business interruptions due to the COVID-19 pandemic. The SERG program =
will=20
distribute funds directly to small businesses that qualify based on a=20
first-come, first-served basis. =20
Eligibility
For a business to be =
eligible under=20
the SERG program, the business must:
=E2=80=A2 as of August 31, =
2020, be a=20
Domestic Business in the State of Tennessee or a business formed in =
another=20
state that primarily operates in Tennessee with at least one physical =
location=20
in Tennessee;
=E2=80=A2 not be a subsidiary of a business with =
consolidated annual=20
revenues (receipts) in excess of $10 million;
=E2=80=A2 as of August =
31, 2020, were=20
registered with the Tennessee Secretary of State, were registered with =
the TDOR=20
or, for an unincorporated business such as a sole proprietorship or a=20
disregarded entity for federal tax purposes, have filed a federal =
Schedule C for=20
that business with the individual owner's IRS Form 1040;
=E2=80=A2 =
have been=20
operational since April 1, 2020, with the exception of temporary =
closures due to=20
COVID-19 and be able to provide documentation that shows the business =
has been=20
in operation for that time period;
=E2=80=A2 provide proof of =
economic hardship due=20
to COVID-19 related interruption of business ("Business Interruption =
Costs") or=20
have incurred eligible direct business expenses related to COVID-19=20
("COVID-Related Expenses");
=E2=80=A2 have not engaged in any =
illegal activity in=20
violation of local, state, or federal laws or regulations, with federal=20
compliance taking precedence over local or state =
compliance;
=E2=80=A2 not exist for=20
the purpose of advancing partisan or other political activities, such as =
direct=20
lobbying of federal or state officials;
=E2=80=A2 be a for-profit =
entity or a=20
not-for-profit entity that operates under either Internal Revenue Code =
Section=20
501(c)(3) or 501(c)(19) (Note: for purposes of the SERG program, =
not-for-profit=20
entities formed under Internal Revenue Code Section 501(c)(3) or =
501(c)(19) must=20
calculate annual revenues in accordance with the instructions for IRS =
Form 990=20
line 12); and
=E2=80=A2 have not already received an award under =
the SERG=20
Program.
The following businesses are not eligible to request or =
receive=20
business relief assistance:
=E2=80=A2 Lending and investment =
institutions;
=E2=80=A2=20
Insurance companies;
=E2=80=A2 Racetracks or gambling facilities; =
=E2=80=A2=20
Businesses owned by State of Tennessee employees or their family =
members living=20
within the household;
=E2=80=A2 Businesses engaged in any illegal =
activity per=20
local, state, or federal regulations, with federal regulations taking =
precedence=20
over local or state regulations;
=E2=80=A2 Businesses that did have =
continuous=20
operations during the last six (6) months;
=E2=80=A2 As of August =
31, 2020,=20
businesses that were not registered with the Tennessee Secretary of =
State or the=20
TDOR or as to which if unincorporated, their owners did not file a =
federal=20
Schedule C with their IRS Form 1040; and
=E2=80=A2 Businesses with =
no activity in=20
the state of Tennessee.
Losses and Expenses That Are =
Covered by=20
SERG
Although businesses cannot receive funds for both =
Business=20
Interruption Costs and COVID-Related Expenses, they can claim the =
greater of=20
either item up to the maximum allowable amount of $30,000. =
COVID-Related=20
Expenses include costs incurred by a business to meet public health =
requirements=20
or recommendations enacted, adopted, required, or issued by the =
Tennessee=20
Department of Health, the Centers for Disease Control, state or federal=20
regulatory authorities, and/or local, state or federal executive =
authorities due=20
to COVID-19, including any costs incurred:
=E2=80=A2 to create =
social=20
distancing measures;
=E2=80=A2 to clean or disinfect areas due to =
COVID-19;
=E2=80=A2=20
for personal protective equipment for employees or customers; =
=E2=80=A2 for=20
contactless equipment ;
=E2=80=A2 for equipment, items, or other =
expenses to screen=20
employees or customers to ensure they are not positive for COVID-19; =
=E2=80=A2 for=20
equipment or items designed to track employees or customers who have =
tested=20
positive for COVID-19;
=E2=80=A2 necessary re-opening expenses; and =
=E2=80=A2 expenses=20
to facilitate teleworking.
In addition, a business may seek =
recovery of=20
Business Interruption Costs to reduce the financial impact that COVID-19 =
had on=20
its net income. To be eligible under this category, a business will need =
to show=20
that its net income for the four-month period of May 1, 2020 through =
August 31,=20
2020 was less than its net income for that same period in 2019. To =
calculate a=20
"loss" and qualifying "business interruption" under this program, the =
business=20
must establish that it incurred a loss in net income during that period =
from=20
2019 to 2020.
Expenses that can be taken into account in determining Business = Interruption=20 Costs incurred by a business during the eligible four-month period may=20 include:
=E2=80=A2 mortgage interest;
=E2=80=A2 payroll expenses; =
=E2=80=A2 rent or lease or payment=20
for real or personal property used for business purposes;
=E2=80=A2 =
utility=20
payments for business properties; and
=E2=80=A2 cost of critical =
business=20
operations.
Businesses that otherwise meet the SERG program =
criteria are=20
still eligible under this new program even if they already received a =
payment=20
from the Tennessee Small Business Relief Program so long as the same =
expenses=20
from May 1, 2020, through August 31, 2020 have not been reimbursed to =
the=20
business under any other federal program.
Application=20
Process
Applications for participation in the SERG =
program=20
opened on October 7, 2020 and are available through an online application portal that will remain open =
until=20
December 29, 2020, or until the program's funds are exhausted. Once =
started,=20
applications cannot be saved and businesses should have the following =
documents=20
available to complete the application:
=E2=80=A2 Copy of most =
recently filed=20
IRS Tax Return (1040 with Sch C, 1120, 1120S, 1065, 990);
=E2=80=A2 =
Completed IRS=20
Form W-9 providing identifying information required for payment; =
=E2=80=A2 Bank=20
Statements for the period May 1 to August 31, 2019, and May 1 to August =
31, 2020=20
("Expense Period");
=E2=80=A2 Current and prior year Balance Sheet =
and Income=20
Statement for the Expense Period;
=E2=80=A2 Supporting =
documentation for eligible=20
direct expenses and other business interruption expenses as requested =
(invoices,=20
canceled checks, proof of receipt, etc.);
=E2=80=A2 Ownership =
documents (Charter,=20
Articles of Organization, Operating Agreements, Partnership Agreements, =
etc.);=20
and
=E2=80=A2 Proof of diversity business enterprise eligibility =
(disability=20
documentation, long-form birth certificate, etc.) if applicable to the =
business.=20
While no documentation is required to apply for the SERG =
program, once=20
an application has been accepted and the applicant is given access to =
the online=20
TN CAMS, the applicant will be required to submit all of the documents =
listed=20
above to support the application as part of the reimbursement process =
before=20
payment can be processed. According to SERG guidelines, businesses =
will have=20
from the earlier of ten (10) business days from receipt of notification =
that=20
access to the TN CAMS system has been granted or until 5 PM CST on =
December 29,=20
2020, to submit a Request For Funding ("RFF") with required supporting=20
documentation in order to receive payment. While not explicitly stated, =
it is=20
presumed that failure to provide the required documentation in the =
applicable=20
timeframe would necessitate an applicant restarting the application =
process. =20
Payments
As stated above, SERG awards =
are based=20
on Business Interruption Costs or COVID-Related Expenses, whichever are =
greater,=20
and applicants will be required to submit supporting documentation for =
costs=20
associated with responses to the COVID-19 emergency or supporting =
documentation=20
to prove business disruption. While there is $50 million in available =
funds,=20
individual awards are capped at $30,000 and a business can determine the =
amount=20
to which it is entitled through the online portal provided by the State of Tennessee. =
A single=20
exception to the per business payment cap is that businesses located in =
low to=20
moderate-income census tracts, opportunity zones, or promise zones =
(which are=20
all more fully defined in the SERG guidelines) will receive an =
additional $500=20
over and above the maximum allowable expenses.
Of the $50 million =
in=20
available funds, 10% of the total has been specifically reserved for =
grants to=20
eligible diversity business enterprises classified as a Minority =
Business=20
Enterprise, Women Business Enterprise or Service =E2=80=93 Disabled =
Veteran Business=20
Enterprises and Enterprise owned by Disabled Persons (all of which are =
more=20
fully defined in the SERG guidelines). Both the 90% of the SERG program =
funds=20
that are available to non-diversity businesses and the remaining 10% of =
the=20
funds that are specifically reserved for eligible diversity business are =
available on a first-come, first-served basis until all funds are =
depleted. =20
Payments under the SERG program will be made on a reimbursement =
basis.=20
Once applicants are notified that funds have been allocated, they will =
receive=20
access to the Tennessee Cares Act Management System ("CAMS") to submit =
an RFF=20
for the estimated benefit calculated on the application and associated=20
documentation. Upon review and approval of each RFF, checks will be =
mailed to=20
the recipient's address as submitted on the application.
There =
are some=20
restrictions on how a recipient business can use the funds received from =
the=20
SERG program. Any funds received from the SERG Program should be used =
to=20
respond to the financial disruption resulting from COVID-19 and its =
effects on=20
the individual business. Funds must not be used for payment of tax =
liabilities=20
to a government agency and for at least five years, businesses must also =
keep=20
records regarding how the funds are spent. By accepting funds, =
businesses=20
acknowledge and agree that they are subject to potential audit or other=20
verification by the State of Tennessee concerning their qualification =
for and=20
use of these funds. Funds are subject to recapture by the State of =
Tennessee if=20
the above requirements are not met.
If your business has been =
negatively=20
impacted by the COVID-19 pandemic and you have questions about the SERG =
program,=20
Dickinson Wright attorneys are here to help.
For more =
information, call=20
Ralph Z. Levy Jr., Esq., at 615-620-173, or Kevin W. DeHart, Esq., at=20
615-780-1115, both of whom practice in the Firm's Nashville, TN office.=20
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