Information for Businesses

January 25, 2021 Update

California has moved Santa Clara County back to the Purple Image showing abstract people standing 6 feet apartTier in the “Blueprint for a Safer Economy.” 

Below is a summary of changes effective January 25, 2021. 

  • Outdoor dining may resume, subject to the Mandatory Directive for Dining. Indoor dining remains prohibited. Bars, breweries, distilleries, and pubs may serve alcohol only outdoors and only in the same transaction as a meal.
  • Personal care services may resume indoors and outdoors, subject to the Mandatory Directive for Personal Care Services.
  • Professional and collegiate sports may resume, subject to the updated Mandatory Directive for Collegiate and Professional Sports.
  • Adult recreational sports activities may resume subject to the updated Mandatory Directive for Gatherings, including specific rules in Section 9 of that Directive.
  • Youth sports may resume subject to the State’s guidance applicable to those activities, as well as the County’s Mandatory Directive for Programs Serving Children and Youth.
  • Most businesses that are allowed to open indoor operations to the public must limit capacity of their publicly accessible space to 20%. The County’s Mandatory Directive on Capacity Limitations has been updated to reflect current openings and closings. 
  • Outdoor gatherings with up to three households are now allowed for any purpose. Larger outdoor gatherings with up to 200 people are allowed only for political, religious, or ceremonial purposes, or as otherwise specifically allowed by the State. Indoor gatherings of any kind remain prohibited. All allowed gatherings must comply with the County’s updated Mandatory Directive for Gatherings.
  • The County’s Mandatory Directive on Travel, which requires most people who travel into the county from more than 150 miles away to quarantine for 10 days upon their arrival, is still in effect.
  • The County’s Mandatory Directive for Lodging Facilities is still in effect. Lodging facilities may not provide lodging services for non-essential purposes, such as tourism, recreational, or leisure purposes. Non-essential travel should be avoided, especially in light of new variants of COVID-19 that are circulating globally and in the United States.

Key rules remain in effect and applicable to all businesses:

  • Telework: All businesses must continue to require workers to do their jobs from home whenever possible. Workers can go into work only to complete the job duties they can’t complete from home.
  • Social Distancing Protocol requirements: All businesses must complete and submit a Revised Social Distancing Protocol for each of their facilities on the County’s website at COVID19Prepared.org.Social Distancing Protocols submitted prior to October 11, 2020 are no longer valid. The Revised Social Distancing Protocols must be filled out using an updated template for the Social Distancing Protocol at COVID19Prepared.org.
  • Positive case reporting: All businesses (and governmental entities) are legally required to report to the Public Health Department within 4 hours if they learn that any of their workers are confirmed to be positive for COVID-19. They must also ensure workers alert them if they test positive.
  • Capacity Limitation and Metering: All businesses must comply with applicable capacity limitations. All businesses (except for acute care hospitals) with indoor facilities open to the public must establish a “metering system” to ensure that the applicable capacity limits are not exceeded by, for example, posting an employee at the facility entrance to track the number of people entering and exiting.

Indoor Breakroom Closure: All businesses (except acute care hospitals) must limit employees’ access to indoor workplace breakrooms as described in section 3 of the Mandatory Directive on Capacity Limitations.

The Order does not modify existing state guidance regarding K-12 schools.

The following sectors are allowed to remain open when a remote option is not possible with appropriate infectious disease preventative measures including 100 percent masking and physical distancing:

  • Critical Infrastructure
  • Non-urgent medical and dental care
  • Child care and pre-K

Please continue to wear a mask, limit your contact with others, keep your distance from anyone outside your household, and get tested.⁣  

In response to the COVID-19 pandemic, both the Federal and State government’s have issued disaster declarations paving the way for Federal and State assistance.

The City of Morgan Hill and the Economic Development Team are deeply grateful for your efforts during these unprecedented times. We know how much this is affecting you and we recognize that the damage to some businesses is irreparable.

Business Resiliency 

The Small Business Development Centers have published materials on small business resiliency including guides and templates. These are excellent resources to review as business models continue to evolve.  Learn how to make your business plan more resilient to natural hazards and business shocks. 

Small Business Resiliency tools and resources (LINK)  

Loan Programs and Resources

Below you will find information on loan programs and  tax assistance.

Note that this situation remains fluid and information about programs is still evolving.   These are the known resources available to businesses currently.  The information will start with the different loan programs that are available to Morgan Hill businesses along with SBA funding that has recently become available due to Federal and State disaster declarations.

The State of California Treasurer’s Office Small Business Resources Page has a great deal of information available for businesses including grants and other programs by County and City. 

Business Resources:

In addition to their Grant Program, Facebook is offering several other resources.

EBay Up & Running Program.  Offers a free basic online storefront for three months to impacted businesses that do not currently sell online. 

IRS Deferrals and Credits

If your business does not qualify for Paycheck Protection Program or the Economic Injury loan from SBA or you did not receive funding under those programs you can take advantage of Employee Retention Credit (“ERC”) from the Internal Revenue Service.   The ERC provides a refundable payroll tax credit for 50% of the wages paid by employers during the COVID-19 pandemic up to $5,000 per employee per quarter. This credit is applied to the employer’s quarterly tax liability reported on Form 941.

In addition, Employers and self-employed individuals can defer payment of the employer share of Social Security taxes incurred to December 31, 2020.  More guidance from the IRS and Payroll Tax deferral can be found by visiting the  IRS website.

Any business that claimed a loss in tax year 2018, 2019, or 2020, may be able to carry that loss back five years. More guidance from the IRS and Payroll Tax deferral can be found by visiting the  IRS website.

Business Grants:

  • Barstool Grant. The nonprofit 30 Day Fund was launched by Virginia technology entrepreneur Pete Snyder and his wife, Burson. Working with other business leaders throughout the nation, the Fund’s goal is to help save as many jobs as possible.  The funds disbursed do not need to be repaid, but if businesses who receive the Fund’s assistance do, at a later date, wish to “pay it forward,” they may do so by directing those dollars back to the Fund. The Barstool Fund

Business Loan Programs:

Information on SBA Economic Injury Loans   

What is an SBA-approved Economic Injury Disaster Loan?

If your business or not-for-profit has suffered substantial economic injury in a declared disaster area, you may be eligible to apply for an SBA Economic Injury Disaster Loan. These loans generally offer up to $2 million in assistance to businesses experiencing temporary loss of revenue. The key terms of these loans are:

  • A 3.75% interest rate for small businesses without credit available elsewhere. (Businesses able to get credit elsewhere are not eligible.)
  • A 2.75% interest rate for nonprofits.
  • A maximum 30-year term, determined on a case-by-case basis, based upon each borrower’s ability to repay.

How does a business apply for an Economic Injury Disaster Loan? 

A business should be able to apply to the SBA either online or by mail. The applicant must provide substantial financial detail to analyze the applicant’s creditworthiness. You can use the services of a CPA or a technical expert, but the SBA will not pay for these services.

Free advice can be sourced from local Technical Assistance providers.
Partners available to help prepare loan paperwork include:

  • Small Business Development Center SBDC.  Morgan Hill’s SBDC rep is Senior Business Advisor Allie Lopez- allie4svsbdc@gmail.com or 408.579.9943
  • Service Corp of Retired Executives SCORE
  • Minority Business Development Agency MBDA

What is the maximum loan amount limit? 

Disaster loans generally max out at $2 million, but if a business is a major source of employment the SBA has the authority to waive that limit.

What can the loan be used for? 

These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The loans are not approved to refinance the long-term debts of a business.

What credit requirements does the SBA use to determine the application? 

The SBA typically use the following criteria when considering an application:

  • An acceptable credit history
  • An ability to repay
  • Collateral is required for all loans over $25,000

Does the SBA take into account any insurance policy that may be applicable? 

Yes. If a business has business interruption insurance, or other relevant claims, then the SBA may reduce the amount of the loan.

What evidence demonstrates economic injury? 

Examples can include:

  • Financial statements from the bank and cash flow statements demonstrating the impact on the business prior to and since the onset of the disaster.
  • Written evidence of cancelled orders that have a material impact on the cash flow or profitability of the business since the onset of the disaster.
  • Proof of layoffs or reduced hours for staff as a consequence of a decline in income or cancelled orders.

TAX ASSISTANCE

IRS Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic (Federal Government)

The Secretary of the Treasury has been instructed “to provide relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency".  Please read the grant of relief offered to all taxpayers.

Notice 2020-17 (PDF), Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic.

The Governor of California issued an executive order that outlines other programs to assist businesses and employees.

Families First Coronavirus Response Act (FFCRA) 

Emergency Paid Leave and Expanded Family and Medical Leave: the U.S. Treasury Department, Internal Revenue Service (IRS), and the U.S. Department of Labor announced that private small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act. Employers are encouraged to visit the U.S. Department of Labor website and IRS website for additional information on purpose, qualification, and frequently asked questions. (Currently not applicable to State and local governmental units).

2019 California tax returns (State of California)

This relief includes moving the various tax filing and payment deadlines that occur on March 15, 2020, through June 15, 2020, to July 15, 2020.  The FTB’s July 15 extended due date may be pushed back even further if the Internal Revenue Service grants a longer relief period. For more information visit: https://www.ftb.ca.gov/about-ftb/newsroom/covid-19/extensions-to-file-pay.html 

Sales Tax (State of California)

California Department of Tax and Fee Administration (CDTFA) has the authority to assist individuals and businesses impacted by complying with a state or local public health official’s imposition or recommendation of social distancing measures related to COVID-19. This assistance includes granting extensions for filing returns and making payments, relief from interest and penalties, and filing a claim for refund.

For more information please contact CDTFA: https://www.cdtfa.ca.gov/services/covid19.htm

Small Business Relief Payment Plans (CDTFA)

Effective April 2, 2020, small business taxpayers, those with less than $5 million in taxable annual sales, can take advantage of a 12-month, interest-free, payment plan for up to $50,000 of sales and use tax liability.

Other Expenses

Payroll (State of California)

Employers experiencing a hardship as a result of COVID-19 may request up to a 60-day extension of time from the EDD to file their state payroll reports and/or deposit state payroll taxes without penalty or interest. A written request for extension must be received within 60 days from the original delinquent date of the payment or return. For questions, employers may call the EDD Taxpayer Assistance Center toll-free from the U.S. or Canada: 1-888-745-3886.

Workshare Program (State of California)

Employers can apply for the Unemployment Insurance (UI) Work Sharing Program if reduced production, services, or other conditions cause them to seek an alternative to layoffs.

The Work Sharing Program helps employees whose hours and wages have been reduced:

  • Receive UI benefits.
  • Keep their current job.
  • Avoid financial hardships

More details and forms are available at: https://www.edd.ca.gov/Unemployment/Work_Sharing_Program.htm 

Business Insurance

The California Department of Insurance  has put together an FAQ on business insurance recognizing that COVID-19 is affecting many businesses throughout the state. The Department issued guidance for businesses regarding insurance coverage and particularly about Business Interruption Insurance coverage.

City of Morgan Hill water and wastewater services

To assist our residents and businesses during these uncertain times, Morgan Hill will not assess late penalties nor terminate services due to delinquency through June. We ask customers to reach out to Utility Billing for more information or request a payment arrangement.

Transient Occupancy Tax (Hotels Only)

To assist our Hoteliers, Morgan Hill will waive the penalties on late TOT payments for up to 30 days after the Shelter-In-Place Order is lifted. Please note that interest on late payments still apply.  

Pacific Gas & Electric

PG&E has made service modifications for Impacted Customers.

  1. Suspended service disconnections for non-payment and waive new service deposit requirements for residential and small business;
  2. Implemented flexible payment plan options; and
  3. Provided additional support for low-income and medical baseline customers.

If a customer is experiencing financial hardships and has trouble paying their bill due to the economic impact of COVID-19, they can help. Please call PG&E at 1-800-743-5000.

RELATED TO EMPLOYEES (FOR EMPLOYERS)

Sick Leave

Employers can receive payroll tax relief for providing employees with up to 80 hours for paid sick leave for those unable to come to work due to COVID-19 illness. Employers are compensated through reduced payroll tax payments. In addition, compensation is available to allow employees to take care of a family member or their child due to school closure. Additional information about the caps on compensation amounts, the duration of additional leave, and potential for small business exemptions is available through the Department of Labor www.dol.gov/agencies/whd/pandemic/ffcra-employee-paid-leave.

Telework/ Telecommuting

The State human resources website and Federal human resources website may provide good insights into the benefits and limitations of allowing employees to keep productive if they are unable to go to the job site. 

Evictions

County of Santa Clara Eviction Moratorium Includes Small Businesses:
The County of Santa Clara adopted a moratorium on residential and commercial evictions related to COVID 19. If the eviction is due to financial inability to pay rent or medical issues resulting from the coronavirus, commercial and residential tenants are safe from eviction through August 31 unless extended.

Santa Clara County has issued an Ordinance covering March 24 through to August 31, unless otherwise extended, ordering that small businesses located in the County renting or leasing real property for commercial, business, income-producing, or otherwise non-residential use, cannot be evicted for nonpayment of rent if such business suffered substantial loss of income due to COVID-19. Refer to County Ordinance NS-9.289 for further details. The County’s ordinance relies on U.S. Small Business Administration (SBA) definitions of small businesses based on industry. Find detailed information and an FAQ on the Santa Clara County moratorium page.

On August 31, 2020, the State of California legislature enacted Assembly Bill No. 3088, effective immediately, that provides state-wide eviction and foreclosure protections for many tenants and property owners suffering from economic hardship due to COVID-19. For small business tenants who qualify for protection under the County’s ordinance, the County's eviction moratorium has been extended through April 30, 2021. Protected small business tenants have up to 6 months after the moratorium expires or terminates to repay at least 50% of the past-due rent, and up to 12 months after the moratorium expires or terminates to repay in full the past-due rent.

The residential tenant protections of the County’s eviction moratorium are deemed to have expired on August 31, 2020 and replaced by state law protections.