SACRAMENTO (CBS SF) — Gov. Gavin Newsom on Thursday afternoon tried to offer some reassurance to small-business owners and workers employed by those businesses that the state would be providing financial support during the economic shutdown caused by the COVID-19 shelter-in-place order.
During his noontime address on California’s coronavirus response, he noted that applications for unemployment insurance benefits had skyrocketed in recent weeks, with 1.6 million Californians applying since March 12. A single-day record was set Monday, March 30, with more than 150,000 people filing for benefits.
COMPLETE COVERAGE: CORONAVIRUS PANDEMIC
“The economic consequences are profound,” Newsom said.
With 49 percent of employees in the private sector working for small businesses, the governor said the state would be focusing a great deal of attention of helping those businesses and offered some specifics.
“When we think about small businesses, it’s not someone with hundreds of employees. In many cases, it’s not someone with any employees: self-employed individuals, independent contractors, businesses that have one or two part-time employees,” Newsom said. “So often, we take them for granted, even in the best of times. Right now, they have been devastated.”
Newsom said he is proposing an interest and penalty free deferral of sales tax of up to $50,000 for all small businesses with less than $5 million in taxable sales.
“In essence, it is a bridge loan. The money that you have already collected, you will not have to pay back to the state for 12 months,” said Newsom. “No penalties, no interest. De facto a loan.”
He also announced a 90 day extension for all businesses filing a return for less than $1 million in taxes.
Newsom also outlined some of the assistance being provided by the federal government including the Economic Injury Disaster Loan Advance program, the Paycheck Protection Program that will provide loans to businesses to help keep workers employed during the crisis, and the Small Business Debt Relief program.
Newsom additionally said the California Small Business Loan Guarantee Program via IBank would provide $50 million in state funding, providing potential capital for individuals who do not qualify for federal funds.
The assistance being offered to small businesses was also outlined on state’s business and employers COVID-19 crisis webpage.
Newsom also announced the launch of the new OnwardCA.org website, which will match open jobs to laid-off workers based on their specific skills through a questionnaire. The site already listed 70,000 open jobs as of Thursday, according to the governor.
The site was created by the Fresno-based company Bitwise in collaboration tate, Mastercard, the University of California, California State University, California Community Colleges and more than 100 technology companies, including LinkedIn and Salesforce.
Openings on the site were focused on four industries actively hiring during the crisis: health care, agriculture, logistics (specifically transportation and warehousing) and grocers.
The site also provides information and assistance on obtaining essential life services like food and shelter as well as retraining opportunities.
Newsom also praised the state’s Employment Development Department for coping with the recent surge in applications. He also reminded applicants that many would be eligible for an additional $600 per week due to the recently passed federal stimulus bill.
In the South Bay, some local business owners reacted to the news.
Montserrat Ayala closed her small San Jose business, Vitamina Juices and Blends, three weeks ago and layoff her five employees.
But she still comes in to tidy up and is hoping the business can bounce back.
“In Mexico there is a saying: ‘Hope is the last thing to die,'” said Ayala. “So I want to continue in that mindset and we’ll see.”
On Thursday, her hopes were raised by Newsom’s announcement.
While Montserrat said she worries about getting too much in debt, a neighboring business said the deferred sales tax could provide a long-term lifeline.
John Pratt, the owner of JP Impressions Photography, said the governor’s plan wouldn’t immediately help businesses like his that are currently closed since they are not generating sales. But over a year’s time, it could help him recover and rehire the six workers he had to lay off.
“It would be helpful, because right now, businesses are just struggling,” said Pratt. “My taxable sales could be $300,000 in the course of a year, so that could be $30,000. That could pay my bills, keep my employees and keep things going.”