Small Business COVID-19 Relief Grant

In late November 2020, Governor Newsom reached out the California Legislative leaders to discuss the possibility of a state grant program for small businesses and nonprofits.  While the state had activated its Small Business Disaster Loan Guarantee Program in the spring and authorized the development of a new blended loan program, which became the California Rebuilding Fund, it was clear that for the state’s smallest businesses grants would be needed.  Appendix F (page 47) of the background report includes the memorandum the Chair of the Assembly Jobs Committee sent to the Administration expressing key priority and programmatic considerations.

After consultation with Assembly and Senate leadership, as well as policy and fiscal chairs, the Governor announced the new $500 million Small Business COVID-19 Relief Program on December 4, 2020.  Within weeks a competitively bid contract was awarded to Lendistry to administer the program on behalf of the Office of the Small Business Advocate and GO-Biz.

Technical assistance webinars describing the program and how to apply were held daily, sometime more often, between December 23 and January 4, 2021.  The core of the webinars were hosted by the California Small Business Development Network.  Webinars were offered in a range of languages, which included, in addition to English, webinars in Arabic, Armenian, English, Farsi, Korean, Mandarin, Spanish, Tagalog, Vietnamese.

Outreach was also subcontracted to many nonprofits technical assistance and advocacy organizations, including, but not limited to, statewide organizations like the American Indian Chamber of Commerce, Black Small Business Association of California, CalAsian Chamber California Association for Microenterprise Opportunity (CAMEO), California Association of Nonprofits, California Hispanic Chambers of Commerce, California Manufacturing Technology Consulting, California Small Business Development Center, and CA Women's Business Center Network.  The outreach network also included local and regional partners, such as the Fresno Area Hispanic Foundation, Los Angeles County Economic Development Corporation, and the Southern California Black Chamber of Commerce.

The Lendistry online platform, https://careliefgrant.com/ offers applicants an opportunity to apply through a nonprofit partner which indicated that it specifically served people in their county or through a nonprofit partner that offers assistance in a selected language other than English.

Grant award amounts are based on the annual revenues of eligible businesses and nonprofits:

• Businesses and nonprofits with revenues between $1,000 to $100,000 may receive a $5,000 grant.
• Businesses and nonprofits with revenues greater than $100,000 up to $1,000,000 may receive a $15,000 grant.
• Businesses and nonprofits with revenues greater than $1,000,000 up to $2,500,000 may receive $25,000 grant.

The initial $500 million was distributed in two rounds of $237.5 million each:

• Round 1 applications opened on December 30, 2020, and closed January 13, 2021, following an extension to allow businesses and nonprofits who may not have heard amount the grant during the holiday season to apply.  Notifications began going out on a rolling basis beginning on January 15, 2021. 
• Applicants who submitted applications, including all documentation, in the first round did not need to reapply.  All qualified applications were automatically rolled over into the second funding round for consideration.
• Round 2 applications opened on February 2, 2021, and closed February 8, 2021.  Notifications began going out to applicants on February 11 and were intended to be completed on February 18, 2021.

Return to the main hearing webpage

High Level of Interest in Round One

According to data provided by the California Office of the Small Business Advocate, over 334,000 applications requesting nearly $4.4 billion in grants were successfully completed in the first round. The most recent data shows that just over 21,000 applicants were selected for award, or just over 6% of the total first round requests.

Chart 1 includes information on Round 1 awards to underserves businesses and Chart 8 provides Round 1 awards for highly impacted industries.  Appendix G of the report includes data by county.  Please note these are early release charts.

Moving Forward

The Governor’s proposed budget for 2021-22 proposed an additional $575 million for the grant program.  Given the high level of interest, the Legislation and the Governor negotiated for $2.1 billion and the codification of the program.  SB 87 is scheduled to be voted on February 22, 2021. 

The new bill would not only authorize new funding rounds, but it also the California Office of the Small Business Advocate to hold a third funding round for eligible applicants in Round 2, which were not ultimately funded.  In preparation for the Legislature’s consideration of SB 87, additional data, but aggregate data was provided on funding Round 1 and 2.

SB 87 also addresses a number of issues raised by Members, which were based on comments from constituents and questions which arose from a review of the data.  Besides technology challenges during Round 1, which are reported to have been adequately addressed in the second round, two additional issues were outreach and accountability that priority underserved small business owners were, in fact, having an opportunity to receive grant funds.  Outreach and accountability were addressed in SB 87, in the following ways:

• Codification:  The grant program is being codified through enactment of SB 87, which means that related fiscal and policy committees can hold the program accountable.  Knowing this will incentivize GO-Biz and the fiscal agent to fully embrace the statutorily mandated outreach.
• General Mandated Engagement:  The bill requires that the implementation of the program include consultations with local, regional, state, and federal public and private entities.
• Specific Outreach Activities:  SB 87 requires the Office of the Small Business Advocate to conduct marketing and outreach to ensure equitable awareness and the distribution of grants.  In meeting this requirement, the Office of the Small Business Advocate is required to:
  • Engage multiple partners, including, but not limited to, business and nonprofit associations, chambers of commerce, economic development corporations, and other nonprofit mission-based organizations, and organizations with nonprofit expertise.
  • Provide access to technical assistance services covering all counties in the state and in multiple languages to reach non-English-speaking individuals in all counties in the state.
  • Build awareness throughout the state, including in underserved and underbanked communities, by collaborating with multiple community groups to distribute program information, applicant access through multiple branded partner portals, and advertising and social media outreach through owned, paid, and earned media channels.
• Time Specific Outreach:  Each new funding round is required to be preceded by at least three weeks of outreach activities to small businesses and nonprofits.
• Using Data to Improve Outreach:  Following each new funding round, the fiscal agent is required to assess service gaps and address outreach deficiencies as necessary to improve program equity.
• Transparency and Accountability:  The bill requires specific reporting and timelines on awards, including a report to the Legislature.

Return to the main hearing webpage