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Main Street Relief Fund

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CLIENT UPDATE: On June 5, 2020, details of the Main Street Relief Fund (“MSRF”) were released, providing clarity on eligibility requirements, grant submission requirements, and grant amount determinations.

The MSRF is a $400 million fund established to provide emergency grants to certain small businesses located in New Hampshire that have suffered economically due to the COVID-19 pandemic. The funds allocated for the MSRF derive from flexible funds distributed to New Hampshire through the federal CARES Act Coronavirus Relief Fund.  

The details released on Friday provide that, to be eligible for a MSRF grant, the small business must: (1) have submitted a timely Prequalification Application; (2) be a for-profit business; (3) have its principal place of business in New Hampshire; (4) have been in operation for at least one year prior to May 29, 2020; (5) anticipate a loss of revenue for 2020 due to COVID-19; (6) have total 2019 gross revenues of less than $20,000,000; (7) not currently be in bankruptcy; and (8) not have permanently ceased operations.

Additionally, the new guidance provides that the following types of businesses are ineligible for any grants under the MSRF: nonprofits; childcare providers; hospitals or other healthcare providers; higher education institutions; elementary and secondary schools; farmers, growers, or maple producers; franchises or national chains; and businesses where the only employees are owners of the business.

If a business meets the eligibility criteria for a MSRF grant, including the requirement that the business submitted a timely Prequalification Application, then the deadline to file a completed “Final Grant Submission” for a MSRF grant is 11:59 PM on June 12, 2020.

To complete the Final Grant Submission, the business will need to provide various information, including: (1) the Prequalification Application 8-digit case number; (2) Federal Taxpayer Identification Number and type (including for all affiliated businesses); (3) principal business office address; (4) NH Secretary of State Business ID; (5) 2019 gross receipts; (6) estimated 2020 gross receipts, in light of the impact of COVID-19; and (7) all COVID-19 relief funding (grants and/or loans) received, or expected to be received, since March 1, 2020.

The Final Grant Submission must be timely submitted by the deadline, or else the business will become ineligible for a grant. A link to the Final Grant Submission can be found here: https://www.goferr.nh.gov/covid-expenditures/main-street-relief-fund

Additionally, the new guidance released provides details on how to calculate the amount of the grant for which a business is eligible under the MSRF. This is a six-step formula, in which the business first calculates its anticipated gross loss by subtracting estimated 2020 gross receipts from actual 2019 gross receipts (“anticipated gross loss”). Second, the business subtracts 50% of the Paycheck Protection Program (PPP) amount received and 100% of all other federal funds (such as an Economic Injury Disaster Loan) from the anticipated gross loss (“qualified loss”). Third, sum the qualified losses of all businesses (“total qualified loss”). Fourth, divide the total fund balance of $400 million by the total qualified loss (“pro rata percentage”). Fifth, multiply the pro rata percentage by a business’s qualified loss to determine the grant amount. Sixth, if the result from step five is above $350,000, then the business will only receive $350,000, as the grant amount is capped at $350,000 per business; otherwise, the business should receive the amount determined in step five. 

Importantly, unlike proceeds from PPP loans, there are no restrictions on how a business can use the money received under the MSRF. In other words, these are “no strings attached” grants and can be spent as the business sees fit. However, it is expected that businesses will use the funds to assist in covering their operational costs and legal obligations.

Further, it is important to note that, if a business’s estimate of its 2020 gross receipts turns out to be incorrect and the actual business loss is not as much as was represented in the Final Grant Submission, the grant received may be subject to recoupment in whole or in part. Businesses receiving a MSRF grant will be required to report their actual tax year 2020 gross receipts to the New Hampshire Department of Revenue Administration at the conclusion of the year, and we expect additional guidance and instructions regarding the potential obligation to return excess funds to become available at that time. Thus, it will be vital to carefully estimate 2020 gross receipts when filling out the Final Grant Submission so as to avoid, or at least limit, a return of funds later.     

Additional information and details, including answers to frequently asked questions, regarding the MSRF program can be found here: https://www.revenue.nh.gov/main-street/index.htm; and https://www.goferr.nh.gov/covid-expenditures/main-street-relief-fund-faq.

Wadleigh’s COVID-19 Response Team will continue to monitor this situation closely and provide updates as the situation develops.