New federal relief package offers slew of new financial options to North Bay businesses hit by new lockdowns
Like a belated, creative Christmas stocking, the $900 billion federal relief package graces the North Bay with a little bit of everything — from $284 billion in loans to $110 billion in tax benefits.
“In Congress, they call this Christmas tree legislation,” said David Colgren, spokesman for CalCPA, a 45,000-member accountant association with 14 chapters across California.
The long-awaited stimulus — signed Sunday — features another round of the Paycheck Protection Program business loans and excise tax credit extensions that benefit wine, beer and distilled spirit producers.
It also includes $15 billion in arts and entertainment funding to help devastated music venues and cultural institutions. Museum of Sonoma County Executive Director Jeff Nathanson pledged to look into that. The museum has been closed since March.
“We will hopefully benefit from the new relief package,” he said. “We’re thrilled this type of support has been approved because this cultural sector has long been ignored. I’m sure we’ll qualify for this grant.”
The $2.3 trillion federal spending package that also averts a shutdown and funds the federal government by $1.4 trillion may not represent the end-all answer to COVID-19 suffering, but it’s a good start for the Wine Country region, according to Rep. Mike Thompson, D-St. Helena.
“I view this as a bridge to get to where we want to be,” Thompson told the Business Journal. “When you’re legislating, you never let perfect be the enemy of the good. We needed to act. It’s just sad it took so long.”
The Fifth District congressman noted “a big disappointment” that disaster relief didn’t make this latest relief bill, especially since tax breaks for corporate meal expenses called the “three-martini lunch” did.
“This was never the answer. These restaurants are closed,” he said.
Tax money pouring in
Thompson pushed and endorsed an extension to excise tax credits that benefits wineries and breweries, something Russian River Brewery President Natalie Cilurzo said she’s “super excited” about.
The tax breaks that came to pass three years ago and made permanent now provides a $1 and 90 cent tax credit for every gallon manufactured up to 30,000 and 100,000, respectively. Small brewers may keep the $3.50 per barrel tax rate on their first 60,000 barrels. The prior rate was twice that amount, representing “a 50% savings” to Cilurzo.
Russian River Brewery produced almost 40,000 barrels this year, said Cilurzo.
“We’re closed and just rolling with the punches. Downtown, we’re just doing takeout, and we’ve furloughed 42 people,” she said.
Still, Cilurzo is passing on the PPP funding this time.
“We got $2 million on the first round. I feel strongly this money needs to go to small business,” she said, further considering her business as mid-sized. “I hope (others) take my lead.”
On the flipside, Judd Wallenbrock, CEO of C. Mondavi & Family, which runs Charles Krug Winery in the Napa Valley, plans to apply for another PPP loan.
The wine business received $1.9 million in the first round of the $660 billion program as one in more than 4,100 federally supported, low-interest loans. Around $1.4 billion was processed over half a year ago in Napa, Sonoma, Marin, Mendocino and Solano counties.
“We’ll absolutely file for it. It was a good thing we did in the first round. We’re not making a profit, and it kept people employed,” Wallenbrock said.
C. Mondavi & Family’s economic hit may be two-fold with the pandemic and wildfires.
“We’re quite uncertain about the impact of the fires,” he said.
The whites and lighter reds are OK, but the verdict is still out on the Napa Valley winery’s robust, signature reds.
Filing for forgiveness on the first PPP loan is also questionable, Wallenbrock added.
If so, C. Mondavi & Family wouldn’t be alone in declining. Some companies which received the PPP loans through the U.S. Small Business Administration passed on applying for forgiveness. Many said the forms and process were confusing and the Internal Revenue Service put a damper on tax benefits.
When all was said and done, the SBA improved the forms to make the process simpler.
And the IRS — which warned companies to refrain from claiming forgiveness and writing off expenses as “double-dipping” — was overruled by the new rules in this relief package. This time, the bill offers a tax deduction on expenses associated with forgiven PPP loans.
Another major milestone in the package, loan recipients with fewer than 300 employees may apply for PPP funding a second time. But the business will need to show it experienced a 25% drop in revenue in any 2020 quarter compared to 2019’s.