Alert

North Carolina Offers Up To $500,000 To Struggling Businesses

January 10, 2022

Deadline Nearing for North Carolina Business Recovery Grant Program

January 31, 2022, is the deadline to apply for North Carolina’s Business Recovery Grant program which offers a one-time payment to North Carolina businesses that endured economic loss as a result of the COVID-19 pandemic. The program allows eligible businesses to receive up to $500,000 of grant relief funds. The grant is allocated on a first-come, first-served basis by the North Carolina Department of Revenue.

Businesses Eligible for NC Recovery Grant

Eligible businesses for this program may be corporations, LLCs, S corporations, partnerships, or sole proprietorships that meet the requirements of the grant program. In addition, recipients must meet the following criteria:

  • Hold a North Carolina sale and use tax ID number
  • File sales and use tax returns reporting gross receipts, or file a North Carolina partnership tax return reporting gross receipt

In addition, wholesale businesses with no taxable sales that meet all other requirements may apply for a grant.

Two Types of Grants Available

Eligible businesses may qualify under two types of grants:  hospitality grant and reimbursement grant.

Hospitality Grant

The hospitality grant is available to eligible businesses classified in NAICS codes 71 and 72. Businesses listed in NAICS code 71 and 72 are restaurants, hotels, arts, entertainment, and recreation businesses.  Businesses may receive a grant of up to 20% of their economic loss, but no more than $500,000, if the business did not receive funds from other grant programs such the COVID-19 Retention Grant program, Economic Injury Disaster Loan Advance, Paycheck Protection Program, Restaurant Revitalization Fund, or Shuttered Venue Operators Grant program. If the business has received funds from other grant recovery programs, the business may qualify for up to 10% of the economic loss. Eligibility for the Hospitality Grant is as follows:

  • The business must have endured an economic loss related to COVID-19 of at least 20%
  • The business must be subject to North Carolina income tax
  • The business must be listed as NAICS 71 or 72

Note that even if you received COVID-19 related cash, advance, grant, or other considerations, you are still eligible for this program.

Reimbursement Grant

The reimbursement grant is available to eligible businesses that are not listed under NAICS Code 71 and 72 between the period of March 1, 2019, and February 28, 2021, and that did not receive grant payment from other relief programs including COVID-19 Retention Grant, PPP, Economic Injury Disaster Loan Advance, Restaurant Revitalization Fund, or the Shuttered Venue Operators Grant Program. The grant payment may be up to 20% of the entity’s economic loss but not to exceed $500,000. Eligibility for the grant is as follow:

  • The business must have endured an economic loss related to COVID-19 of at least 20%,
  • The business did not receive funds from other relief programs,
  • The business must be subject to North Carolina income tax; and
  • The business is not classified as NAICS code 71 or 72

As a result of these eligibility requirements, many businesses that received any COVID-related assistance will not be eligible for this grant.

Gross Receipts Rules

Determination of the grant amount is based on a percentage reduction of the amount of your North Carolina gross receipts from March 1, 2019, through February 2020, when compared to the gross receipts from March 1, 2020, through February 28, 2021. For businesses, gross receipts for the calculation are taken from amounts reported on line 1 of Form E-500, Sales and Use Tax Return, or the sum of lines 4-8 of form E-500 Sales and Use Tax Return. For partnerships, North Carolina gross receipts are taken from line 1a of Form 1065, U.S. Partnership Return of Income.

Other Grant Details

The application period for the North Carolina Recovery Grant Program closes on January 31, 2022, at which point grant amounts for qualified businesses will be determined. It is recommended that applicants apply online for faster submission; however, grant applications may also be submitted by fax, at a drop off service center or by mail.

Businesses must be in operation during the application period of the grant and may not be in the process of dissolving or filing documentation requesting permanent closure of the business. Payments for the North Carolina Business Recovery grant program will be made by check written to the business entity, not to the individual owners, unless the business is a sole proprietor. The Department of Revenue will issue a 1099G to the business for the 2022 tax year if grant payment is awarded. The grant is not includable in North Carolina taxable income and is not subject to North Carolina income tax.

How Cherry Bekaert’s Tax Credits and Incentives Advisory Team Can Help 

Cherry Bekaert’s Tax Credits and Incentives Advisory professionals are available to answer questions and assist with the following services:

  • Scoping the potential for your eligibility for the program,
  • Calculating and documenting the declines in the 2020-2021 Gross Receipts.
  • Determining the percentage of the business economic loss and eligible relief funds.
  • Applying for the applicable grant through January 31, 2022.

Contact your Cherry Bekaert tax advisor or a member of the Firm’s Tax Credits and Incentives Advisory team for more information.