Is New Jersey Providing Additional Pandemic Relief for Impacted Small Businesses?

The New Jersey Legislature is advancing a package of bills intended to help small businesses impacted by the COVID-19 pandemic...

The New Jersey Legislature is advancing a package of bills intended to help small businesses impacted by the COVID-19 pandemic. The relief measures include both grant programs and tax credits.

New Jersey small businesses have struggled to stay afloat during the pandemic. According to the New Jersey Business & Industry Association (NJBIA), the number of small businesses in New Jersey is down 38.7%, and their revenues are down 41.9%, compared to pre-pandemic January of 2020. The state’s hospitality industry has been particularly hard hit, with 66.9% of small businesses having closed since January 2020.

To help ease the economic strain, New Jersey lawmakers are considering several bills. Below is a brief summary of the New Jersey COVID-19 legislation:

• Assembly Bill 4634: The bill would allow a corporation business tax taxpayer to claim a credit against the tax equal to one percent of the amount the taxpayer paid to New Jersey small businesses for subcontracted work. For purposes of the credit, the subcontracted work must be performed in New Jersey, and the subcontractor must have less than 50 employees.
• Assembly Bill 4958: The bill would allow a small business, defined as one that employs fewer than 20 full-time employees, to apply for a sales and use tax exemption for purchases made or services rendered to winterize the business, which purchases or services are made or rendered between September 1, 2020, and March 31, 2021.  The exemption would apply to items purchased or services rendered to a small business that enable the business to conduct business outdoors during the fall and winter seasons due to the COVID-19 pandemic.  This exemption would cover purchases of products to melt or remove snow and ice, as well as tents, and space heaters.
• Assembly Bill 5218: This bill would allow the owner of a small restaurant or of an alcoholic beverage manufacturer to use a bonus depreciation allowance of up to $150,000 for capital expenditures incurred within New Jersey to comply with the health and safety requirements of the Governor’s executive orders regarding the COVID-19 pandemic. These capital expenditures would include but are not limited to the purchase of heaters and overhangs. This benefit would be available to a restaurant owner if the restaurant has no more than 100 employees, and if the restaurant is not a chain restaurant.
• Assembly Bill 5389: The bill allows corporation business tax and gross income tax credits for nonresidential and multifamily building improvement expenses to reduce the spread of COVID-19. The credit will be allowed for expenditures made during calendar years 2020, 2021, and 2022. The following expenditures will be includable in calculation of the credit: expenditures for (1) bi-polar ionization and ultraviolet lighting to disinfect indoor air and surfaces, including in elevators and work areas; (2) infrared thermometers for screening visitors in common areas; (3) transparent sneeze guards or shields; (4) touchless entryway and security; (5) ventilation; and (6) other materials, supplies, and equipment to reduce the spread of COVID-19 and necessary to create a safe environment for building occupants. The amount of credit allowed will be equal to: 75 percent of the taxpayer’s expenditures for a location of less than 30,000 square feet, but the credit for such expenditures cannot exceed $100,000; and 50 percent of the taxpayer’s expenditures for a location of 30,000 square feet or more, but the credit for such expenditures cannot exceed $250,000. A taxpayer that claims a credit pursuant to the bill will be required to add back into their calculation of income the amount of any expenditures that the taxpayer deducted, which is intended to ensure that the taxpayer does not get the double benefit of being allowed to deduct expenses from income and get a credit against their tax liability to cover the cost of those expenses.
• Assembly Bill 5443: The bill would make $25 million in federal funds available to the New Jersey Economic Development Authority (NJEDA) to award grants to microbusinesses that produce goods or provide services, have 10 or fewer full-time equivalent employees, and who are in need of support as a result of the COVID-19 public health crisis.
• Assembly Bill 5444: The bill would make $35 million in federal funds available to the NJEDA to award grants to restaurants and bars with fewer than 100 employees and who are in need of support as a result of the COVID-19 public health crisis. The NJEDA would establish the size of the awards and additional eligibility criteria for entities.
• Assembly Bill 5445: The bill would make $10 million in federal funds available to the NJEDA to award grants to child care centers licensed by the Department of Children and Families and who are in need of support as a result of the COVID-19 public health crisis. The NJEDA would establish the size of the awards and additional eligibility criteria for entities.
• Assembly Bill 5446: The bill would make $15 million in federal funds available to the NJEDA to award grants to businesses and nonprofits in need. The NJEDA would establish the size of the awards and additional eligibility criteria for entities.
• Assembly Bill 5447: The bill would make $15 million in federal funds available to the NJEDA to award grants to arts and culture organizations who are in need of support as a result of the COVID-19 public health crisis, including $7.5 million to the New Jersey Council on the Arts for the purposes of issuing grants to nonprofit arts and culture entities.

While we are beginning to see the light at the end of the tunnel, many New Jersey small businesses are still struggling. At Scarinci Hollenbeck, we continue to help businesses of all sizes successfully navigate the challenges created by the ongoing COVID-19 pandemic. We will continue to track the status of the proposed COVID-19 relief bill and encourage businesses to contact us to discuss what other options may be available.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, David Edelberg, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.