Key Takeaways of the North Carolina Business Recovery Grant

As part of Senate Bill 105 (SB105), North Carolina enacted the Business Recovery Grant Program (BRG). The BRG provides a one-time payment of up to $500,000 to qualifying businesses that experienced a significant economic loss due to COVID-19. The BRG application must be submitted by January 31, 2022. No late applications will be accepted. The program will be run by the North Carolina Department of Revenue (NCDOR).

There are two types of grants available under the BRG:

  1. Hospitality Grants
  2. Reimbursement Grants

Each of these grants is discussed in detail below along with specific requirements for each grant.

Hospitality Grant

Businesses who seek a Hospitality Grant must meet all of the following requirements:

  1. Classified in NAICS code 71 (Arts, Entertainment and Recreation) or 72 (Accommodation and Food Services)
  2. Suffered an economic loss of at least 20%
  3. Subject to North Carolina income tax

The economic loss of 20% is based on a reduction in gross receipts in excess of 20% for the period of March 1, 2019, through February 29, 2020, as compared to the period March 1, 2020, through February 28, 2021. The gross receipts used in this calculation are those reported on North Carolina Form E-500 (Sales and Use Tax Return), Line 1 (or Lines 4-8 if the taxpayer did not report any receipts on Line 1). A partnership that filed Federal Form 1065 may also include gross receipts appearing on Line 1(a) so long as those gross receipts were not reported on Form E-500 and are only North Carolina receipts.

Hospitality Grant awards will be 20% of the economic loss described above if the business has not received assistance from other COVID-19 relief programs; if the business has received previous assistance, the Hospitality Grant will be 10% of the economic loss. Other COVID-19 relief programs include the Paycheck Protection Program, EIDL Advance, North Carolina’s Job Retention Grant, Restaurant Revitalization Fund, or the Shuttered Venue Operators Grant Program.

Reimbursement Grant

North Carolina taxpayers who seek a Reimbursement Grant must meet all of the following requirements:

  1. NOT classified in NAICS code 71 (Arts, Entertainment and Recreation) or 72 (Accommodation and Food Services)
  2. Did NOT receive relief from other COVID-19 relief programs (the Paycheck Protection Program, EIDL Advance, North Carolina’s Job Retention Grant, Restaurant Revitalization Fund, or the Shuttered Venue Operators Grant Program
  3. Suffered an economic loss of at least 20% (calculated in the same manner as the Hospitality Grant)
  4. Subject to North Carolina income tax

Reimbursement Grant awards will be 20% of the economic loss described above. If the business has received previous assistance from other COVID-19 relief programs, they are ineligible for the Reimbursement Grant.

Other BRG Highlights
  • Funds Available – The North Carolina General Assembly appropriated $500M for the overall program and stated that $200M was reserved for Reimbursement Grants.
  • Proration of Awards – If NCDOR receives BRG requests that exceed the appropriation for the program, each approved applicant’s award will be reduced ratably so that the total awards do not exceed $500M.
  • Application Process – NCDOR will allow online submissions through the NCDOR’s website or completion of a paper form (Form NC-180). All applications must be submitted by January 31, 2022, and no late applications will be accepted.
  • Payments – At the conclusion of the BRG, NCDOR will mail checks to the businesses that were approved for either a Hospitality Grant or a Reimbursement Grant. The check will be mailed to the address on the BRG application.

DHG assisted several clients with similar types of state COVID-19 relief packages. We would recommend contacting your DHG Tax Advisor for further analysis or reach out to us directly at tax@dhg.com.

ABOUT THE AUTHORS

Matt Howell
Senior Consultant

Marc Jackson
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