By Dustin H. DeVore, Commercial

Rebuild VA Economic Recovery Fund

On July 27, 2020, Governor Ralph Northam announced the Rebuild VA Economic Recovery Fund for small businesses and non-profits impacted by COVID-19. The $70 million Rebuild Virginia Recovery Fund, administered by the Department of Small Business and Supplier Diversity, will provide grants of up to $10,000 to approximately 7,000 applicants of small businesses to cover eligible expenses, such as payroll support, employee salaries, mortgage, rent, or utility payments, and principal and interest payments for certain business loans, among other expenses.

Eligible businesses include any business or non-profit that is organized as a C-Corp, a pass-through entity, such as an S-Corp, Partnership, and LLC, or other legal entity that is organized separately from the owner, a 501(c)(3) or 501(c)(19) organization, a sole proprietorship, or an independent contractor. These eligible businesses must be either a) a restaurant and beverage services entity, b) a non-essential brick and mortar retailer, c) a fitness or exercise facility, d) personal care and grooming services, such as a salon or barbershop, e) an entertainment or public amusement venue, or f) a private campground or summer camp.

An eligible business must have its principal place of business in Virginia, 25 or fewer employees, gross revenues of less than $1.5 million in the last fiscal year, in operation prior to March 12, 2020, currently in good standing with the Virginia State Corporation Commission, and must be engaged in legal activity. However, a business is ineligible if it has received any CARES Act funding, such as a PPP loan or an EIDL loan, or funding from any other state, regional or local authority, if it is not individually owned and operated, if it is delinquent in paying Virginia state income taxes and does not have a payment plan in place, if it is engaged in lobbying, or if an owner or principal with a 20% or greater ownership interest is more than sixty (60) days late in paying child support payment.

If a company is eligible for the fund, the grant may be used for any of the following expenses:

• Payroll support, including paid sick, medical, or family leave, and costs related to the continuation of group health care benefits during those periods of leave;
• Employee salaries;
• Mortgage payments, rent, and utilities;
• Principal and interest payments for any business loans from national or state-chartered banking, savings and loan institutions, or credit unions that were incurred before or during the emergency;
• Eligible personal protective equipment, cleaning and disinfecting materials, or other working capital needed to address COVID-19 response.

A business may not use any of these funds to pay dividends, bonuses, repay stockholder loans, refinance debt, prepay or payoff loans, or expand facilities or acquire fixed assets not directly related to a COVID-19 response.

The application process opens on August 10, 2020, and applicants are encouraged to submit their applications online. An applicant may also submit the application to:

Virginia Small Business Financing Authority
PO Box 446
Richmond, Virginia 23218

All applicants must include the following supporting documentation with the application:

• SCC Certificate of Good Standing
• Incorporation documents for your business or non-profit, including one of the following:
  • Articles of Incorporation (e.g., C-Corp, S-Corp)
  • Articles of Organization (e.g., LLC)
  • Declaration of Partnership (e.g., Partnership)
  • IRS Letter of Determination (e.g., 501c3)
  • Business License (e.g., Sole Proprietor, Independent Contractor)
  • Certificate of Fictitious Name (e.g., Sole Proprietor, Independent Contractor)
  • Form 1099 (individual contractors)
• Current Owner Photo ID (e.g., VA Driver’s License, VA Real ID, Permanent Resident Card, Passport)
• Copies of 2019 Federal Income Tax Returns and 2019 interim financial statements. If your 2019 Federal Income Tax Return has not been filed, a year-end profit-and-loss statement and balance sheet for 2019
• Commonwealth of VA Substitute W-9 form
• Documentation demonstrating qualifying salary or payroll, including one of the following:
  • VEC-FC-21/20 quarterly report;
  • Payroll processor records;
  • Payroll tax filings;
  • Form 1099-MISC; or
  • Other documentation to demonstrate the qualifying salary or payroll
• Mortgage statements or rent/lease agreements
• Utility bills
• Paid invoices, contracts, canceled checks, or other documentation to substantiate eligible COVID-19 expenses incurred to continue operations or re-open the business or non-profit.

The Commonwealth recognizes that access to capital remains the number one issue confronting small businesses during this ongoing pandemic. The Rebuild Virginia fund is designed to help these small businesses recover from the COVID-19 Pandemic. As this is a new program, additional information will become available and our recommendations may be updated based on further guidance or information. If you have any questions, please contact Dustin DeVore at (757) 259-3808 or dhdevore@kaufcan.com.

The contents of this publication are intended for general information only and should not be construed as legal advice or a legal opinion on specific facts and circumstances. Copyright 2024.