By Corporate Law Practice Group
The Missouri Department of Economic Development (DED) has provided guidance on how to apply for the Small Business Grant Program as added by the CARES Act and House Bill 2007. The grants seek to provide support to small businesses and family-owned farms by reimbursing the costs of business interruptions caused by required COVID-19 closures.
DED kicked off the grant program by focusing on hardest hit industries: retail trade, accommodation, food service, health care, and family-owned farms. Applications for these industries are being accepted until August 31, 2020. Businesses in other industries may apply on or after September 1, 2020 if funds are still available.
While all a business or farm’s expenses may not be covered, or total reimbursement may not be possible, depending on funding available, the grant program provides another excellent option for COVID-19-related relief.
Program Basics:
The Missouri grant program is statewide with the total funds available set at $30 million, Of this, $7.5 million is specifically available for family-owned farms and family farm corporations.[i] Each applicant may only file one grant application. Hopeful applicants must incur, or have incurred, COVID-related costs between March 1, 2020 – November 15, 2020.
DED will consider an applicant’s industry, ability to use funds timely, and availability of funds when determining who shall review grant funding. Individual grant amounts will initially be limited to a $50,000 maximum request but DED reserves the right to grant over this amount if additional funds remain available on October 15, 2020. Chosen applicants must enter an agreement with DED outlining program details, requirements, state and federal terms and conditions, and execute a company certification.
If funds remain after October 15, 2020, grants may increase up to $100,000. Additionally, businesses who received PPP grants or loans may apply, but they cannot receive funding for the same expenses and must be sure to list what expenses were funding by separate state or federal relief funds. So much like all other relief programs, detailed recording keeping will be important for recipients of these grants.
Eligible Applicants:
To be eligible under the program, applicants must meet all the following criteria:
- A for-profit business or family-owned farm that employs 50 or fewer full-time employees, including the owner(s).
- A “family-owned farm” also includes family farms and family farm corporations.[ii]
- A full-time employee is a person scheduled to work 35 or more hours per week.
- Located in Missouri.
- Incorporated in Missouri except for family farms.
- Registered to do business in Missouri and in good standing with the Missouri Secretary of State, except for an unincorporated family farm.
- Completes and submits Missouri Form 943 to obtain a certificate of tax clearance from the Missouri Department of Revenue for each owner and the business. This certificate is valid for 90 days.
- Does not employ illegal workers and provides proof of enrollment in the E-Verify system.
- Registers as a vendor with the State of Missouri through the Missouri BUYS online portal.
How Grant Funds may be Used:
DED will review applications based on guidance from the CARES Act and the U.S. Treasury for similar programs. Under the CARES Act, the grants are limited to reimbursing necessary expenditures made due to the current COVID-19 pandemic if spent between March 1, 2020 – November 15, 2020. The U.S. Treasury guidance on eligible costs is updated regularly, and may be subject to change, so the Department reserves the right to change their guidance accordingly. However, eligible costs are generally those that are significantly different from the business’ planned operational costs, and this unexpected difference must be directly related to the COVID-19 emergency. Other tentatively eligible costs are outlined below.
Which Costs are Eligible and Ineligible
Applicants must submit original receipts of eligible costs and payment documentation to receive 100% reimbursement. To request reimbursement, applicants must submit DED’s reimbursement form along with the supporting invoices, contracts, purchase orders, and other receipts and documents from vendors by November 15, 2020. Any proofs of payment must be dated March 1, 2020 or later.
Possible Eligible Costs:
- Business interruption costs caused by COVID-19 required closures
- Unemployment insurance costs related to COVID-19 if the costs will not be reimbursed by the federal government under the CARES Act or another similar aid package
- Livestock depopulation facilitation costs incurred by producers due to disruptions in the supply chain to the extent these efforts are necessary for public health or as a form of economic support due to COVID-19.
Sample Eligible Expenses:[iii]
- Hazard pay for workers providing direct health care
- Salaries paid for hours worked above normal hours for COVID-19 sanitation
- Labor and other expenses for facility redesign
- Lease of additional space to enforce social distancing
- Addition or update of air filtration systems
- One-time replacement of inventory if a business had to close or its sales decreased
- Costs to help a business remain open during the COVID-19 pandemic, such as additional equipment to change or increase remote work, PPE supplies, and equipment to pre-screen employees for work
- Increased cost of solid waste disposal due to used PPE disposal
- Required payments for overhead while the business was closed or when sales decreased
- Salaries of workers during closure or reduced hours
- Website redesign costs for e-commerce
Ineligible Costs:
- Expenses of franchise or chain business entities
- Expenses of businesses engaged in illegal activity under federal or state law
Sample Ineligible Costs:
- Expenses reimbursed or to be reimbursed by insurance
- Expenses reimbursed or to be reimbursed under any federal, state, or local government funding
- Expenses not necessary to address the COVID-19 emergency
Application and Reimbursement Process:
DED is accepting applications and will review them in the order received for hardest hit industries and family-owned farms. If funding is quickly allocated to these groups, DED may request additional funds. If all funds are not allocated to these initial groups, DED will start accepting applications from other eligible industries. Applications for the hardest hit industries and family-owned farms will be accepted until August 31, 2020, and, pending funding availability, other eligible industries will have applications reviewed starting September 1, 2020. Priority in these other eligible industries will be given to those who had to close due to COVID-19. Regardless of when a grant is given, all expenditure and reimbursement documentation must be submitted to DED by November 15, 2020.
Grant applications must be submitted online at: https://ded.mo.gov/content/small-business-grant-program for DED to review. Written approval will be sent to the applicant once review is completed. Once approval has been granted, the applicant must enter into an agreement with DED outlining all relevant details, requirements, terms, conditions, and certifications. The applicant then submits the reimbursement form with invoices and proof of payment. This form may only be submitted once prior to November 15, 2020, unless additional funds are received, at which time applicants will be permitted to provide a second submission. Awards will then be determined by DED based upon eligibility, eligible costs, and overall program fund availability. Then the applicant will receive a reimbursement for eligible expenses from DED.
Required Documentation and Other Information:
Applicants should keep all granted related documentation, invoices, payment records and similar items for five years following the final payment as DED can inspect or audit these records. The Missouri Auditor’s Office, U.S. Treasury, or other authorized state or federal authorities may also request to inspect these records. If project costs exceed the amount requested in an application, recipients must finish the project without an increase in their grant amount. Applicants who commit fraud or misrepresentation, or who do not adequately document or retain documents, are subject to state and federal legal action.
For further questions, please do not hesitate to reach out to one of our corporate attorneys.
For additional COVID-19 related information, go to our Coronavirus/COVID-19 Resource Center.
Posted by Attorney Hannah E. Mudd. Mudd is a member of Danna McKitrick’s transaction team. As a member of the team she advises clients on a variety of corporate and business transactions including entrepreneurial, real estate, banking, employment, and corporate formation and governance matters.
[i] Farm grant applications will be shared by the Department with the Missouri Department of Agriculture.
[ii] A “Family Farm” is an unincorporated farming unit owned or leased by one or more persons residing on the farm or actively engaging in farming.
A “Family Farm Corporation” is a corporation incorporated for the purpose of farming and the ownership of agricultural land in which at least one-half of the voting stock is held by and at least one-half of the stockholders are members of a family related to each other within the third degree of consanguinity or affinity including the spouses, sons-in-law and daughters-in-law of any such family member according to the rules of the common law, and at least one of whose stockholders is a person residing on or actively operating the farm, and none of whose stockholders are a corporation prohibited by Mo. Rev. Stat. § 350.015 from entering into farming, or any corporation which is subject to the controlled expansion provisions of Mo. Rev. Stat. § 350.015; provided that a family farm corporation shall not cease to qualify as such hereunder by reason of any gift, devise or bequest of shares of voting stock. A person actively operating a farm shall include, but not be limited to, a person who has an ownership interest in the family farm corporation and exercises some management control or direction.
“Farming” is the use or cultivation land for the production of (a) agricultural crops; (b) livestock or livestock products; (c) poultry or poultry products; (d) milk or dairy products; or (e) fruit or other horticultural products, provided; however, “farming” shall not include a processor of farm products or a distributor of farming supplies contracting to provide spraying, harvesting or other farming services.
[iii] Please remember, these samples are outlined as implied by the Department but are not expressly provided for and may be subject to a future ineligible determination by the Department.
(c) darklight www.fotosearch.com
07/29/20 10:12 AM
Filed under Business Law, COVID-19, Emerging Business, Manufacturing and Distribution | Comments Off on Missouri Offers Additional COVID-19 Relief Grants for Small Business and Family-Owned Farms
