Rules for Participation in the Oklahoma Business Relief Programs

June 29, 2020 | Article

Governor Stitt has designated up to $50 million received by the State of Oklahoma from the Federal CARES Act to assist some crucial businesses and certain nonprofit organizations to ensure their survival and stability.

The Oklahoma Business Relief Program (OBRP) is designed to provide necessary relief and economic support to Oklahoma businesses who have been negatively impacted by the effects of COVID-19.

The effects of COVID-19 are far-reaching. We’ve developed resources to help you make sense of it all.

How much could businesses potentially received under the Oklahoma Business Relief Program?
Businesses may be awarded up to $25,000 based on two months of their average total payroll. This average total payroll may be the greater amount of one of the following:

  • The average 2019 monthly payroll for months where the business had payroll costs
  • The average of their January 2020 and February 2020 monthly payroll

Payroll shall only include the following expenses:

  • Salary, wages, commissions, tips, bonuses and hazard pay
  • Employee benefits including costs for vacation, parental, family, medical, or sick leave allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit
  • State and local taxes assessed on compensation
  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment count as payroll expenses.

Payroll does not include money paid by a business to an independent contractor for goods or services.

Grants are awarded on a first come, first serve basis as calculated based on the time when the required documents are received by the Oklahoma Department of Commerce from the participating financial institution until the allocated funding is depleted.

In addition, $10 million is designated for qualifying businesses who are owned in whole, or in part, by a racial or ethnic minority.

The program defines a minority owned business as one that is owned in whole or in part by a member of a racial or ethnic minority. An owner shall be considered a member of a racial or ethnic minority if their race or ethnicity is listed as something other than White/Caucasian as reflected on the owner's birth certificate, U.S. passport or tribal ID.

Who is eligible to receive funding through the Oklahoma Relief Program?
For the purposes of the Oklahoma Relief Program, businesses include all legal forms of for-profit entities including but not limited to sole proprietorships, independent contractors, partnerships, and corporations physically located in Oklahoma. It also includes nonprofit entities as defined within sections 501(C)(3) and 501(C)(6) of the Internal Revenue Code. Entities using the same FEI number shall all be considered one "business" for purposes of this program. Each business can only receive one grant under this program.

Eligible businesses that meet all of the following criteria may receive funding from the OBRP:

  • Located in Oklahoma
  • In good standing with the Oklahoma Secretary of State
  • Current on their most recent quarterly or yearly taxes with the Oklahoma Tax Commission, depending on when the business is required to file.
  • Must have suffered an average monthly loss of 25% or more in revenue generated from business activities from March of 2020 through May of 2020 as compared to the average monthly revenue for any one of the following periods (special provisions apply to a newly created business):
    • January 2019 through December of 2019
    • March 2019 through May of 2019
    • January 2020 through February of 2020
    "Revenue generated from business activities" refers to revenue generated from the customary activities generated from the purpose of the business. This shall not refer to money received by the business as part of any federal relief such as grants or loans related to COVID-19 or other lending.
  • Revenue loss must be substantially caused by the impact of COVID-19 and the grant must be necessary to help the business recover from the negative impacts of COVID-19. This revenue loss can be attributed to some or all of the following reasons:
    • Oklahoma business locations (or portions thereof) were ordered closed for a period of time pursuant to executive order or an order of local government.
    • Oklahoma business locations (or portions thereof) engaged in revenue generating business activities but with restrictions or on reduced hours due to an executive order, an order of local government, or in an effort to comply with social distancing recommendations.
    • Oklahoma business otherwise suffered from reduced revenue due to decline in customers or clientele likely due to COVID-19 precautions being taken by potential customers or clients.
  • Business has operated continuously in Oklahoma from at least January 1, 2020, through the date that the application was submitted, to the extent authorized by law, and is a going concern for the future.
  • Business is not an "ineligible business" as described within these rules.

Are you eligible for the Oklahoma Relief Program?

Who is Not Eligible for the Oklahoma Relief Program?
A business as defined in one or more of the following categories are ineligible to participate in the OBRP:

  • Publicly traded companies
  • Government entities or agencies
  • Banks, credit unions, life insurance companies, finance companies, factoring companies, investment companies, mortgage companies, bail bond companies, and other businesses whose stock in trade is money
  • Private clubs
  • Lobbying firms
  • Businesses who engage in gambling activities or adult activities
  • Businesses who generate any part of their income from activities performed in violation of state or federal law, including but not limited to businesses involved in the distribution, sale, cultivation or transportation of marijuana
  • Businesses who are participating in or who expect to receive funds from the Oklahoma Manufacturing Reboot Program or Oklahoma Bounceback Program
  • Businesses who do not meet the definition of "eligible businesses"
  • Businesses who dedicate 50% or more of their time or resources to lobbying activities
  • Businesses who exist for the purpose of advancing partisan political activities

What Are You Allowed to Use the Funds for?
Program funds may be used for business expenses incurred from March 1, 2020, through December 30, 2020, relating to their Oklahoma business location(s) as long as the expenses do not violate state or federal law and are not otherwise specified as impermissible uses of funds.

Examples of permissible expenses include, but are not necessarily limited to:

  • Business rent/mortgage payments
  • Payroll expenses
  • Purchase of supplies and/or equipment
  • Purchase of personal protective equipment for employees, customers or clients or other measures taken by the business to protect employees or clients from COVID-19
  • Utility payments to non-governmental utility providers

Program funds may not be used for the following purposes:

  • Payment of property taxes
  • Payment of non-business expenses
  • Political purposes, whether or not the expenses are business related. These expenses include but are not limited to: lobbying activities; donating to a political party; donating to a political action committee or group; use of funds in support of (or in opposition to) a referendum or initiative petition
  • Payments to cover specific expenses for which the business has or will otherwise receive reimbursement from another source, including but not limited to other government loan or grant programs or insurance coverage

If a business uses funds for an impermissible reason, the business must repay the funds to the state within 30 days of the state’s written request for repayment.

How do You Record the Funding You Receive from the Oklahoma Business Relief Program?
Businesses who receive funds from the program should keep specific records of all specific expenses for which the funds were used for a period of five years from the final expenditure of received funds. These records should include but not be limited to paid invoices, cancelled checks, payroll records and other documentation acquired when the permissible expense occurred. Business also need to keep copies of the documents relied upon by the business and by the participating financial insitution to establish their payroll and revenue losses as detailed within these rules.

Upon request, the business will need to provide access to these records to the State of Oklahoma, its agencies, agents, directors, and/or any party who has contracted with the state for the exclusive purposes of evaluating or ensuring compliance with CARES act or OBRP program requirements.

Businesses will need to prepare >photocopies >of all of these records for the appropriate parties within a reasonable amount of time.

In the event that the business ceases operations during this five-year period, the business must provide photocopies of these records to the Executive Director of ODOC within 30 days of ceasing operations.

Failure to abide by the requirements may result in the business repaying OBRP funds within 30 days of a written request for repayment.

What is the Timeline for the Oklahoma Business Relief Program?

  • Businesses must submit their application and all required documentation to a participating financial institution at any time from June 29, 2020, through July 10, 2020. Participating financial institution" refers to any bank or credit union who is either FDIC or NCUA insured that is a depository institution with a physical Oklahoma lending location or any bank or credit union who is either FDIC or NCUA insured that is a depository institution with a physical Oklahoma lending location or any Certified Community Development Financial Institution who chooses to participate in the OBRP.
  • A participating financial institution shall submit the online applications for each business received to the Oklahoma Department of Commerce website at any time from June 29, 2020, through July 10, 2020.
  • Distribution of funding to participating financial institutions shall begin on approximately July 17, 2020.

Get the relief you need and stay in compliance with state specific relief packages.

Stay current on your favorite topics

SUBSCRIBE

Applicable Services

Take a deeper dive into this Insight’s subject matter.

Tax State & Local Tax (SALT)