Maryland business and individual income taxpayers will be given a 90-day extension for tax payments.

In response to the COVID-19 pandemic, federal, state and local governments are ushering in an array of programs and tax relief measures to help mitigate the adverse economic impact of COVID-19 on business and nonprofit entities.

In addition to the economic incentive provisions and programs that are available through the new federal CARES Act, including the $350 billion Paycheck Protection Program (PPP) and the U.S. Small Business Administration’s (SBA) Emergency Injury Disaster Loan (EIDL) program, Maryland has offered a number of new economic assistance programs, tax relief measures and deadline extensions to help businesses and individuals impacted by the COVID-19 pandemic.

Maryland COVID-19 Business Assistance Programs

The Maryland Department of Commerce is offering three new business assistance programs:

Maryland Small Business COVID-19 Emergency Relief Loan Fund

This $75 million loan fund offers working capital to assist Maryland for-profit small businesses with disrupted operations due to COVID-19. This loan fund offers loans with no interest or principal payments due for the first 12 months, which then convert to a 36-month term requiring principal and interest payments thereafter, with an interest rate at 2 percent per annum, as follows:

General terms and conditions:

• Loans of up to $50,000 (not to exceed three months of cash operating expenses) open to Maryland businesses impacted by COVID-19 with fewer than 50 employees.
• Business must be established prior to March 9, 2020, and be in good standing.
• Applicants must have employees on their payroll for whom they have had payroll taxes withheld (i.e., W-2 employees).
• Two years of historical financial statements and the most recent interim statement to benchmark revenue against (if available).
• Six month pro forma of estimated lost revenue or other documented loss evidence.
• Minimum personal credit score of 575.
• No collateral requirements.
• Eligible uses include working capital to support payroll expenses, rent, mortgage payments, utility expenses or other similar expenses that occur in the ordinary course of operations.

The business must demonstrate financial stress or disrupted operations, which may include, but are not limited to:

• Notices from tenants closing operations and not paying rent caused by loss of income.
• Notice of inability to pay rent or make loan payments due to reduced sales or suspended operations.
• Increased cost related to COVID-19 prevention measures.
• Notice of disrupted supply network leading to shortage of critical inventory or materials.
• Other circumstances subject to review on a case-by-case basis.

Maryland Small Business COVID-19 Emergency Relief Grant Fund 

This $50 million grant fund offers working capital to assist Maryland small businesses and nonprofits with disrupted operations due to COVID-19. This program offers grant amounts up to $10,000, as follows:

General terms and conditions:

• Grants up to $10,000 not to exceed three months of cash operating expenses for Maryland businesses and nonprofits impacted by the COVID-19 with 50 or fewer employees.
• Must be established prior to March 9, 2020.
• Business must be in good standing.
• Applicants must have employees on their payroll for whom they have had payroll taxes withheld (i.e., W-2 employees).
• Annual revenues of the business or nonprofit not to exceed $5 million as evidenced by financial statements or other financial documentation.
• Business or nonprofit is expected to seek longer term funding through its bank, SBA or other source.
• Eligible uses include working capital to support payroll expenses, rent, mortgage payments, utility expenses or other similar expenses that occur in the ordinary course of operations.

The business or nonprofit must demonstrate financial stress or disrupted operations, which may include but are not limited to:

• Notices from tenants closing operations and not paying rent caused by loss of income.
• Notice of inability to make loan payments due to reduced sales or suspended operations.
• Increased cost related to COVID-19 prevention measures.
• Notice of disrupted supply network leading to shortage of critical inventory or materials.
• Other circumstances subject to review on a case-by-case basis.

Maryland COVID-19 Emergency Relief Manufacturing Fund 

This $5 million incentive program helps Maryland manufacturers to produce personal protective equipment (PPE) that is needed by hospitals and healthcare workers across the country, as follows:

General terms and conditions:

• Grants of up to $100,000 will be made available to manufacturers to 1) increase existing capacity to produce these critical need items or 2) quickly pivot operations to produce these critical need items. 
• Grant awards will vary based on the applicant's total investment.
• Applicants must be an established Maryland business and demonstrate experience, technical expertise and financial stability to implement the proposed project. 
• Eligible costs include but are not limited to capital expenses such as machinery and equipment, raw materials needed for production and operating expenses associated with increased production. 
• Funding decisions will be made based on a variety of evaluation criteria, including but not limited to technical capability, operational experience and the priority purchasing needs of the state of Maryland, with priority given to the product areas of greatest need within the Maryland healthcare system. 
• Funds will be disbursed 50 percent at notice of award, with remaining 50 percent paid upon completion with proof of expenses. 

To be eligible an applicant must:

• Currently be located and plan to manufacture the products in Maryland.
• Be in good standing with the state of Maryland and with OSHA and MOSH regulations.
• Demonstrate an ability to quickly implement the proposed project in order to meet the urgent needs resulting from the COVID-19 response.

Maryland Tax Extensions

Maryland business and individual income taxpayers will be given a 90-day extension for tax payments. No interest or penalty for late payments will be imposed if 2019 tax payments are made by July 15, 2020.

Business-related tax filing deadlines have been extended to June 1, 2020. 

Businesses who already paid their Maryland Sales and Use Taxes for March may request a refund of their payments.

About Duane Morris

Duane Morris has created a COVID-19 Strategy Team to help organizations plan, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.

For Further Information

If you have any questions about this Alert, please contact Thomas L. Totten, Brad A. Molotsky, David R. Augustin, any member of the COVID-19 Strategy Team or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.