Legal Tip —Main Street Relief Fund and Self Grant Recipients: Watch for Final Reporting Obligations
NOTE: This was authored by Paul J. Durham, Esq. of Sheehan Phinney not the Chamber Collaborative
Many New Hampshire businesses benefited from a variety of federal and state aid programs in 2020, utilizing loan proceeds and grants to weather the economic storm brought on by the COVID-19 pandemic. Programs such as New Hampshire’s Main Street Relief Fund (“MSRF”) and Self Employed Livelihood Fund (“SELF”) provided grants to small businesses without stipulations as to how those funds were to be spent. Although this aid took the form of grants rather than loans, the New Hampshire Department of Revenue Administration (the “DRA”) made it clear that MSRF and SELF grants could be recoupable by the State under certain circumstances.
Actual Versus Estimated Revenues
Application materials for both MSRF and SELF grants asked applicants to provide actual 2019 revenues (estimated 2019 revenues if 2019 tax returns were not yet filed) and estimated revenues for 2020. Eligible applicants’ grant awards were calculated by an established formula, based in part upon the difference between their reported 2019 revenues and estimated 2020 revenues. The purpose of the grants was to help provide a bridge to make up anticipated revenue shortfalls caused by COVID-19.
Initial MSRF and SELF grant documentation indicated that grants could be subject to recoupment based on certain year-end revenue reporting requirements. In or about October, the DRA provided additional guidance to grant recipients regarding recoupment circumstances. The DRA indicated that, in accordance with the CARES Act and related guidance, the State will recoup grant awards, in whole or in part, only in the following instances:
1. If the sum of 2020 revenue plus the value of awarded state/federal COVID relief funds exceeds a recipient’s 2019 revenue, the State will recoup the difference; and
2. If there is fraud, intentional misrepresentation of projected losses, or a failure to submit all required final reporting, the State will recoup the full award amount.
As of the drafting of the article, the DRA has not provided further information regarding final revenue reporting requirements or recoupment mechanisms, but expects to do so before year-end.
Reporting Requirements Remain to be Determined
Busy sole proprietors or small enterprises without dedicated accounting departments might easily overlook an additional reporting requirement. This is especially true when the requirements themselves have not yet been announced months after disbursement of the grants. Grant recipients should carefully monitor their emails and public announcements for DRA notifications, and otherwise check in regularly with their tax or legal advisors regarding any reporting obligations. Those who were fortunate enough to overperform their 2020 estimates should also plan to set aside funds to repay the applicable portion of their grants. But remember that even those whose grants would not otherwise be subject to recoupment could find themselves facing a repayment burden if they fail to submit final required reporting.
Sheehan Phinney has offices in Manchester, Concord, the Upper Valley, Boston, and soon Portsmouth. We provide a broad range of sophisticated legal services to our business clients. Visit sheehan.com to learn more. Durham can be reached at firstname.lastname@example.org.
While the above information may include some general guidance, it is not intended as, nor is it a substitute for, legal advice.