In February of this year, Governor Larry Hogan signed Maryland’s Recovery for the Economy, Livelihoods, Industries, Entrepreneurs, and Families (RELIEF) Act of 2021 into law. The impressive $1 billion relief package enacted by the Maryland General Assembly doesn’t stop at providing direct aid to qualifying Marylanders. It also offers grants, loans, and tax relief to small businesses that have been struggling as a result of the ongoing coronavirus pandemic.
When it comes to aid for small businesses, the RELIEF Act contains three noteworthy provisions. It provides grants for eligible business owners, changes the way unemployment tax relief is calculated and offers an immediate sales tax credit to qualifying businesses. The cumulative effect of these provisions is to make 2021 the perfect year to Buy a Business in Baltimore.
The RELIEF Act Grant Program
As part of the RELIEF Act, the state of Maryland established a new Maryland Small Business COVID-19 RELIEF Grant Program. It directs $10 million of the funding from the Relief Act to small businesses that have struggled as a result of the ongoing coronavirus pandemic.
The state’s 2021 Grant Program is separate from the Small Business Administration (SBA) Paycheck Protection Program (PPP) that was in place until May 31, 2021. Businesses that received loans through the PPP while the program was in place may still be eligible for loan forgiveness, but participation in the federal SBA program does not preclude applying for a state grant. As a result, business owners who open up shop before the end of the year could still take advantage of Maryland’s Grant Program.
In addition to the general RELIEF Grant Program, the state is also offering multiple more specialized grants. Programs established in the Act include the Maryland Small, Minority, and Women-Owned Business Account COVID-19 RELIEF Program, which received $10 million in funding, and the Maryland Commuter and Shuttle Bus COVID-19 RELIEF Grant Program, which received $8 million in funding. Of course, business owners who want to apply for these more specialized programs will have to meet eligibility criteria.
Additional, local grant programs established by the RELIEF Act include:
- The Online Sales and Telework Assistance COVID-19 RELIEF Grant Program
- The Restaurant and Caterers COVID-19 RELIEF Grant Program
- The Lodging and Accommodations COVID-19 RELIEF Grant Program
The RELIEF Act Sales Tax Credit
Alongside the grant programs, the RELIEF Act also created new Sales Tax Credits for small business owners. The Act earmarked $200 million to provide sales tax credits of up to $9,000 for qualifying businesses and has already directly helped over 55,000 Maryland small business owners.
This provision of the RELIEF Act allowed businesses that collect $6,000 or less in sales taxes per month to keep up to $3,000 per month of sales tax revenue that would otherwise have been remitted to the state. It was put in place for three months following the passage of the RELIEF Act, showing the Maryland legislature’s commitment to helping small business owners through trying times. At least 15% of the funding for the Sales Tax Credits was also earmarked to offer assistance to businesses in need that don’t collect sales tax.
Changes to Taxability of Unemployment Benefits
During the pandemic, many business owners were forced to close up shop either temporarily or permanently. Most of their employees went on unemployment insurance, as did some business owners who were unable to find other recourse. Thanks to the RELIEF Act, qualified unemployed workers were able to subtract their unemployment benefits from their taxable income when filing Maryland state taxes.
Most RELIEF Act Provisions Have Expired
As of October 2021, most of the provisions of the RELIEF Act have expired. Though this has caused a good deal of difficulty for business owners who were unable to return to business as usual as a result of personal or financial losses during the pandemic, it also creates a unique opportunity for aspiring buyers.
Many previously successful businesses have been placed up for sale at surprisingly low prices, and one person’s loss is always another’s gain. Potential buyers can contact a local business broker to discuss what types of companies they are interested in investing in and find out what options are available for financing a purchase. They may also want to think about what steps they could take toward getting a business struggling as a result of the ongoing pandemic back on track.
Baltimore Is the Perfect Place to Get a Foot in the Door
Even before the coronavirus pandemic caused a great shuffling of assets, Baltimore was a great place to start or buy a small business. The city is less than 50 miles from Washington, D.C., and an easy drive or bus ride from both New York and Philadelphia. Plus, it is a thriving metropolitan area in its own right.
Before the pandemic, Baltimore also boasted a growing tourist economy, with around 20 million out-of-state visitors passing through each year. The city is home to three designated arts districts, an increasing number of tech startups and biomedical companies, and plenty of opportunities to thrive in retail and commercial business.
To sweeten the deal, Baltimore is also home to a large pool of talent from dozens of nearby colleges and universities, and there’s no shortage of office space. Whether buyers want to purchase companies that are already well-established in their current locations or they want to expand to new ones, there’s plenty of room to grow in America’s Comeback City.
The Future of Baltimore’s Business Markets
No one can predict the future, but financial analysts are generally confident that the United States, Maryland included, is on the road toward economic recovery. Now is a great time to get a foot in the door, with prices low and small businesses in a diverse array of industries up for sale.
Keep in mind that it can take some time to find the right business and negotiate the best price. Start reaching out to business brokers and defining personal goals now instead of waiting until this unique opportunity passes by. 2021 is the perfect year to buy a business in Baltimore.
