On October 7th, Tennessee Governor Bill Lee and the Financial Stimulus Accountability Group (FSAG) announced $50 million in federal Coronavirus Relief Funds for the new Supplemental Employer Recovery Grant (SERG) program to provide additional relief to small businesses suffering during the COVID-19 pandemic.
The application window opened October 7, 2020 and quickly after all funds appeared to be spoken for and this message appeared on the website:
NOTE: Applications for SERG program funds have exceeded available funds. While there is no guarantee of payment, applications may still be submitted at this time. If additional funds become available for this program, applications already received will be processed prior to new applications. Any updates regarding additional funding will be included on this page.
Many businesses assumed it was like all the other phantom grant programs out there, come and gone within a matter of minutes, but alas this one appears to have a few catches to it!
Recently clients have received an email inviting them to the RFF submission portal:
What awaits them is a laundry list of document requests, which I believe has allowed for the State of Tennessee to move on to the next applicant due to lack of response or ability to provide qualifying documents by early applicants. Additionally a little birdie tells me that the Governor added more funds to the program ($75 mill to be exact!)
So what is the program and can/should you apply?
Here are some FAQs on program overview, eligibility and application to familiarize yourselves with:
PROGRAM OVERVIEW
Is there any cost associated with applying / receiving the Grant?
No. However, SERG program grants are considered taxable income by the Internal Revenue Service
How much assistance can one business receive?
Awards are based either on costs necessarily incurred to respond to the COVID-19 public health emergency or the costs of business disruption, whichever are greater. Applicants will be required to submit support for costs associated with responses to the COVID-19 emergency or support to prove business disruption. Awards are capped at $30,000, except that businesses located in low to moderate income (“LMI”) census tracts, Opportunity zones, or Promise zones will receive an additional $500 added to the maximum allowable expenses.
Does a business have to be certified with the state of TN as a WBE, MBE, or DSVBE?
No. This program does not require the business to have previous certifications under the GO-DBE Program in the State of Tennessee. For additional information on the GO-DBE program please visit its website.
How should 501(C)3 and 501(C)19 annual revenues (receipts) be calculated?
501(C)3 and 501(C)19 should calculate annual revenues (receipts) in accordance with the instructions for IRS form 990 line 12. Please see link below for additional information on IRS form 990. Revenues (receipts) should be calculated in accordance with these instructions even if the non-profit entity is not required to file a 990.
How will recipients receive payment?
Payment will be made on a reimbursement basis. Once applicants are notified that funds have been allocated, they will receive access to the Tennessee Cares Act Management System (“TN CAMS”) to submit a Request For Funding (“RFF”) for the estimated benefit calculated on the application and associated documentation. Upon review and approval of each RFF, checks will be mailed to the recipient's address submitted on the application.
ELIGIBILITY
If I received funding under the original TN Business Relief program, can I apply for funding under the SERG Program?
Yes. Businesses who otherwise meet the criteria of this program are still eligible even if they’ve received a payment from the Tennessee Small Business Relief Program, as long as this award is not duplicative of an award under other federal funding sources.
Which businesses are ineligible to receive payments under the Supplemental Employer Recovery Grant Program?
The following businesses are ineligible to request or receive business relief assistance:
Lending and investment institutions
Insurance companies
Racetracks or gambling facilities
Businesses owned by State of Tennessee employees or their family members living within the household
Businesses engaged in any illegal activity per local, state or federal regulations, with federal regulations taking precedence over local or state regulations
Businesses that did not continue operations during the last 6 months
Businesses that are not registered with the Secretary of State, nor registered with the Department of Revenue, nor filing a federal Schedule C as of August 31, 2020
Businesses with no activity in the state of Tennessee
What expenses are eligible for reimbursement under the SERG program?
Eligible expenses include those costs incurred by the business to meet public health requirements or recommendations enacted, adopted, required, or issued by the Tennessee Department of Health, the Centers for Disease Control, state or federal regulatory authorities, and/or local, state or federal executive authorities due to COVID-19.
Am I eligible to receive reimbursement for eligible expenses and business interruption?
No, you can claim the greater of either eligible expenses or business interruption up to the maximum allowable amount.
Am I eligible if I dissolved my business during the eligible period due to circumstances of
COVID-19?
No. This program was designed to reimburse small businesses that were severely impacted by the COVID-19 pandemic but chose to remain in operation for at least 6 months ending on August 31, 2020. Therefore, for a business to be eligible under the SERG Program, the business must be able to provide proof of operation during the period May 1, 2020 to August 31, 2020, with the exception of temporary closures due to COVID-19.
Am I eligible to receive a payment under the Supplemental Employer Recovery Grant Program if my business has received another form of relief related to the COVID-19 pandemic, such as a forgivable loan under the Payroll Protection Program (PPP)?
Yes, so long as the same expenses during May 1, 2020 through August 31, 2020 were not reimbursed under any other federal program.
What if my business has multiple locations? How will that impact my payment amount?
Yes. Any funds received from the SERG Program should be used to respond to the financial disruption resulting from COVID-19 and its effects on your business. Funds must not be used for payment of tax liabilities to a government agency. Businesses must also keep records regarding how the funds are spent for a minimum 5 years.
I am the owner of a company that was formed in and is headquartered in Tennessee and all my revenue is generated from sales in the state of Tennessee. Is my company eligible for relief funding?
Yes, your company is eligible because it is a domestic business formed in the state of Tennessee.
My LLC was formed in and is headquartered in Tennessee. However, all revenue is generated from work done outside of Tennessee. Am I eligible?
Yes, your company is eligible because it is a domestic business formed in the state of Tennessee.
My LLC was formed in and is headquartered in Tennessee. However, all revenue is generated from work done outside of Tennessee. Am I eligible?
Yes, even though all revenue was generated from states outside Tennessee, your LLC is eligible because it was formed and headquartered in the state of Tennessee.
I own a chain of businesses that were formed in another state. We have three locations in Tennessee and one in another state. Each location contributes equal parts revenue. Are my Tennessee locations eligible?
Yes, because 75% of revenue was earned in Tennessee, your company meets the requirements of operating “primarily” in the state of Tennessee. The Tennessee locations are eligible to receive relief through the SERG program. Please note, eligible business interruption is limited to net income generated by the three locations located in the state of Tennessee. You will be required to provide support that identifies only revenues and expense generated within the state of Tennessee.
My construction company was formed in another state and is headquartered there. We are working on a building project in Tennessee that makes up 40% of our revenue for both 2019 and 2020. The job start date was 2/2/2019 and is still in progress today. Does this make my company an eligible business?
No, your company is not eligible. Since you are formed and headquartered outside the state of Tennessee, revenues generated must be greater than 50% to be considered primarily operating in Tennessee. Because your company’s Tennessee revenue is only 40%, it does not meet the 50% threshold.
My construction company was formed and headquartered in another state. We are working on a building project in Tennessee that made up 70% of our revenue in 2019 and 20% of revenue in 2020. Does this make my company an eligible business?
No, eligible businesses must have a physical location in the State of Tennessee to claim business interruption under this program.
APPLICATION
May an applicant submit more than one application during the application window?
No. The program is limited to one application per business. Once started, applications cannot be saved. Please ensure you have all information required to complete the application before starting.
If I own more than one business, can I apply for multiple Grants? Do I have to fill out a separate application for each business?
Yes. While each applicant is limited to one business per application, businesses under the same ownership are allowed under this program. Owners must submit one application per business and include a different primary contact for each. This is important because a business owner’s email may only be used once in TN CAMS. If the businesses are subsidiaries of one company, the parent or holding company is subject to the small business $10 Million annual revenue threshold.
What if I have a business that is not required to pay sales tax and is not registered in the State of Tennessee? Or what if I have a business that does not meet the revenue threshold in which the State of Tennessee requires businesses to register with the state?
Businesses whose registration cannot be easily verified by the program will be contacted by a SERG Program coordinator via the contact information submitted with the application to determine eligibility.
What documents will I need to present in order to apply for the SERG Program?
No documentation is required to apply for the SERG program. Once an application has been accepted and given access to TN CAMS, the applicant will be required to submit the below, but not limited to, documents to support the application as part of the reimbursement process before payment can be processed.
How will applicants demonstrate business disruption?
The application will require the applicant to input figures comparing net income from May-August 2019 to May-August 2020. Once accepted and given access to the TN CAMS system, applicants will upload any documentation that they believe supports this claim. The application will also have space to include a narrative providing more detail surrounding the nature of business disruption suffered by the applicant and upload any additional document supporting this narrative. The SERG Program has prepared an estimated benefit calculator (https://tncaresact.tn.gov/SERG). Eligible businesses should use this resource for guidance when calculating business interruption.
Is there a deadline to submit a request for funding (RFF) and provide supporting documentation after submitting an application?
Yes. You have the earlier of 10 business days from notification access to TN CAMS has been granted or 5 p.m. CST December 29, 2020 to submit an RFF with required supporting documentation or until all funds are depleted. Funds will be distributed on a first-come, first-served basis.
