Business Recovery Grant Phase 1

Application for Phase 1 Closed January 31

The application period for Phase 1 of the Business Recovery Grant Program closed on January 31, 2022. The application period for Phase 2 of the Business Recovery Grant Program closed on June 1, 2022

Tab/Accordion Items

About the Program

The Business Recovery Grant Program will issue a one-time payment to an eligible North Carolina business that experienced a significant economic loss due to COVID-19. The application period closes January 31, 2022. 

Two types of grants will be available to an eligible business that suffered an economic loss of at least 20 percent during the pandemic:

  • A hospitality grant will be available to an eligible arts, entertainment, and recreation business, as well as eligible accommodation and food service business such as a hotel, restaurant, and bar (NAICS codes 71 and 72).
  • A reimbursement grant will be available to an eligible business not classified in NAICS Code 71 and 72 that did not receive funding from other relief programs including Paycheck Protection Program, COVID-19 Job Retention Grant, and EIDL Advance.

Watch an informational video

Grant Amount

The grant amount is a percentage of the economic loss demonstrated by the eligible business or $500,000, whichever is less.  NCDOR will reduce grant amounts if the total amount of grants requested exceeds the maximum amount of funds authorized for the for Business Recovery Grant by the state of North Carolina. 

Payments

The NCDOR began mailing payments on Tuesday, March 1 to North Carolina businesses approved for a grant of $50,000 or less. Please allow 10 business days for the checks to reach you by mail before contacting the Department.

Federal law requires persons or entities receiving grant awards in excess of $50,000 to provide additional information to the NCDOR. The NCDOR will contact applicants that will be impacted by these federal requirements regarding next steps via email and US postal service.

Businesses that do not qualify for a grant award, will be notified by mail.

 

Who is eligible to receive the grant?

To Receive a Hospitality Grant

  • A business must be classified in NAICS code 71 or 72
  • A business must have suffered an economic loss of at least 20% (Calculated using gross receipts reported on North Carolina Sales and Use Tax Return and IRS Form 1065)
  • A business must be subject to North Carolina income tax

To Receive a Reimbursement Grant 

  • A business is not classified in NAICS code 71 or 72
  • A business did not receive relief from other relief programs including Paycheck Protection Program, COVID-19 Job Retention Grant, and EIDL Advance
  • A business must have suffered an economic loss of at least 20% (Calculated using gross receipts reported on North Carolina Sales and Use Tax Return and IRS Form 1065)
  • A business must be subject to North Carolina income tax

The grant amount is a percentage of the economic loss demonstrated by the eligible business or $500,000, whichever is less. Your economic loss is determined based on the amount your gross receipts in North Carolina were reduced from the period March 1, 2019 through February 29, 2020 (“Pre-COVID Period”) to the period March 1, 2020 through February 28, 2021 (“COVID Period”). 

For most applicants, gross receipts are the gross receipts reported on Line 1 of Form E-500, Sales and Use Tax Return (“Form E-500”). However, if the applicant did not report gross receipts on Line 1 of Form E-500, gross receipts are the sum of the receipts reported on Lines 4-8 of Form E-500. A partnership that filed a federal Form 1065, US Partnership Return of Income (“Form 1065”), may also include gross receipts reported on Line 1a of Form 1065 that meet both of the following criteria: 1) the gross receipts were not reported on Form E-500 and 2) the receipts are for transactions apportioned to North Carolina.

Grant amounts will be determined at the conclusion of the application period. NCDOR will reduce grant amounts if the total amount of grants requested exceed the maximum amount of funds authorized for the Business Recovery Grant by the state of North Carolina.  The application period closes January 31, 2022. All payments will be made by check, mailed to the address provided by the respective business once the amounts are determined after the application period closes.

Are you a Historically Underutilized Business (HUB)? 

If you are a Historically Underutilized Business (HUB), there may be additional funding available for your business.  Your HUB status has no bearing on the Department of Revenue’s Business Recovery Grant Program.  If you are a HUB that is not certified as such you may still be eligible for additional opportunities.  Click here if you have questions or want to be notified of additional information that could be beneficial to HUB businesses.

HUB Definition 

 A business is a HUB if fifty-one percent of the business is owned by, and the day-to-day management and daily business operations are controlled by, one of the following:

  • Black, Hispanic, Asian-American or American Indian
  • Female
  • Socially and Economically Disadvantaged person
  • Disabled

About

The application period for the Business Recovery Grant Program closed on January 31, 2022. If funds are available for grants after the application period closes, the NCDOR will reopen the application. We will provide additional information on this page if we reopen the application.

Application Checklist

  1. Read the eligibility requirements 
  2. If you are eligible to apply, the information you will need to apply includes:

If the business is a sole proprietorship:

  • Proprietor’s: name, SSN, mailing address, and contact phone number
  • Sales and use tax account ID or IDs
  • NAICS Code
  • Whether the applicant received an award amount (see Section I, question 8 from the FAQs) 
  • Gross receipts reported on Line 1 of Form E-500, or if Line 1 is blank, the receipts reported on Lines 4-8, for the following periods:
    • March 1, 2019 – February 29, 2020
    • March 1, 2020 – February 28, 2021

If the business is not a sole proprietorship:

  • Business’ legal name, FEIN, mailing address, and contact phone number
  • If applicable, sales and use tax account ID or IDs
  • NAICS Code
  • Whether the applicant received an award amount (see Section I, question 8 from the FAQs)
  • If applicable, Gross receipts reported on Line 1 of Form E-500, or if Line 1 is blank, the receipts reported on Lines 4-8, for the following periods:
    • March 1, 2019 – February 29, 2020
    • March 1, 2020 – February 28, 2021
  • If applicable, gross receipts reported on federal Form 1065, Line 1a, that were not reported on Form E-500 AND are apportioned to North Carolina for the following periods:
    • March 1, 2019 – February 29, 2020
    • March 1, 2020 – February 28, 2021
  • If applicable, a copy of page 1 of federal Form 1065.

 

The NCDOR began mailing payments on Tuesday, March 1 to North Carolina businesses approved for a grant of $50,000 or less. Please allow 10 business days for the checks to reach you by mail before contacting the Department.

Federal law requires persons or entities receiving grant awards in excess of $50,000 to provide additional information to the NCDOR. The NCDOR will contact applicants that will be impacted by these federal requirements regarding next steps via email and US postal service.

Businesses that do not qualify for a grant award, will be notified by mail.

Frequently Asked Questions for the Business Recovery Grant Program

Section I: Eligibility and Qualification for the Business Recovery Grant Program

Section II: Completing the Application for the Business Recovery Grant Program

Section III. Receiving the Business Recovery Grant

Section IV: Miscellaneous

Section I: Eligibility and Qualification for the Business Recovery Grant Program

1. What is the Business Recovery Grant Program?

The Business Recovery Grant Program provides a one-time grant payment to aid eligible North Carolina businesses that suffered substantial economic damage from the COVID-19 pandemic.  The Program was established in Session Law 2021-180 that was signed by Governor Cooper on November 18, 2021.

2. What are the eligibility requirements for the Business Recovery Grant Program?

The requirements depend on the type of grant.

Hospitality Grant

To qualify for a hospitality grant, you must meet all of the following conditions:

  1. You were classified in NAICS Code 71 or 72 from March 1, 2019 through February 28, 2021.
  2. You are a taxpayer subject to North Carolina income tax imposed by Article 4 of Chapter 105 of the North Carolina General Statutes.
  3. You suffered an economic loss, as the term is defined in Section 34.3A.(h) of Session Law 2021-180, of at least 20%.

Reimbursement Grant

To qualify for a reimbursement grant, you must meet all of the following conditions:

  1. You were not classified in NAICS Code 71 or 72 from March 1, 2019 through February 28, 2021.
  2. You are a taxpayer subject to North Carolina income tax imposed by Article 4 of Chapter 105 of the North Carolina General Statutes.
  3. You suffered an economic loss, as the term is defined in Section 34.3A.(h) of Session Law 2021-180, of at least 20%.
  4. You did not receive an award amount from any of the following:
    • COVID-19 Job Retention Grant
    • Economic Injury Disaster Loan Advance (EIDL Advance)
    • Paycheck Protection Program
    • Restaurant Revitalization Fund 
    • Shuttered Venue Operators Grant Program

3. What is the NAICS code and where can I locate my business’s NAICS code?

A NAICS Code is a classification within the North American Industry Classification System adopted by the United States Office of Management and Budget.  Generally, your NAICS Code should be similar to the Principal Business Code or Professional Activity Code reported on your federal income tax return. Find out more information by visiting the NAICS website.

4. What business industries are classified in the 71 and 72 NAICS code?

Businesses classified in NAICS codes 71 and 72 include businesses primarily engaged in the following sectors:  Accommodation, Food Services, Arts, Entertainment, and Recreation.  For a complete list of business sectors and more information, visit the NAICS website.

5. How do I determine if I’m subject to North Carolina income tax under Article 4 of Chapter 105 of the North Carolina General Statutes?

In general, Article 4 of Chapter 105 covers corporate income tax, individual income tax, and partnership tax.  If you have further questions, review Article 4 in its entirety.

6. How do I determine my economic loss?

Your economic loss is determined based on the amount your gross receipts in North Carolina were reduced from the period March 1, 2019 through February 29, 2020 (“Pre-COVID Period”) to the period March 1, 2020 through February 28, 2021 (“COVID Period”). 

7. How do I determine my gross receipts?

For most taxpayers, your gross receipts are the gross receipts reported on Line 1 of your Form E-500, Sales and Use Tax Return (“E-500”).  If you did not report gross receipts on Line 1 of your Form E-500, gross receipts are the sum of the receipts reported on Lines 4-8 of your Form E-500.

A partnership that filed a federal Form 1065, US Partnership Return of Income (“Form 1065”), may also include gross receipts reported on line 1a of Form 1065 that meet both of the following criteria:

  1. The gross receipts were not reported on your E-500.
  2. The receipts are apportioned to North Carolina.

Note: Applicants that file the Simplified Electronic Return (SER) may substitute the North Carolina "Total Sales" amount from SER schema in place of North Carolina gross receipts listed on line 1 of Form E-500.

8. What is considered an award amount?

Money, loan, advance, grant, or any other consideration received by the applicant from any of the following federal programs:

  • COVID-19 Job Retention Grant
  • An Economic Injury Disaster Loan Advance (EIDL Advance)
  • Paycheck Protection Program
  • Restaurant Revitalization Fund
  • Shuttered Venue Operators Grant Program

If you received an award amount and were classified in NAICS Codes 71 or 72, you may qualify for a hospitality grant of up to 10% of your economic loss.  If you received an award amount and were not classified in NAICS code 71 or 72, you are not eligible for a grant.

9. My business is a corporation that operates multiple business locations in North Carolina, should I apply for a grant for each location?

No.  As long as your business locations are operated by the same corporation, the corporation should file one application.  If you have multiple North Carolina Sales and Use Tax Account IDs, you must include the sum of the gross receipts reported on your Form E-500s for all of your sales and use tax account ID numbers.  In addition, you will need to attach a list of all of your sales and use tax account ID numbers to your application.

10. I am an individual operating multiple business locations in North Carolina.  I have multiple North Carolina Sales and Use Tax Account IDs and file a separate schedule C for each location.  Should I apply for a grant for each location?

No.  You should file one application for yourself.  You must include the sum of the gross receipts reported on your Form E-500s for all of your North Carolina sales and use tax account ID numbers.  In addition, you must attach a list of your North Carolina sales and use tax account ID numbers to your application.

11. I have two businesses that are LLCs in North Carolina.  The businesses are LLCs and are registered to collect North Carolina sales and use tax as LLCs with different FEINs.  However, I am the sole member of the LLCs and the entities are disregarded for federal income tax purposes.  How should I file the applications?

Each business should file separate applications as LLCs because they are LLCs registered to collect and remit sales and use tax with different FEINs.   

12. If a business has more than one owner, will each owner receive the grant?

No.  The grant will be awarded to the business, not individual owners.  Individuals should not file a grant application unless they operate a sole proprietorship.   

13. I am an S-Corporation with a single owner.  I operate a business location in North Carolina.  I file Form E-500, Sales and Use Tax Return, suffered an economic loss of over 20% during the COVID Period, and did not receive any other award amounts.  Am I eligible for a grant?

Yes.  Since you are an S-Corporation operating in North Carolina, you suffered an economic loss of over 20% and you did not receive any other award amount, you are eligible for a grant.  You must file a complete application prior to the deadline. 

14. If a business is not a partnership for federal income tax purposes, and does not have a NC Sales & Use Tax ID, is the business eligible for a grant payment?

No. If the business is not a partnership for federal income tax purposes and the business does not have a NC Sales & Use Tax ID, the business is not eligible for a grant payment. To be eligible for a grant payment, North Carolina law requires the business to have suffered an economic loss.

An economic loss is determined based on the difference between the business's gross receipts for the COVID period and its gross receipts for the equivalent time frame before the COVID period. The law specifically defines a business’s gross receipts as the sum of (i) the business’s NC gross receipts listed on line 1 of Form E-500, Sales and Use Tax Return, (or the sum of lines 4 through 8, if line 1 is blank), and (ii) gross receipts not listed on Form E-500 but reported on line 1a of the federal Form 1065 if any, provided the gross receipts are for transactions apportioned to NC. Thus, if the business does not report gross receipts on either the Form E-500 or federal Form 1065, the business cannot calculate an economic loss.

15. I file a federal Form 1120 or 1120-S. May I calculate my gross receipts for the grant using receipts reported on my federal Form 1120 or 1120-S?

No. By law, the only gross receipts that are used to calculate an eligible business' economic loss are:

1) Gross receipts reported on Line 1 of Form E-500, Sales and Use Tax Return (or if you did not report gross receipts on Line 1, the sum of the receipts reported on Lines 1-4 of Form E-500), and

2) Gross receipts reported on Line 1a of Form 1065 that meet both of the following criteria: a) the gross receipts were not reported on Form E-500 and b) the receipts are for transactions apportioned to North Carolina.

16. I have not filed an E-500, Sales & Use Tax Return(s), during the “COVID Period.”  What should I do?

You should file and pay the E-500 Sales and Use Tax Return(s) for the missing period(s).  You must include the gross receipts that will be reported on Line 1 of the E-500 when calculating your gross receipts for the “COVID Period.”

17. My business started in June 2019 so I don’t have gross receipts prior to that date. Can I apply for the grant?

Yes. However, it is unlikely that you would be able to show economic loss as required by the enacting statute.  Session Law 2021-180 requires you to compare your gross receipts for the period beginning March 1, 2020 and ending February 28, 2021 to the prior 12-month period.  As a result, your business may not have suffered a 20% economic loss when comparing the two periods because you had no gross receipts from March 1, 2019 through June 2019.  

18. If I meet the qualifications to be eligible, but closed my business after February 28, 2021, am I still eligible to receive the grant?

If your business was permanently closed at the time of the application, you are not eligible to receive a grant.  A business must be in operation at the time of application for a grant.

19. My business permanently closed during the “COVID Period.”  Am I still eligible to receive the grant?

No. The business cannot be permanently closed at the time of the application. This includes a business that has taken steps to dissolve or has filed documentation with the Department indicating the business is permanently closed.  The Department will look to the cancellation or withdrawal of any business’s filings.  Additionally, if a business closed its Sales and Use Tax Account with the Department, filed Form NC-BN with the Department or filed Form NC-3 indicating it is closing, the business is permanently closed.

20. Can I use my Streamlined Sales Tax Identification Number (SST ID) instead of the NC Sales and Use Tax Account ID?

Yes, the SSTID can be substituted for the Sales and Use Tax Account ID on your application.

21. If I am a wholesale business and do not have taxable sales, can I still apply for the grant?

If you meet all eligibility requirements, you may apply for a grant. 

Section II: Completing the Application for the Business Recovery Grant Program

1. What do I need to do to apply for the grant?

The application period for the Business Recovery Grant applications closed on January 31, 2022. 

2. When is the last day I can submit my Business Recovery Grant Program application and be eligible to receive the grant?

Applications submitted electronically, faxed, mailed to the designated address, or delivered to a Department service center must be have been received by the Department on or before January 31, 2022.   

3. How do I know the Department has received my online application?

If you’ve received an email confirmation with the subject line ‘Completed: Please DocuSign: NC-180 Application for Business Recovery Grant Program’, then the Department is in receipt of your electronic application.  If you submitted an electronic application but do not see a confirmation email, then check your spam email inbox.  If you still do not see a confirmation email, then call the Department at 1-877-252-4487.    

Please note: Applications faxed or mailed to the Department did not receive a receipt confirmation from the Department.

4. I was not able to submit an application for the grant on or before January 31, 2022.  Will I be eligible to receive the grant if I submit an application after January 31, 2022?

It depends.  If funds are available for grants after the application period closes, the Department will reopen the application period.  The Department will provide notification on its website and provide additional information if it reopens the application period.      

Section III. Receiving your Business Recovery Grant

1. When will the Department issue grants?

Updated payment information is posted in the Payments tab.  

2.  I am eligible for the grant. How much will I receive?

It depends.

Hospitality Grant

You may receive a grant of up to 20% of your economic loss, but no more than $500,000, if you did not receive an award amount from any of the following:

  • COVID-19 Job Retention Grant
  • Economic Injury Disaster Loan Advance (EIDL Advance)
  • Paycheck Protection Program
  • Restaurant Revitalization Fund 
  • Shuttered Venue Operators Grant Program

You may receive a grant of up to 10% of your economic loss, but no more than $500,000, if you received an award amount from any of the programs listed above. 

Reimbursement Grant

You may receive a grant of up to 20% of your economic loss, but no more than $500,000.

3. How will I receive a grant award?

The Department will mail paper checks to grant recipients using the mailing address listed on the application.  Payment distribution information and timing will be updated in the Payments tab. 

4. Can I check the status of my grant application and/or payment? 

If you applied for the grant on or before January 31, 2022 (Phase 1), the Department’s employees can check the status of your application or payment. 

5. Who will the grant check be made payable to?

If the business is a sole proprietorship, the check will be made payable to the individual operating as a sole proprietorship.  If the business is an entity, then the check will be made payable to the legal business name of the applicant listed on the application.

6. What address will the grant check be mailed to?

The check will be mailed to the mailing address you listed on the Application for Business Recovery Grant Program.

7. I received my grant check. How much time do I have to deposit the check?

You have 180 days from the date the check was written to deposit the check.

8. Are there any requirements on how grant proceeds must be spent?

The Business Recovery Grant Program was established by the North Carolina General Assembly to use funds from the American Rescue Plan Act to aid businesses that suffered economic damage from the COVID-19 pandemic.  Any stipulations for the grant were met during the eligibility phase.

9. I disagree with the Department’s grant amount calculation. Can I dispute the determination?

No. The Department's determination on grant amount issuance is final.

10. Why did I receive a denial letter? 

According to the application you submitted, you were not eligible to receive the grant.  Your letter lists the eligibility criteria for a grant.

11. Is there anything I can do to dispute the denial? 

The Department reviewed your application and determined you were ineligible to receive the grant based on the criteria in the law.  The Department’s determination is final and not subject to review.  If you believe you received the denial letter in error, review all of the requirements listed in the letter.  If you believe you meet all of the requirements, you should immediately contact the NCDOR at 1-877-252-4487.

Section IV: Miscellaneous

1. Will I owe the Internal Revenue Service tax on the grant?

Whether the grant is included in federal gross income is determined under federal law.  Generally, however, all income is taxable for federal tax purposes unless specifically exempted by federal law.  The Department of Revenue will issue a 1099G for the 2022 tax year if you receive a grant payment.

2. Will the grant be included in my North Carolina taxable income?

No.  If the grant is included in federal AGI or federal taxable income, the Department will allow a deduction for the grant payment.  The grant is not subject to North Carolina income tax. The Department will issue additional guidance in the instructions for the 2022 tax year.

3. What is the difference between the Business Recovery Grant Program and a federal stimulus check I received from a federal government program?

The Business Recovery Grant Program is a State program administered by the Department of Revenue.  The purpose of the grant is to aid eligible North Carolina businesses that suffered substantial economic damage from the COVID-19 pandemic. Any federal grant payments received were from a federally administered program on behalf of the U.S. government.

4.  I have a question about the Business Recovery Grant Program that is not covered in these frequently asked questions.  What should I do?

If you have any questions about the program or application, you may call the North Carolina Department of Revenue at 1-877-252-4487 (8:00 am until 4:30 pm EST, Monday through Friday). Bilingual agents available to provide assistance where necessary.