MN Legislature Passes Business Assistance Package

The Minnesota legislature has passed a business assistance package in response to COVID-19 impacts which includes approximately $217 million to the General Fund in FY21 and about $25 million in FY22. Its provisions include three business relief components: 

  • Business Assistance Grants 
  • Unemployment Insurance Extension  
  • Hospitality Industry Waiver of Certain Fees 

Business Assistance Grants 

Business Assistance Grant funding is the largest part of the overall bill and appropriates $216.5 million for direct assistance to businesses and nonprofits that have been negatively affected by executive orders. The most recent executive order (EO 20-99) prohibits restaurants and bars from seating customers (take-out only), restricts travel, and prohibits gyms, breweries, concert halls, theaters, and other venues limited from opening their doors to the public. 

Under the bill, grants will be provided from the state to individual businesses through three buckets or categories of assistance: 

  1. Minnesota Department of Revenue Direct Payments to restaurants, bars, bowling alleys and gyms ($88 million) 
  1. Minnesota Department of Employment and Economic Development (DEED) Grants to movie theaters and large convention centers ($14 million) 
  1. County Grants to other affected businesses, including hotels, museums, arcades and live theater venues in addition to non-profits ($114.8 million) 

Minnesota Department of Revenue Direct Payments 

Minnesota Department of Revenue payments are intended to get money out-the-door as quickly as possible and in the hands of small businesses that are directly affected by EO 20-99. The Minnesota Department of Revenue will issue checks to all businesses in Minnesota that meet certain criteria. These businesses do not have to apply for a grant. Rather, they will receive a check from the state based on their eligibility and size. This funding is available to the following types of businesses: 

  • Restaurants (full service and limited service), 
  • Bars, 
  • Coffee shops, 
  • Breweries, wineries and distilleries (if they have taprooms or tasting rooms), 
  • Caterers, 
  • Bowling alleys, and some Gyms and Fitness Centers (this includes dance studios and martial arts studios that pay sales taxes). 

These business types would be eligible for Department of Revenue assistance if they meet the following criteria: 

  1. Directly impacted by Executive Order 20-99, 
  1. At least 30% drop in sales revenue from 2019 to 2020, 
  1. At least $10,000 in sales in 2019, 
  1. Physical presence in the state, and 
  1. Good standing with the Department of Revenue. 

The Department of Revenue estimates that there are about 5,800 restaurants, bars and other businesses that would be eligible for this direct payment funding. The bill establishes a grant amount for these 5,800 businesses based on the number of employees they have: 

Number of Employees Grant Amount 
Small businesses not in the UI system $10,000 
1-20 employees $15,000 
21-100 employees $25,000 
101-300 employees $35,000 
Over 300 employees $45,000 

For example, the Department of Revenue estimates that nearly 3,000 small businesses in Minnesota with 20 employees or less will get checks from the Department of Revenue for $15,000. The total amount of grants under this funding source is projected to be about $82 million but could be as much as $88 million. 

Minnesota Department of Employment and Economic Development (DEED) Grants 

The second bucket or area of funding consists of grants from the Department of Employment and Economic Development (DEED) totaling $14 million. This funding is designated for movie theaters and large convention centers which have been shut down for most of 2020. Again, these businesses must be directly impacted by EO 20-99 and must see a decline in annual revenue of at least 30%. 

Of this $14 million, $9 million is allocated among 146 movie theaters across the state (not including drive-ins). Grants will be awarded by DEED based on the number of screens at each theater as follows; 

  • Small theaters with 1-2 screens receive $15,000 per screen, 
  • Larger theaters receive $10,000 for each additional screen. A theater with 6 screens for example, would receive $70,000 from DEED. 
  • The maximum grant is $150,000 per theater. The largest theater in the state with 21 screens (Lakeville) would get $150,00. 

In order to prevent huge national chains from diverting state assistance to their corporate offices, the bill requires that the assistance must be used for operating expenses at the Minnesota theater. 

This assistance is also dedicated to providing assistance to large convention centers with a capacity greater than 1,500 people. Under the bill, DEED could award grants to these convention centers that must be used to cover operations and upkeep (i.e. owners/municipalities cannot just pocket the money). The maximum grant amount is $500,000 and the total pool is $5 million. 

County Grants 

The bill appropriates $114.5 million to counties. This funding is split among the 87 counties on a per capita basis, with a minimum amount of $250,000 to each county.  

Funds provided to counties are designated to provide assistance to the remainder of businesses and nonprofits that are struggling with the pandemic and the executive orders. These local allocations give counties discretion in awarding this assistance. While the bill doesn’t specify any business types that are eligible, the intention is to include numerous entities including hotels, indoor amusement parks, museums, food trucks, dry cleaners, live theater venues, small convention centers, commercial cleaning services, and many others.  

Under the bill, these businesses and nonprofits will be eligible if they are directly or indirectly affected by EO 20-99 or other executive orders issued by Governor Walz. Thus, a county could provide a grant to a retail store, even though retail stores are not restricted under EO 20-99. Likewise, a county could award a grant to a restaurant that opened in 2020 and was not eligible for assistance from the Department of Revenue direct payment grants. Grant applicants must be located in that county and have no tax liens against it on record with the Secretary of State. 

Each county has the authority to decide who gets a grant and what the size of each grant is. There is no minimum or maximum grant amount. Under the agreed upon language, individual counties could also choose to award grants to restaurants, bars, and others to supplement assistance they received under  Minnesota Department of Revenue Direct Payments or they weren’t eligible under that program because their revenue loss was only 25%. Money not awarded by the counties must be returned to the General Fund. Counties can use up to 2.5% for administrative costs. 

Unemployment Insurance Extension 

The bill extends unemployment insurance for those who exhaust their benefits by up to 13 weeks or until the week ending April 10, 2021, whichever comes sooner. Unemployment insurance benefits will be paid at the same rate as regular unemployment benefits. Any unemployment benefits paid out under this extension will not be factored into the unemployment tax rate for employers and will not be charged to any reimbursing employers. 

Hospitality Industry Waiver of Certain Fees 

The bill waives fees on state licenses issued by the Department of Public Safety on 1) bars that want to serve alcohol until 2:00 a.m. and 2) caterers who serve alcohol. Most licenses relating to liquor are issued by local units of government, so there is only so much fee assistance the state can provide to bars, restaurants and others affected by EO 20-99. Nevertheless, the waiver of the 2:00 a.m. fee will save bars (and cost the state) a total of $570,000 in FY21 and FY22. The waiver by DPS on the license fee for caterers will save them about $150,000. 

Additionally, the bill calls on the Minnesota Department of Agriculture to temporarily waive late payment penalties in 2021 on the following businesses in the food industry: 1) food manufacturers, 2) wholesalers, and 3) retailers.