Final 2022-23 State Budget (AB/SB 178/193) for Small Business

Whew we are halfway through 2022! This year Governor Newsom and the state legislature have given us plenty to be proud of as the final budget for the 2022-23 year awaits the final vote and signature. At the same time, the budget falls short in several places. The good news is that the state is making serious investments in the small business ecosystem – with funding for the Technical Assistance Expansion Program (TAEP)Community Development Financial Institutions (CDFI), and the Women’s Business Centers. The bad news is that pandemic related grant funding for FY 2022-23 lags behind last year’s.

Below are the announced budget details that we know so far:

Investments in the Ecosystem

  • $50 million for the California Investment and Innovation Program, administered by the California Pollution Control Financing Authority, will provide funding for CDFIs.
  • The Technical Assistance Expansion Program (TAEP) fund was increased from $17 million to $23 million. and funds small business technical assistance centers. These funds are considered permanent as the annual appropriation does not include a sunset date (which was originally the case.)
  • The Women’s Business Centers will receive an additional $8 million to build capacity to meet the increased demand for women who want to start businesses.
  • Something that flew under our radar is an $8 million allocation for Micro Enterprise Home Kitchen Operations (MEHKO) grants managed by the California Workforce Development Board. A competitive grant will be issued for nonprofit organizations to perform outreach about MEHKO opportunities; provide education and training; marketing; and negotiate preferred rates for food, supplies, equipment, and services. Funding can also be used for direct financial support for home cooks to reimburse activities related to permitting or food-safety certification, including, but not limited to, obtaining permits, completing food manager certification courses, and purchasing food safety supplies. 
  • $20 million for iHub2 – Inclusive Innovation Hubs (iHub2) are intended to spur high-growth industries and startups and build a pipeline of scalable firms and well-paid jobs, and increase access to private investment for diverse founders as well as those in geographically isolated and underserved regions.
  • $3 million for the Capital Infusion Program provides a grant for Small Business Development Centers to help entrepreneurs navigate the financing landscape and successfully access the funding they need to operate and/or expand their businesses.
  • $1.5 million to Initiative Change in Our Neighborhoods for a Small Business Incubator and Training Facility in San Fernando Valley.

Grants / Direct Aid for Small Businesses

  • $250 million for paid sick leave COVID-19 grant will pay businesses back from time lost due to employees out sick with COVID-19.
  • $75 million for the Small Business Drought Grant Agricultural Program  will ameliorate small business losses that occur as a result of extreme droughts.
  • $15 million for California Venues Grant provides funds for venues that were forced to close due to COVID-19 lockdowns and include movie theaters.
  • $25 million for the California Regional Initiative for Social Enterprises Program (AB 2670) will fund businesses that achieve transformative social impact by providing jobs, training, and support to people who are breaking through barriers to employment. California has more than 200 employment social enterprises.

Removed From the Final Budget:

  1. The Hardest Hit Small Business Grant proposed by Governor Newsom would have given $500 million in relief to the hardest hit businesses.
  2. An additional $100 million proposed by the legislature for the Small Business COVID-19 Grant would have funded $5,000 – $25,000 grants to eligible small businesses and nonprofits that were on the waitlist.
  3. $125 million in relief grants for microbusinesses and nonprofit performing arts and cultural organizations were one time funding in the 2021-22 budget and were not renewed.

Written by Addison Peterson.