New York's COVID-19 Small Business Recovery Grant: A Complete Guide

When the pandemic forced thousands of New York businesses to close their doors in 2020, many owners faced an impossible choice: deplete their life savings or shut down permanently. While federal relief programs like PPP and EIDL helped, they often came with complex requirements and weren't available to everyone. That's why New York State launched an $800 million COVID-19 Pandemic Small Business Recovery Grant Program—designed specifically to help local businesses recover from pandemic losses with flexible, forgivable funding.

If you're a New York small business owner who weathered the storm of COVID-19, this comprehensive guide will walk you through everything you need to know about the program: who qualified, how much funding was available, what expenses were covered, and what documentation was required. While the program officially closed in September 2022, understanding how it worked provides valuable context for future relief programs and helps businesses that received grants ensure they're maintaining proper financial records.

What Was the New York COVID-19 Small Business Recovery Grant?

The New York State COVID-19 Pandemic Small Business Recovery Grant Program was a state-funded initiative launched on June 10, 2021, allocating $800 million to help small businesses, micro-businesses, and for-profit independent arts and cultural organizations recover from pandemic-related economic hardship. Unlike loans, these grants did not need to be repaid, making them a critical lifeline for struggling businesses.

The program was administered by Empire State Development (ESD) in partnership with Lendistry, a minority-owned financial technology company, ensuring that applications were processed efficiently and at no cost to applicants.

Key Program Features

• Total Funding: $800 million allocated across New York State
• Grant Type: Forgivable grants (no repayment required)
• Launch Date: June 10, 2021 at 9:00 AM ET
• Closure Date: September 30, 2022
• Award Range: $5,000 to $50,000 per business
• Eligible Period: Expenses incurred between March 1, 2020 and April 1, 2021

The program prioritized minority-owned, women-owned, and veteran-owned businesses, as well as those located in economically distressed communities—recognizing that these groups faced disproportionate pandemic impacts.

Who Was Eligible for the Grant?

Eligibility requirements were designed to target small businesses that experienced genuine pandemic hardship while ensuring funds went to viable businesses with potential for recovery. Here's the complete breakdown:

Basic Eligibility Criteria

To qualify for the New York COVID-19 Small Business Recovery Grant, applicants had to meet all of these requirements:

1. Business Age: The business must have been operational before March 1, 2019, and still operating at the time of application
2. Revenue Threshold: Gross receipts between $25,000 and $500,000 annually (based on 2019 tax returns)
3. Profitability: Positive net profit of at least $1 on 2019 tax returns
4. Revenue Loss: Documented 25% or greater revenue decline comparing 2019 to 2020 (year-over-year through December 31, 2020)
5. Tax Compliance: No outstanding federal, state, or local tax debts before July 15, 2020
6. Relief Gap: Cannot have received sufficient assistance through other federal COVID-relief programs

Entity Type Requirements

The program was open to:

• For-profit small businesses and micro-businesses
• Independent for-profit arts and cultural organizations
• Limited Liability Companies (LLCs)
• Corporations (C-corps and S-corps)
• Sole proprietorships
• Partnerships

Who Was NOT Eligible?

Certain types of organizations were explicitly excluded:

• Non-profit organizations (501(c)(3) entities)
• Religious institutions
• Government entities and agencies
• Passive real estate businesses (real estate holdings without active operations)
• Businesses with significant other federal assistance

Priority Consideration

While all eligible businesses could apply, the program gave priority to:

• Minority-owned businesses (MBE)
• Women-owned businesses (WBE)
• Veteran-owned businesses
• Businesses located in economically distressed communities
• Businesses in underserved areas

Grant Amounts: How Much Funding Was Available?

Grant amounts were tiered based on the business's 2019 gross receipts, with larger revenue businesses receiving proportionally more support:

Funding Tiers

2019 Gross Receipts	Grant Amount
$25,000 - $49,999	$5,000
$50,000 - $99,999	$10,000
$100,000 - $500,000	10% of gross receipts (capped at $50,000)

Examples:

• A business with $40,000 in 2019 gross receipts received $5,000
• A business with $75,000 in 2019 gross receipts received $10,000
• A business with $300,000 in 2019 gross receipts received $30,000 (10% of $300,000)
• A business with $600,000 in 2019 gross receipts would receive $50,000 (10% would be $60,000, but capped at $50,000 maximum)

This tiered structure ensured that the smallest micro-businesses received meaningful support while also providing substantial aid to larger small businesses that experienced proportionally greater dollar losses.

What Could the Grant Money Be Used For?

One of the program's strengths was its flexibility. Grant funds could be used for a wide range of COVID-19 related expenses incurred between March 1, 2020 and April 1, 2021:

Eligible Expenses

• Payroll Costs: Salaries, wages, benefits, and payroll taxes for employees
• Rent or Mortgage Payments: Commercial lease payments or mortgage interest
• Utilities: Electric, gas, water, internet, phone, and other essential services
• Insurance: Business liability, property, and other commercial insurance premiums
• Personal Protective Equipment (PPE): Masks, gloves, sanitizer, plexiglass barriers
• HVAC System Upgrades: Air filtration improvements to enhance safety
• Equipment: Computers, point-of-sale systems, outdoor heaters for restaurants
• Inventory: Restocking after closures or pivoting to new business models
• Marketing and Advertising: Costs to attract customers after reopening
• Professional Services: Legal, accounting, or consulting fees related to pandemic response

Important Restrictions

• Expenses must have been incurred during the eligible period (March 1, 2020 – April 1, 2021)
• Funds could not be used for expenses already fully covered by other federal relief programs
• Owner compensation had limits similar to PPP rules

This flexibility allowed restaurants to invest in outdoor dining equipment, retail shops to enhance e-commerce capabilities, and service businesses to upgrade technology for remote work—whatever adaptations each business needed to survive and recover.

The Application Process: How to Apply

The application process was designed to be straightforward, but required thorough documentation. Here's what applicants needed to provide:

Required Documentation

Tax Documents:

• 2019 federal tax return (complete with all schedules)
• 2020 federal tax return (complete with all schedules)
• Most recent NYS-45 form (Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance Return)
• NYS ST-809 or ST-100 (sales tax collection documentation)

Ownership Information:

• Schedule of all owners with 20% or more ownership interest
• For each owner: name, address, Social Security Number (or ITIN for non-US owners), phone number, email, percentage ownership, and photo ID
• W-9 form for tax reporting
• Bank account information for fund distribution

Business Verification:

• Proof of business organization (articles of incorporation, certificate of assumed name/DBA, partnership agreement)
• Two documents showing proof of business location (utility bill, current bank statement, insurance bill, lease agreement)

Financial Proof:

• Documentation showing the 25% revenue decline between 2019 and 2020
• Bank statements or accounting records demonstrating ongoing operations

Application Timeline

• Applications Opened: June 10, 2021 at 9:00 AM ET
• Application Portal: State of New York Pandemic Small Business Recovery Grant Program website (nysmallbusinessrecovery.com)
• Processing Partner: Lendistry (at no cost to applicants)
• Program Closure: September 30, 2022

Application Review Process

1. Initial Screening: Applications were reviewed for completeness and eligibility
2. Documentation Verification: Tax returns and financial records were validated
3. Award Calculation: Grant amount determined based on 2019 gross receipts tier
4. Approval and Disbursement: Funds were distributed directly to approved applicants' bank accounts

Processing times varied based on application volume and completeness of documentation. Businesses that provided all required documents upfront experienced faster processing.

Tips for Future State Grant Programs

While this specific program has closed, New York State periodically launches new grant programs to support small businesses. In fact, a new "Save Our Small-Business Grant Program" was proposed in January 2025 to provide additional pandemic recovery assistance. Here's how to position your business for future opportunities:

1. Maintain Accurate Financial Records

The documentation requirements for the COVID-19 grant were extensive—and future programs will likely have similar requirements. Keep your financial house in order:

• File accurate, timely tax returns every year
• Maintain organized records of gross receipts, expenses, and payroll
• Keep utility bills, lease agreements, and bank statements accessible
• Use accounting software to track income and expenses in real-time

Having clean, verifiable financial records not only makes grant applications easier but also demonstrates that your business is professionally managed and creditworthy.

2. Stay Tax Compliant

Tax debt disqualified many otherwise eligible businesses from the COVID-19 grant program. Avoid this pitfall:

• Pay federal, state, and local taxes on time
• If you're struggling to pay, work with tax authorities to set up payment plans
• File all required tax forms even if you can't pay the full amount immediately
• Keep documentation of any payment agreements or extensions

Tax compliance shows responsibility and ensures you're eligible for relief when opportunities arise.

3. Document Revenue Losses Carefully

Future relief programs will likely continue to require proof of pandemic or economic hardship. Create a paper trail:

• Keep monthly or quarterly revenue reports comparing year-over-year performance
• Maintain records of closures, capacity restrictions, or supply chain disruptions
• Document how external events (pandemic, economic downturn, natural disasters) impacted your business
• Use accounting software that can generate comparison reports automatically

4. Monitor State and Local Resources

Don't miss out on funding opportunities:

• Subscribe to Empire State Development email alerts
• Follow your local Small Business Development Center (SBDC)
• Join industry associations that track grant opportunities
• Check your regional economic development council website regularly

5. Consider Working with Advisors

Grant applications can be complex. Professional help often pays for itself:

• Accountants can ensure your tax returns are accurate and optimize your application
• SBDC consultants provide free guidance on grant eligibility and applications
• Business attorneys can help with organizational documentation and compliance

Current Grant Opportunities in New York (2026)

While the COVID-19 Pandemic Small Business Recovery Grant has closed, New York continues to support small businesses through various programs:

Verizon Small Business Grant (2026)

Verizon is awarding $5,000 grants to 25 small businesses based in New York between January 1, 2026 and March 31, 2026. Visit the Verizon Small Business Digital Ready program for application details.

New York State Small Business Seed Funding Grant Program

This ongoing program provides grants of up to $25,000 to early-stage small businesses that:

• Started operations on or after September 1, 2018
• Have been operational for at least six months
• Have between $5,000 and $1 million in gross receipts

Regional Economic Development Councils

New York's 10 Regional Economic Development Councils each have competitive grant programs focused on local economic development priorities. Check with your regional council for current opportunities.

What If You Received a Grant? Maintaining Compliance

If your business was fortunate enough to receive a New York COVID-19 Small Business Recovery Grant, maintaining proper records remains important:

Record Retention

Keep all documentation related to the grant for at least six years:

• Original grant application and award letter
• Receipts and invoices for how grant funds were spent
• Bank statements showing grant deposit and expenditures
• Tax returns filed during and after the grant period

Financial Tracking

Even though the grant doesn't need to be repaid, accurate tracking protects you:

• Maintain clear records showing grant funds were used for eligible COVID-19 related expenses
• Keep documentation that expenses weren't duplicated by other relief programs
• Be prepared to respond to any state audit or verification requests

Tax Implications

Grant funds received under this program were generally excludable from gross income for federal tax purposes under the American Rescue Plan Act. However:

• Consult with a tax professional about your specific situation
• Keep documentation of the grant's tax treatment
• Ensure your tax returns properly reflect the grant if required

Lessons Learned for Small Business Resilience

The COVID-19 pandemic exposed vulnerabilities in many small businesses' operations and finances. The recovery grant program provided critical support, but the experience highlighted important resilience strategies:

1. Build an Emergency Fund

Before the pandemic, many small businesses operated with minimal cash reserves. Aim to build a reserve fund covering 3-6 months of operating expenses to weather future disruptions without immediate crisis.

2. Diversify Revenue Streams

Businesses that could quickly pivot—restaurants adding delivery, retailers launching e-commerce, service providers offering virtual options—fared better. Consider how you could adapt if your primary revenue source were disrupted.

3. Strengthen Financial Visibility

Many business owners struggled to quickly demonstrate their revenue losses because they lacked organized financial records. Invest in accounting systems that give you real-time visibility into your financial performance.

4. Understand Available Resources

Awareness was a major barrier—many eligible businesses didn't apply simply because they didn't know the program existed. Stay connected to business support networks so you're informed about opportunities.

5. Plan for Compliance

Relief programs come with strings attached. Before accepting grants or loans, ensure you can meet documentation and reporting requirements. Non-compliance can result in having to repay funds or facing penalties.

Simplify Your Financial Management

Whether you're tracking grant expenditures, documenting revenue losses for future relief applications, or simply managing your day-to-day finances, maintaining clear financial records is essential for small business success. Traditional accounting software often acts as a black box—your data is locked in proprietary formats that are difficult to audit, version control, or customize.

Beancount.io offers a different approach: plain-text accounting that gives you complete transparency and control. Your financial data is stored in human-readable text files that you can version control with Git, customize with scripts, and analyze with AI tools. No vendor lock-in, no black boxes—just clear, auditable financial records that you actually own. Get started for free and experience the peace of mind that comes with truly transparent bookkeeping.