Cesar Garcia’s timing for opening Hanzo Sushi restaurant in the City of San Fernando couldn’t have been worse.
The restaurant opened its doors on Feb. 17, 2020, but was soon struggling to survive the COVID-19 pandemic that severely limited service (such as banning inside dining) or led to the permanent closure of various restaurants throughout the state.
Garcia estimates that business at his new restaurant fell 70%, and staff there could only prepare take-out orders.
“It was very tough,” said Garcia, who also owns Papa Juan’s Baja Grill in the city’s Library Plaza. “We had to cut hours, reduce staff. A lot of customers thought we were closed.”
Garcia applied for and received funding through the Paycheck Protection Program (PPP), a loan program designed to help small businesses maintain their payroll.
The loan got Hanzo Sushi through its hard times, Garcia said. “As soon as we got it, we opened seven days a week,” he noted.
New Law Benefits Small Business
Garcia and other PPP loan beneficiaries are getting another reprieve.
On April 29, while visiting several businesses in the City of San Fernando, — including Magaly’s Tamales and Manzanitas Las Originales — Gov. Gavin Newsom signed legislation exempting the proceeds from the PPP loans as taxable income.
State law AB80 (http://leginfo.legislature.ca.gov), first introduced last Dec. 7, also allows businesses to deduct the costs of the expenses that those loans paid. The governor’s office estimates the bill could provide some $6.2 billion in tax relief to small businesses.
The Hanzo Sushi restaurant served as the backdrop for Newsom signing the bill.
“We are recognizing the stress and distress of the last year (on businesses),” said Newsom, who was joined on the tour by local elected officials and actor-restaurateur Danny Trejo.
“It means no tax consequences for small businesses that have experienced revenue loss in California,” the governor said. “California’s small businesses have been hampered and hammered by this pandemic, and we are using every tool at our disposal to help them stay afloat.”
According to the governor’s office, the relief is in addition to the $2.5 billion in grants — worth up to $25,000 each — available to small businesses statewide under legislation signed into law in February. More than half of those grants have gone to minority and underserved businesses.
State Could Fully “Reopen” June 15
Newsom is facing a recall election later this year, launched by conservative political groups primarily over his handling of the pandemic. But he expects to remain as governor.
“We’re going to defeat the recall,” he said emphatically during the San Fernando visit.
A recent poll by the nonpartisan Public Policy Institute of California (PPIC) seems to indicate that voters are currently inclined to keep Newsom in office.
The PPIC analysis shows 58% of likely voters approve of his handling of the state’s K-12 public education system, and 40% disapprove. In addition, 59% of the respondents approve of his handling of jobs and the economy, while 40% disapprove.
Newsom said his decisions to close schools and businesses last year at the peak of the COVID-19 pandemic “saved thousands of lives.”
He expects to fully “reopen” California on June 15, as long as the public continues to be vaccinated and the state’s infection rate remains low.
But Newsom cautioned the public against becoming complacent, pointing out that state health officials are tracking the presence of 11 variants of the COVID-19 virus.
“The disease is not going away, it’s not taking a vacation,” he said. “If you thought about getting [vaccinated], now is your chance.”
More than 30 million doses of the vaccine have been administered in California, according to the Centers for Disease Control and Prevention.
Garcia Plans to Expand
Garcia is betting the state will meet its June 15 “reopening” date.
He said the tax forgiveness law will allow him greater latitude for advertising and marketing, and the ability to hire more employees.
“I’m going to gradually expand (Hanzo Sushi),” Garcia said, adding, “My landlord has been holding it (the empty space next door) for me.”