State changes rules for troubled state small business grant program, hoping to speed things

State officials are changing rules for a troubled $300 million small business grant program in hopes of solving problems and speeding relief to firms struggling under COVID-19 shutdowns and lost revenues.

Beginning Aug. 6 the Alaska CARES grant program has been expanded to include Alaska’s commercial fishermen, 501©6 nonprofit organizations and small businesses that received $5,000 or less in Paycheck Protection Program (PPP) or Economic Injury Disaster Loan (EIDL) funds.

However, if any amount is received over $5,000 it still results in an application being rejected.

A number of firms that have received small amounts of PPP or disaster funding have were disqualified under the old rules. The number is unknown, but it is to be substantial. Also, many commercial fishermen had been excluded because they did not have Alaska business licenses.

Fish harvesters typically operate under other kinds of state licensing such as a salmon limited-entry permit and do not ordinarily apply for business licenses. However, many are family-operated fishing enterprises and are small businesses in every respect.

In response to concerns, state agencies operating the grant program, the Department of Commerce, Community, and Economic Development, or DCCED, and the Alaska Industrial Development and Export Authority, or AIDEA, are revamping AK CARES processing procedures.

Among other changes they have created an online portal for applications and are working to bring on additional program operators. At this point Credit Union 1 is administering the program, receiving applications and making the grants, under guidelines set by DCCED and AIDEA.

“Providing broad and rapid relief to small businesses is critical to ensuring that every Alaskan can pay their bills and collect a paycheck during this global crisis,” Gov. Mike Dunleavy said in a statement.

“These program improvements make certain that Alaskan businesses, non-profits, and their hardworking employees are not left behind as we continue to manage the health and economic impacts of COVID-19,” the governor said.

Not everyone shares the governor’s upbeat assessment, however. Harold Heinze, former president of ARCO Alaska and a former Commissioner of Natural Resources, says the program is delivering too little too late in terms of the needs of small businesses.

“I am concerned that while $17 million in awards (made so far) is notable it only represents one-third of the money applied for by applications. While I expect that there will be more disbursements going into the fall and winter, this situation of ‘help’ right now is only $13,500 per applicant, which seems small compared to the four to six months of expenses,” businesses will bear until the economic effects of the pandemic wear off.

“I also am very concerned that the $55 million application total (so far) is only 18 percent of the $300 million target funding,” allocated by the state. “Was the funding level set to include more business segments than has shown up in the application process? Even more disappointing to me, the money awarded ($17 million) represents only 6 percent of funds available. That represents a huge gap in policy expectations and societal needs that needs to be quickly and thoroughly understood,” Heinze said in remarks to the Alaska Industrial Development and Export Authority’s board last Wednesday.

As of August 4, $18.8 million in CARES act grants have been disbursed, according to information posted on AIDEA’s website.

State officials in charge of the program said they are doing the best they can. “Setting up a completely new grant program to assist businesses through this unprecedented pandemic and its economic impacts, with constantly evolving federal guidance, has been challenging to say the least,” DCCED Commissioner, Julie Anderson, said in a statement.

“However, we continue to adapt the program to assist as many businesses as we can, as quickly as we can. I expect to see significant improvements in processing times and the number of businesses we can reach as a result of the program changes that will go into effect next week.”

However, businesses that will become eligible under the new criteria and who were previously turned down will need to reapply, said Glenn Hoskinson, spokesperson for the department. This is because the new application – which will also become available on Thursday at akcaresonline.org – will include modifications to accommodate the changes.

“The new online application portal is a streamlined process that will help get applications reviewed quickly. While we sincerely apologize for the inconvenience of having to reapply, we are hopeful this will significantly improve processing times,” Hoskinson said.

“However, we are not encouraging any businesses to return federal funds,” so that they will come under the $5,000 limit,” she said. “This is a decision that needs to be made by each business based on their individual needs. Before opting to return federal funds, businesses may want to consider checking to see if their local government are offering municipal grants to small businesses, and if so, to see if they qualify for those without returning funds,” Hoskinson said.

The online application portal goes live next Thursday, at which point applications will no longer be submitted through Credit Union 1’s website. Instead, they will be completed and submitted online at akcaresonline.org. This will allow all program operators to access the applications from one central location to facilitate faster processing, and safeguard multiple processors from issuing grants to the same business when additional resourses are brought into the program.

Businesses that will become eligible on Thursday should wait for the portal application to become available, as it will differ from the application currently available on Credit Union 1’s website. However, businesses are encouraged to begin preparing their supporting documentation now.