Wave of new federal money heads for Alaska

A surge of new federal money is headed to Alaska to help small businesses. It may take a little longer to get here than was hoped, but it’s on the way.

Alaska financial institutions began accepting applications Friday for new Small Business Administration-guaranteed emergency loans, but the rollout of the massive federal program, called the Paycheck Protection Program, is hitting speed bumps.

That should be no surprise given its unprecedented size and speed, but it’s not yet clear how quickly money can get to businesses that are struggling in the wake of the virus-related impacts.

“Our lenders are ready to answer questions and start the process. Applications were being accepted starting on Friday,” Northrim Bank spokesperson Katie Bender said.

“I don’t believe there is an official timeline but applications shouldn’t take too long as everyone is trying to get help out as quickly as possible,” she said.

Banks that are preferred lenders to SBA should see applications move more quickly. Besides Northrim, Cache Valley Bank; Wells Fargo; KeyBank; First Bank Alaska; Denali State Bank, and Mt. McKinley Bank are participating in the program.

Meanwhile, a state-backed loan program available now through the Alaska Industrial Development and Export Authority can guarantee business loans up to $1 million. “We are accepting applications now, but remember the first step is for the business to contact their lender regarding their interest in the “Alaska Safe” said Karsten Rodvick, a spokesman for AIDEA. The current authority for AIDEA is to lend up to $50 million under the program.

Julie Anderson, state Commissioner of Commerce and Economic Development, said a plan for a larger AIDEA loan guarantee program is also being developed. Anderson spoke in a press conference Friday with Gov. Mike Dunleavy. The goal is for a fund up to $1 billion.

However, that will require approval by the state Legislature, which is now in recess. It will likely be summer or fall before lawmakers return to Juneau to take up unfinished business.

There was a last-minute effort to include authority for the new program on a bill moving through the Legislature extending the COVID-19 emergency declaration declared by Gov. Mike Dunleavy, but negotiations on the provision failed. The bill, Senate Bill 241, passed the Legislature March 26 but without the new authority.

AIDEA has worked with commercial banks for years in participation in business loans for years has authority to implement a small-scale loan guarantee program for businesses affected by COVID-19, but the larger version of the loan guarantee program, announced recently by Gov. Mike Dunleavy and AIDEA, must await the return of the Legislature.

The new money that will be here much faster, in about a week in fact, will be the larger Unemployment Insurance Compensation (UIC) benefits that were also part of the federal legislation, state Department of Labor and Workforce Development officials said.

Those are the $600-per-week supplements to the state’s existing UIC program, which had maximum benefits of $370 per week. A second program is expected, also $600 a week, that would pay unemployment to self-employed people not typically part of the normal UIC system, state labor Commissioner Dr. Tamika L. Ledbetter said in the Friday press conference with the governor.

This program should be up and running in about a month. “The UIC division is now standing up a program to begin processing applications for the self-employed, including IT upgrades and imcome verification procedures,” Ledbetter said.

As is happening nationally, Alaska’s unemployment filings are soaring at a record pace. There were 13,774 new unemployment claims filed the week of March 21, up 76 percent from the number of claims filed the previous week. Prior to the COVID-19 crisis Alaska had about 3,000 on unemployment in a given week during winter with new applications offset by people leaving the system.

“It’s fair to say that we are now seeing a 12-fold increase in weekly claims filed compared to the period preceding the economic shutdown,” said Cathy Munoz, Deputy Commissioner of the labor department.

The surge in unemployment filings has put huge strain on the Department of Labor staff in answering questions and helping applicants, Ledbetter said. “We are moving people from other divisions in the department and asking people to come out of retirement to help. We’re asking people to be patient with us as we work our way through this,” the commissioner said.

Alaska’s Legislature also passed a bill to streamline and enhance the state UIC program even before the new federal legislation was approved. It removed a one-week waiting period for unemployment benefits and increased weekly allowances for dependents.

Enhanced unemployment assistance will take some of the sting out of the current situation.

If 15,000 are registered and receiving benefits, the extra $600 a week means an injection of $9 million a week of new money into the state’s economy. When self-employed are added, these numbers will grow. This won’t replace the lost wages, but it will help.

Alaska’s UIC program has never been considered generous, however. At a $370/week maximum the state pays the third-lowest benefit in the nation, and in terms of replacement of lost weekly wages Alaska is in last place among U.S. jurisdictions, lower than even Puerto Rico and the U.S. Virgin Islands.