Alaska’s $290 million small-business aid program is starting slowly

Fewer than 1% of applicants to Alaska’s new small-business grant program received money in the effort’s first week, officials told the Alaska Legislature on Wednesday.

That’s much slower than planned. Administrators of the AK CARES program said applicants are either submitting incomplete applications or overwhelming grant officers with thick packets of unnecessary information.

Officials said the pace of aid will improve in coming weeks, and the effort is still on track to help between 5,000 and 7,000 Alaska small businesses, they said.

Through Friday, 44 aid applications were approved from 1,171 filed. Eleven of those 44 have received money, according to figures presented to the Alaska House Finance Committee.

Grants will be issued until funding runs out. The state has earmarked $290 million for the program.

“The first week has had a slower than anticipated start, but we should see a larger amount of funding being issued this week and the following week,” said Alan Weitzner, interim director of the Alaska Industrial Development and Export Authority.

AIDEA is a state-owned corporation under the Alaska Department of Commerce and was put in charge of the program, which is funded by the federal CARES Act. It’s intended to give grants between $5,000 and $100,000 to small businesses suffering from the economic shock caused by the coronavirus pandemic.

AIDEA contracted Credit Union 1 to administer the program. In documents provided to the Legislature, the administration of Gov. Mike Dunleavy estimated that an administrator “will be able to verify applications and distribute funding at a rate of $150,000,000 per month.”

Credit Union 1′s contract with AIDEA doesn’t require that benchmark, but President/CEO James Wileman said his company “definitely thought it was attainable at the time.”

Weitzner, Wileman and others said grant officers are having to talk with applicants six or seven times to finalize their requests for aid. Applicants are also submitting more paperwork than expected.

“From our perspective, there’s some PPP shell shock going on,” Wileman said, referring to the federal Paycheck Protection Program, which requires a significant amount of supporting documentation.

Requirements for the state program are easier, said Robert Venables, executive director of Southeast Conference, one of several regional economic development organizations paid by the state to assist the aid process.

He said some companies submitted incomplete information, the equivalent of “spaghetti thrown at a wall” to see what sticks.

“That’s the real issue: A lot of people threw some stuff up in the air,” Venables said.

To fix the problems, Credit Union 1 created a series of how-to videos and attached them to the official application. Wileman said he believes those should help applicants streamline their submissions and make approvals quicker.

The state is also preparing to hire additional processing firms before the end of the month.

In addition to the slow pace of processing, state legislators said they are concerned by rules that prohibit federal aid recipients from qualifying for the state program.

“I’m very keen to figure out what the solution is for those businesses,” said Rep. Ben Carpenter, R-Nikiski.

Julie Anderson, commissioner of the Alaska Department of Commerce, said her agency is working with the Alaska Department of Law to see if there is any flexibility in rules crafted by the governor’s office and approved by the Legislature last month.

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