Alaska business owners and nonprofits need grants, not loans

On May 4, the Anchorage Daily News reported that federal relief has reached ‘barely a handful’ of Alaskan businesses. As members of Mayor Ethan Berkowitz’s Economic Resiliency Task Force (ERTF) — and members of the business community ourselves — we have talked with employers across our region and state. We have heard the dire consequences of a federal relief package that reached too few, and we know that Alaska businesses and nonprofits are struggling to survive. Some are already gone, and many others are teetering on the brink.

Gov. Mike Dunleavy and the Legislature have an opportunity to address this through the $1.25 billion in CARES Act relief funds Alaska received. The governor has currently set aside $290 million of these funds for small business and nonprofit relief, proposing a loan program similar to the federal Paycheck Protection Program (PPP). We urge the governor and the Legislature to reconsider the proposed use of funds to provide grants instead of loans. In doing so, they could prevent a generational loss of businesses and nonprofit groups that currently threatens Alaska’s economy.

While the federal relief programs have provided much-needed assistance to thousands of Alaska employers, they have notable limitations. The PPP was designed as a short-term stopgap support to allow employers to keep their employees. It has been difficult to access, complex and slow in deploying cash, especially for small shops, sole proprietors and minority-owned businesses. SBA data indicates many Alaska employers have not yet received federal money, and those that have received it still need long-term solutions and support. Asking businesses — particularly small shops — to take on debt after nearly two months of closures puts them in an incredibly precarious position. Those who have received the money have little clarity on loan forgiveness, adding stress to a period of tumult and uncertainty.

We urge the governor and the Legislature to set aside $125 million of the proposed $290 million as grants for small businesses and nonprofit employers, prioritizing those with fewer than 50 employees. This would mean 96% of Alaskan businesses and nonprofits would qualify for direct grant relief, representing 49% of all nongovernmental employers in the state. For that reason, we suggest the governor and Legislature authorize grants to these entities in amounts of $10,000 for meeting a minimal set of criteria that balances expediency and accountability. We encourage the state to deploy this money as quickly as possible.

Partners across the state agree. In a survey conducted by the Anchorage Downtown Partnership, 71% of business owners said a grant and not a loan would either keep them in business or contribute to staying afloat. Recently, the Alaskan Regional Development Organizations sent a letter urging Gov. Dunleavy and the Legislature to prioritize grants over loans. Members of the ERTF also sent a letter encouraging the state to do the same. On May 5, the Anchorage Assembly approved a $1 million grant fund for Anchorage small businesses. The city is already inundated with inquiries, a sign the program is likely to be oversubscribed, and is demonstrative of the statewide need.

Small businesses and nonprofits have borne the brunt of emergency hunker-down ordinances. They have made large sacrifices by shutting down to ensure Alaska flattened the curve and saved lives. Because of their efforts, Alaska has one of the lowest rates of COVID-19 in the nation. Now, they need support to get back on their feet.

To echo the words of the governor’s Economic Stabilization Team, now is the time to act boldly and courageously. Now is the time to help the businesses owners and nonprofit organization staff who put their livelihoods on the line for Alaskans.

Jon Bittner is the State Director for the Alaska Small Business Development Center.

Nolan Klouda is the Executive Director of the UAA Center for Economic Development.

Amanda Moser is the Executive Director of Anchorage Downtown Partnership.

Alyssa Rodrigues, Ph.D., is the Director of the Alaska Manufacturing Extension Partnership Center.

Kirk Rose is the CEO of Anchorage Community Land Trust.

Jasmin Smith, owns The Business Boutique.

Ethan Tyler is a Girdwood representative on the Economic Resiliency Task Force.

Jonathan White is the owner of SteamDot Coffee Company.

Jon, Nolan, Amanda, Alyssa, Kirk, Jasmin, Ethan, and Jonathan comprise the Business Programs and Tactics Subcommittee of Mayor Berkowitz’s Economic Resiliency Task Force, a coalition of business and nonprofit leaders working to navigate the economic impacts of COVID-19. The ERTF is chaired by Bill Popp, President and CEO of AEDC, and Julie Saupe, President and CEO of Visit Anchorage.

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