State seeks ways to speed CARES grant process

  • Department of Commerce, Community and Economic Development Commissioner Julie Anderson speaks at an April 3 press conference. The department, the state-owned development bank and Credit Union 1 are working to speed up the process for distributing a pool of some $290 million in aid to small businesses. Nearly $100 million has been applied for, but just more than $10 million has been distributed. (Photo/Austin McDaniel/Office of the Governor)

The Dunleavy administration’s attempt to expand eligibility for a $290 million small business aid program initially prevailed in court but those overseeing the grants are struggling to pinpoint why dispersing the funds has gone so slowly.

“All of us recognize that the applications are not being processed quickly enough,” Alaska Industrial Development and Export Authority Interim Executive Director Alan Weitzner said of the AK CARES pandemic relief grant program.

Through July 13, Credit Union 1 had received 2,226 AK CARES grant applications from small businesses totaling approximately $98.5 million in expenses and 253 grants totaling nearly $10.6 million had been dispersed since June 1, according to Credit Union 1 spokeswoman Jessica Gallagher.

AIDEA officials have recently been in constructive discussions with AK CARES program managers at CU1, Commerce Department officials and other, experienced grant providers, in which best practices for administering such a large grant program were exchanged, Weitzner said during a teleconferenced July 14 House Labor and Commerce Committee hearing.

AIDEA, the state’s development bank, was tasked with overseeing the small business grant program in spring and Anchorage-based Credit Union 1 was selected to administer it following a competitive bidding process. AIDEA is a public corporation under the Department of Commerce, Community and Economic Development.

CU1 CEO James Wileman told legislators that the grant applications, which can be started through the lender’s website, are regularly submitted while missing requisite information. Credit union staff are then reliant on the applicants to be responsive to fix the form, he said, and the missing information varies widely between applicants, making it difficult to get ahead of the problem.

CU1 is also awarding the grants with paper checks, which slows the process slightly versus electronic funds transfers. According to Wileman, paper checks are being used at the request of AIDEA to create an appropriate paper trail for potential future audits.

CU1’s Gallagher wrote via email that lag time in processing the applications is often a result of verifying documents supporting the eligible expenses for the requested grant amount.

“Since go-live (June 1), we have been in many conversations with the state about process improvements, and we are jointly looking for ways to reduce processing time required so we can serve more Alaskans as quickly as possible,” she wrote.

Weitzner said AIDEA is working to change the application forms to streamline the process as much as possible for applicants and CU1 grant processors and is trying to coordinate the new applications with new, relaxed eligibility criteria for the grants.

The Commerce Department announced June 17 that it was expanding the eligibility for AK CARES grants to small businesses that had also received $5,000 or less from federal pandemic relief programs such as the Small Business Administration’s Paycheck Protection or Economic Injury Disaster Loan programs.

The state grants are also now open to 501(c)6 nonprofits and commercial fishermen who hold a Commercial Fisheries Entry Commission permit in-lieu of a traditional business license, Commerce Commissioner Julie Anderson said.

“Thousands of (commercial fishery) participants will be able to access those funds and as we all know the fishing industry is facing some extreme hardships this year,” Anderson said, with depressed markets and poor salmon returns across much of the state.

The Commerce Department eased the requirements at the behest of lawmakers and state business leaders who said many small business owners statewide were ineligible for AK CARES support because they had received small amounts of funding through a federal program but were still in need of more aid to stay open.

The Dunleavy administration first limited AK CARES eligibility to small businesses that had not received federal funding to ensure the aid would be spread as widely as possible. Anderson said if business owners can return any federal aid in excess of $5,000 they would also be eligible for an AK CARES grant under the revised requirements.

State Superior Court Judge Philip M. Pallenberg on July 10 denied a preliminary injunction motion filed by former University of Alaska regent and Eric Forrer against the Dunleavy administration, in which Forrer urged the court to halt the AK CARES program over his belief that the administration and lawmakers had not followed the correct process in accepting and appropriating the $290 million of federal funds that are the basis for the program.

Pallenberg concluded that stopping the aid over a process dispute would cause undue harm to applicants and Forrer was also unlikely to win on the overall merits of his arguments.

Anderson said the state needs to be more effective in communicating the AK CARES guidelines to potential applicants, which should help speed the process for future grants.

“Our intent is to be as responsive as we can,” she said.

And while it’s well understood that countless businesses and nonprofits are struggling mightily to stay afloat, it’s nearly impossible to quantify the situation in real-time, Anderson noted.

She told lawmakers that there simply isn’t a good method for understanding how many businesses are on the verge of closing or have closed without waiting months to see what shows up in business licenses and changes to other records.

Elwood Brehmer can be reached at [email protected].

07/15/2020 - 9:34am