Dunleavy administration makes changes to ease small business access to COVID-19 relief

Mike Dunleavy gestures wearing a green and black jacket
Gov. Mike Dunleavy speaks at a news conference on Tuesday, March 31, 2020. (Office of the Governor)

Alaska Gov. Mike Dunleavy announced changes on Thursday intended to put more COVID-19 relief grants into the hands of small business owners. The AK CARES grant program has distributed less than a tenth of the $290 million budgeted for it. 

Dunleavy’s administration will remove two barriers that have prevented many businesses from receiving the grants, which are funded through the federal CARES Act.

Dunleavy said the program was crafted to help businesses excluded by other programs. 

“And we are now expanding that relief to other small Alaska businesses in real need,” he said in a pre-recorded statement. “But we are hearing very clearly from businesses throughout Alaska that relief needs to come now.”

The changes will allow small businesses that have received more than $5,000 in relief from two other federal relief programs — the Payroll Protection Program and Economic Injury Disaster Loans — to receive AK CARES grants. Also, business owners who have different primary sources of income will be able to receive the grants. 

The grants range in size from $5,000 to $100,000. Businesses with 50 or fewer employees are eligible. 

The changes were submitted to the Legislative Budget and Audit Committee. The changes can happen as soon as the committee approves them. If the committee doesn’t approve them, they can still happen, but not until early October.

Anchorage Democratic Rep. Chris Tuck, the committee chair, said LB&A will review the proposal on Aug. 27. He said Dunleavy should have put fewer restrictions on the grant program in the first place.

“Well, that’s something that should have gone out a long time ago, because there’s a lot of small businesses that really need that relief,” he said. “And for the governor to have really put those limitations on there in the first place, really was a disservice to our Alaska businesses.” 

Funds from the grant program have been slow to reach many businesses since the Legislature approved Dunleavy’s plan for the money in May — just $28.6 million has been sent so far. 

On Tuesday, Department of Commerce, Community and Economic Development Commissioner Julie Anderson said 3,665 businesses have applied for $169 million in AK CARES grants. 

Credit Union 1 was originally the only organization to process the applications. It has approved roughly 1,000 applications for $41.5 million. 

The credit union is no longer accepting applications, with all new applications going through a website the state launched on Aug. 6. 

Anderson said the state is aiming to have the applications processed faster. 

“And we’re doing everything we can to assist them and work together to make sure people are getting their funds out, as we know they are desperately needed,” Anderson said. 

Businesses who were determined ineligible after applying for the grants will have to reapply. But, Anderson said the revised application is much less time-consuming. 

State officials have said the state could make further changes to program eligibility if necessary in order to spend all of the money by Dec. 30, the federal deadline. The request submitted to the Legislative Budget and Audit Committee would allow Dunleavy’s administration to make these changes — such as increasing the number of employees that eligible businesses can have — in the future.  

Anderson said the state has reassigned 15 people to work on the applications. In addition, the Alaska Industrial Development and Export Authority, the state corporation overseeing the program, has hired staff and signed a contract with the Juneau Economic Development Council to handle applications. 

Business owners have raised concerns during legislative hearings that the state’s rules prevented them from receiving grants. 

And some lawmakers have criticized the delays in getting the money out to Alaskans. Anchorage Sen. Elvi Gray-Jackson and Rep. Geran Tarr, who are both Democrats, earlier this week called on Dunleavy to reconvene the Legislature to expand eligibility for the grant program.

The state has steadily loosened eligibility restrictions on the AK CARES grants since the program was launched.  The original plan barred businesses that received any other federal relief from also getting the grants. That was later changed to allow those that received less than $5,000 to be eligible. Now, with the latest changes, businesses that have received other federal relief in any amount can still qualify for the state’s grant funding.  

Changes to the state’s grant program have been controversial.  When Dunleavy’s administration first debuted its plan to use the funding, a Juneau man sued — arguing that the Legislature needed to meet and vote on how the funds should be allocated. That lawsuit was eventually dismissed on Aug. 6.