Allocating $240 million in coronavirus relief to businesses turned out to be an exact science. Rep. Charlie Kimbell, ranking member of the Legislature’s House Committee on Commerce and Economic Development, found that out firsthand.
Kimbell, who this summer sold his outdoor clothing store, ended up returning his own $50,000 grant to the state because he didn’t need it.
“Businesses I was talking to in the Legislature were saying, ‘We don’t have enough money,’ and I was like, ‘You’re right, someone else needs this more than we do,’” said Kimbell, D-Woodstock. After assessing the economic damage the store had suffered in the spring, he determined his losses didn’t meet the guidelines for the grant program he had helped create. Also, “we had a PPP loan, so we were all set,” he said of the federal Paycheck Protection Program.
At Zoom committee meetings this spring and summer, lawmakers allocated about $240 million of Vermont’s $1.25 billion share of the Coronavirus Relief Funding, the federal money from the $2 trillion CARES Act that Congress passed last March. The business grants programs, along with grants related to health, have consumed the largest proportion, about one-fifth, of Vermont’s share of the federal funding so far.
The U.S. Treasury adjusted the rules of the federal PPP mid-spring as businesses applied and discovered they weren’t eligible for the program as written. The same thing has happened with the state’s grants programs, many of which have been adjusted by administrators and lawmakers over the last several months to reach more beneficiaries. Deadlines have also been extended for many, as the expected flood of applications often failed to materialize.
“We left some people out,” said Joan Goldstein, the state’s economic development commissioner, of the initial grants programs, which based applications on a 50% business loss compared to the year before. The Agency of Commerce and Community Development is about to open applications for its latest round of business funding, a $76.7 million program that will again be based on businesses losses, although with a different formula for calculating who is eligible for how much.
“We thought we should right the wrongs of the first time around, and enable people who still have ongoing need, those who are still suffering … how do we get money to them?” Goldstein said.
Agricultural grants adjustment
The Agency of Agriculture received $8.5 million in three separate bills to support agricultural and working lands businesses that suffered losses as a result of the Covid-19 pandemic. An additional $25 million was allocated to the agency to help dairy producers and processors.
Lawmakers adjusted both grants programs as part of the budget bill they passed Oct. 1 to make more businesses eligible. One change: In the earlier version of the working lands grants program, businesses that showed a profit weren’t eligible. But many businesses had converted from in-person or wholesale retail to mail-order, and had invested in websites, packaging and shipping, said Laura Ginsburg, the agency’s agriculture development division section chief.
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“A lot of farms said, ‘We’re profitable because we’re selling more, but our expenses are 10 times what they used to be,” Ginsburg said. Some businesses were also disqualified if they had a W2 employee. “So we were able to bridge that gap by making it more flexible,” she said. “Those businesses will now be able to apply and have access to the funding.”
A newly revamped business grants program
Lawmakers this month also set aside $76.7 million more for Vermont’s small business grants program, a continuation of sorts of the $150 million business grants program originally launched July 6. Now the Agency of Commerce Community Development is working on a new set of rules for applicants to reach the many businesses, most in the hospitality sector, that weren’t eligible in the first go-around.
One of the big obstacles that emerged for applicants this summer was a requirement that businesses have lost 50% during one month of the pandemic period compared to the same month the year before.
Many businesses didn’t quite meet that threshold, but still suffered large losses, and needed compensation, Goldstein said. This time around, the agency will take in applications for two weeks, determine the need based on actual losses between March 1 and Sept. 30, and then distribute the money proportionately for all who apply and qualify.
“There are a lot of square pegs and round holes for the grant program,” Goldstein said, noting that the formula hadn’t worked well for chambers of commerce and for many nonprofits, either. “So it was really to establish this next round of financing based on demonstrated need.”
ACCD plans to submit its proposal for eligibility changes to the Legislature for review, and then will hold webinars on the revised grant program, Goldstein said. She expects to open the application process in the last week of October.
Kimbell said lawmakers knew the early guidelines for the business grants program weren’t perfect, but in late May, as the House Commerce Committee started discussing how to use the federal money, the goal was to get the money out to businesses as fast as possible to help them to survive.
“People were desperate to apply, so in some cases they got more money than they actually needed,” said Kimbell, who got more money than he needed because he had applied for a PPP loan to cover payroll and overhead at his store.
“It was really confusing for businesses to figure out what should they apply for; many businesses ended up applying for anything they could, and it was just a bit of panic setting in for everyone,” he said.
The state’s mortgage assistance program has adjusted its deadlines and guidelines. Vermont Housing Finance Agency’s $5 million Covid-19 program, launched in July, originally set a deadline of Aug. 31. But with demand lower than expected, it is still taking applications and in September increased the assistance period available from three months to six. The $25 million rental assistance program through the Vermont State Housing Authority is also still taking applications.
Hospitality businesses expected to apply
Doug Farnham, deputy commissioner at the Vermont Tax Department, said other business owners who have returned grant money also found — like Kimbell — that they had duplicated awards by receiving PPP and state grants for the same losses, a prohibited use of the state program. PPP loans can be converted to grants.
Farnham doesn’t think that’s going to be an issue in the upcoming round of grants, which is administered by ACCD and the Tax Department. Many hospitality businesses that did receive PPP grants have suffered losses surpassing what that money paid for.
“In preparing for this second, upcoming program, we have run an analysis on the hospitality sector, and there is still significant unmet need,” Farnham said. “You can tell from their general tax revenues.”
Goldstein, too, expects most of the applications to come from businesses that still cannot operate at capacity, such as performing arts venues, some educational institutions, tourism businesses, and transportation companies.
“All the things that are travel, tourism, all the venues and ancillary event-related businesses are severely impacted,” she said.
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