The Center for Economic Development and Alaska SBDC Update Alaska’s Small Businesses on COVID-19
Nolan Klouda, executive director of the Center for Economic Development at UAA, and Jon Bittner, executive director of the Alaska Small Business Development Center, presented at the April 13 Make it Monday forum organized by the Anchorage Chamber of Commerce. It was the inaugural wholly-online Make it Monday forum and appropriately provided listeners with updates and information about COVID-19 in Alaska.
Klouda confirmed what many Alaskans have felt, that the COVID-19 pandemic is an “unprecedented crisis” that hit the Last Frontier at a particularly trying time, creating a “perfect storm.” COVID-19 has changed the daily life of every American: “It’s like a slow motion earthquake hitting the whole country at once… causing damage across the planet and unfolding over weeks and months,” Klouda said.
But in Alaska in particular we were just on the cusp of coming out of a three-year recession. Last year was the first in several that jobs were increasing instead of decreasing, and 2020 was poised to be a year of recovery. Not only that, oil prices that had been on a steady upward trend have crashed, plunging Alaska’s primary source of income back into jeopardy.
Due to COVID-19, Alaska lost 36,000 jobs over two weeks, which is 10 percent of the Alaskan workforce and marks an unemployment rate of 16 percent, Klouda explained. “This exceeds anything that we’ve seen in any recorded history.” Job losses are still increasing as businesses that were able to withstand a week or two of closure or reduced commerce are unable to keep operating after a month… with no definitive end in sight.
Nationally, Klouda reported, 24 percent of small businesses are temporarily closed and 30 percent of small businesses anticipate closing temporarily within two weeks; 43 percent have reported that they could close permanently within six months. The industries listed as the most vulnerable are retail, restaurants and dining places, seafood processing, hotels and accommodations, and air transportation, though every industry has needed to make adjustments and many others are experiencing difficulties.
Kouda did note that, while this information seems dire, it’s an “immediate response to an external shock… this unemployment doesn’t reflect a structural weakness in economy.” The positive thing about that is, once the “external pressure” of COVID-19 is somewhat relieved, many of those jobs may return relatively quickly.
Many of us are asking if the shut-down is “worth it,” which is difficult to determine. It’s impossible to know how COVID-19 would have spread through Alaska had we not acted quickly in our attempts to “flatten the curve.” But the detriment to our economy, particularly combined with a recent recession and plummeting oil prices, is easy to see. Klouda did report that in a survey of economists, 52 percent strongly agree that the actions taken to protect the public are necessary and 36 percent agree they are necessary.
He anticipated that in the near future, an additional stimulus package at the federal level is likely and will allocate funds to further support the health care industry, postal services, and the business community.
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Bittner spoke more specifically about the aid available to small businesses struggling under the COVID-19 crisis. He says there are four major programs available to small businesses:
- The Economic Injury Disaster Loan (EIDL), which is a long-standing SBA program that supports small businesses after natural disasters such as the November 2018 earthquake;
- The Paycheck Protection Program (PPP), which allocates funds that can be fully forgiven if they are used within eight weeks primarily to pay employees;
- The SBA Express Bridge Loan, which is available to small businesses with fewer than twenty employees that had an existing loan previous to March 13 and is intended to get a small business through the short term until other funds are available;
- And the Small Business Debt Relief Program, which provides automatic debt relief for the next six months to those small businesses with existing 7(a) loans (excluding the PPP), micro loans, or 504 loans.
Bittner urged small businesses to look into any and all of their options as quickly as possible; the PPP was allocated $350 billion and has already “burned through” $180 billion, and that was “before Wells Fargo, the largest small business lender in the nation,” began making loans through the program.
The EIDL, he explained, already has more funding requests than there is funding available.
However, “I believe that as these programs are strapped for funds, Congress will overcome any politics involved with passing another round, at least to recapitalize these programs and other programs in the CARES act. I have to believe that they understand their constituents will hurt across the nation; this is a nation-wide issue that needs to be addressed,” Bittner said.
“What we’re going through is unprecedented,” he continued. “No one anticipated that the systems being relied upon to provide this assistance would ever have to deal with the magnitude they’re dealing with… The EIDL was never really design to handle every small business in the nation needing those funds at the same time.” Specifically, the application process for the EIDL has changed to try to accommodate the rush of applications, and Bittner recommends that anyone who applied for that program before March 30 reapply.
Regardless, employees at the Small Business Development Center and the SBA are working tirelessly to process applications and answer questions to the best of their ability.
“Even though there are a lot of reasons to be frustrated… the only way we make it through this is if we focus on trying to build each other up, support businesses operations, and find creative ways to get through the next six months,” Bittner said.
In This Issue
Designing Spaces for Masked Faces
The arrival of COVID-19 last March changed the way Alaskans live. Hand sanitizer and face masks became must-have items when leaving home, and phrases like “hunker down” and “social distance” became part of our daily lexicon.