Many Alaska small businesses on shaky footing despite coronavirus funding help
Across Alaska, many small business owners are struggling during the COVID-19 pandemic despite loans and grants that are meant to assist them.
On Wednesday, the Commerce Department announced that
are now available for business owners who have taken small federal loans. Some nonprofits like chambers of commerce are also eligible.
Nate Vallier, the owner of Alaska & Yukon Tours, planned to expand his business this summer from a travel agency into a tour operator in Southeast Alaska. COVID-19 changed those plans. “It’s put us at a standstill,” Vallier said.
His business had been ineligible for state grants after receiving a $2,000 federal loan advance.
“What the AK CARES grant would do is give us a huge shot in the arm, we could restart instantly with a huge campaign and immediately start hiring three to five people,” Vallier said. “Whether or not it gets us through winter, that is an unknown. If right now we get nothing, we should be solvent for probably three or four months.”
Vallier said the grant would allow his business to work through the winter, trying to market Alaska as a winter destination.
For small business experts, the eligibility change is positive.
“That’s a good start but I’d like to see it expanded a little more,” said Jon Bittner, executive director of the Small Business Development Center.
Bittner has been fielding calls from business owners during the pandemic looking for help. He says calls have changed in nature in the past two weeks.
“The tone of the businesses that are contacting us have gone from cautiously optimistic to innovative, how do I pivot my business? To things are getting tight, now, we’re getting sort of into a desperation mode,” Bittner said.
Small business owners called into a House Finance Committee meeting on Wednesday, many of whom said that the expanded grants program worth between $5,000 and $100,000 would make a difference. Others said it wouldn’t be enough.
Some business owners are also still set to miss out on the expanded state program, including JoAnna Littau, the owner of Planet Anchorage, a bed and breakfast in Fairview.
Littau estimates that her business makes up around a third of her annual income. Under the state business grant program, she is ineligible for help because her business is considered a secondary income source.
“Unless any regulations are going to change, I’m history,” Littau said. “Frankly, I don’t know what I’m going to do.”
“It was kind of depressing to be honest, a lot of businesses are going through a lot of hardship right now,” said Rep. Adam Wool, D-Fairbanks, of the callers to the committee meeting.
Wool wasn’t opposed to the idea of the Legislature rewriting some of provisions in the grant program after some have questioned whether expanding the program has been done legally.
Wool was forthright about the future for some Alaska businesses. “I don’t think we can save every business and that’s the sad reality,” he said.
Business confidence across the state appears to be shaky, according to surveys conducted by regional development corporations.
Robert Venables, the executive director of Southeast Conference, is preparing to publish a survey of businesses in Southeast. Four hundred businesses responded, saying they’ve laid off 1,900 staff due to the pandemic, an additional 3,500 planned hires haven’t been made.
Of the business owners surveyed, 25% are not sure if their businesses will survive the pandemic, Venables said.
Similar numbers have been seen in Anchorage.
The Anchorage Economic Development Corp. conducted business surveys in March and April. Across all businesses, 15.8% said there was a risk they would close permanently. Another 22.4% said they didn’t know.
On the Kenai Peninsula there was a similar response. In a survey conducted in March and April, just over 24% business owners feared closing permanently
Tim Dillon, the executive director of Kenai Peninsula Development Corp., said the expanded state grants program “is not going to fix the whole thing” but he was heartened by local governments in the region committing to investing in businesses.
Boroughs and cities are preparing to spend $10 million at a minimum of their CARES Act funds to help small businesses on the Kenai Peninsula, Dillon said.
Many local governments across Alaska are planning, or have already begun, to implement similar business relief programs.