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Problems with CARES Act funds may require legislature to reconvene

In order to modify the CARES Act guidelines, the legislature may have to reconvene for a...
In order to modify the CARES Act guidelines, the legislature may have to reconvene for a special session. (Storyblocks) (KTVF)
Published: Jun. 12, 2020 at 5:45 PM AKDT
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State CARES Act funds are a topic of conversation amongst legislators once again.

This time, it is because the language in the state’s guidelines for eligibility for small business relief funds preclude businesses who have received funding at the federal level from receiving any at the state level, regardless of how much they received.

This creates a problem for businesses who applied for federal aid but did not receive amounts that provided adequate relief during the economic shutdown associated with the coronavirus pandemic due to exhausted federal funding sources.

In the case of the Economic Injury Disaster Loan (EIDL), for instance, its funds were tapped at a higher rate than anticipated. For successful applicants whose applications were processed after this was discovered, they were only granted $1,000 per employee rather than the previous baseline of $10,000.

This was experienced by a local businessowner who spoke to the issue on condition of anonymity. This is because they say that there is a fear among businessowners that if the community knows that they have received “free money”, their patrons will no longer want to do business there.

According to this businessowner, they applied for $10,000 and only received $1,000.

The same individual also owns a restaurant in the downtown area, and due to the guidelines associated with another type of COVID-19 relief loan, the Paycheck Protection Program, they were forced to spend their money within an 8-week period. This caused them to deplete their funds, however, they say their restaurant is still struggling as the state continues to grapple with handling the coronavirus.

Solving this issue, according to Representative Christ Tuck (D – Anchorage) may require the legislature, which has adjourned sine die, to reconvene for a special session as the guidelines were created via the RPL process by the governor and ratified by the legislature.

Thus, they cannot be legally undone without the legislature's approval.

"Now that the RPL, as drafted by the governor, is the way it has to be administered,” Tuck says, “The governor realizes, 'oh I made a mistake, we

should

allow businesses who had previously applied for the EIDL or the PPP to be able to apply for this as well, they can just deduct what they got from the federal government previously against their application on this one.'"

Tuck advises businesses who feel they would be awarded more money from the state to pay back their federal loans and apply for the state’s AK CARES grant.

The Alaska Industrial Development and Export Authority (AIDEA) and the Alaska Department of Commerce, Community, and Economic Development (DCCED) have partnered with Credit Union 1 to distribute the funds.

According to AIDEA, Credit Union 1 is receiving in a significantly greater amount of paperwork than is needed for AK CARES program, and they have sent out a proposal request from other financial institutions to assist in processing the grants.

As of Friday, AIDEA has currently received 1,300 applications, representing an amount of nearly $60 million dollars.

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