Gov. Raimondo and Lt. Gov. Daniel McKee agree small businesses are going to need more help to weather the impact of COVID-19 on the economy. But does the state use $125 million in CARES Act funds to assist 10,000 small businesses with
Gov. Raimondo and Lt. Gov. Daniel McKee agree small businesses are going to need more help to weather the impact of COVID-19 on the economy.
But does the state use $125 million in CARES Act funds to assist 10,000 small businesses with grants up to $10,000, as McKee proposes, or should the pot be smaller – $50 million – but with grants of up to $15,000, as Raimondo suggests?
The governor holds the cards, as it is up to her to allocate the $1.25 billion in funding. A spokeswoman for McKee said Tuesday that the lieutenant governor will continue to push for additional funding for small business and to get a plan up and running sooner than later.
For the moment, there’s no immediate relief for small businesses. And if anything, the use of federal funds allocated to the state to address the pandemic has raised more questions.
In an interview last Thursday, House Speaker Nicholas Mattiello said he is reluctant to endorse either plan or a hybrid until legislators resolve how to plug a state budget deficit projected at $750 million - $600 million caused by lost sales and income tax revenues and lottery income as a result of the pandemic plus a $150 million projected shortfall prior to the shutdown. Although McKee said the federal funds can’t be used for that purpose, Mattiello isn’t so sure the rules of the game won’t change. He’s for waiting to see what additional federal funding comes Rhode Island’s way and what strings they may carry.
Meanwhile, buoyed by the governor’s announcement, businesses turned to the website giving a broad outline of the program – only to find when they tried to apply, they were told it could take another week before they could sign up. When she announced the program, Raimondo projected it would be six weeks before it could be in place and awarding grants.
That’s way too long for McKee, who told the Warwick Rotary Club last Thursday that businesses need the help right now and if they are forced to wait they could be forced to close.
McKee, who said his plan is ready to go, was also critical of conditions Raimondo would place on use of grant funds. Raimondo sees the money being used to address expenses related to the pandemic such as disinfecting areas, the acquisition of plexiglass shielding, masks and other personal protective equipment, or PPE, for employees. McKee is for letting businesses how to best spend the money.
“They know how to run their business,” he said.
McKee also took exception with Mattiello’s suggestion the funds could be used to balance the state budget. McKee agrees that legislators face a budget challenge but says they need to find it elsewhere, or though cuts.
“This is not to help save a business long term, but it helps buy time, and time is really important right now, time is money,” McKee said.
Under McKee’s plan, the money would be allocated on a city or town’s population and then in turn to businesses.
“So if you've got 8 percent of the [state’s] population in your town, you get 8 percent of the money, and then you distribute that out at $10,000 a shot,” he said.
According to a release from his office, qualifying small businesses could receive a grant of up to $10,000 – $2,000 per employee for up to five employees. In addition, qualifying small businesses that did not qualify for the Paycheck Protection Program could receive an additional $5,000 bonus – $1,000 per employee for up to five employees and minority – and women-owned small businesses could receive an additional 10 percent bonus.
The lieutenant governor’s proposal is part of an advocacy effort that began in March through a series of virtual COVID-19 small business meetings hosted by his office. Since then, McKee said he has worked with hundreds of small businesses to connect them with the resources they need and hear their feedback on the process of reopening and stabilizing Rhode Island’s economy.
More than 3,700 people have signed a petition (rismallbusiness.org/petition) in support of the small business community. The petition was delivered to the State House two weeks ago.
The spokeswoman for the lieutenant governor said McKee plans to keep his plan alive in hopes the governor will increase funding as well as step up the program.