Louisiana’s regular legislative session, which ended June 1, has yielded additional federal financial support for small business recovery from the impacts of COVID-19. Last week, Governor Edwards signed senate bill 189 by Mack “Bodi” White into law, creating the Louisiana Main Street Recovery Fund, a small business set aside of $300 million of the $1.8 billion the state received from the federal CARES Act. The program will be administered through the state Treasurer’s office, and will provide grants of up to $15,000 to eligible for-profit businesses.
To qualify for the program, businesses must meet a few standards such as being domiciled in Louisiana, paying taxes for 2018 and 2019, being in good standing with the secretary of state, and others. The business must also:
- Be domiciled in Louisiana as of March 1, 2020;
- Have suffered an interruption of business;
- Have controlling interest by one or more Louisiana residents;
- Have customers or employees coming to its physical premises;
- Employ no more than 50 full-time employees as of March 1, 2020; and
- Not be a subsidiary of a larger business.
Use of the funds must be “consistent with the CARES Act.” The CARES Act is the controlling legislation for the Paycheck Protection Program and the Economic Injury Disaster Loan Advance Grants, both of which must be spent on things like payroll, rent, mortgage interest, interest on existing debt, and utilities.
The legislature is directing that the program moves money to companies quickly. The Treasurer has 15 days to review applications for grants and must make disbursements within five days of approval. Eligible expenses must be incurred on or before December 30, 2020 and submitted to the Treasurer on or before January 31, 2020.
The money will be prioritized for those businesses who have not accessed other federal aid by staggering eligibility. On or before July 1, the Treasurer will announce the date on which the program will become available, and advertisements and postings about its availability must be in place for at least 10 days before the program starts. When it does, it will be limited for the first 21 days to applicants which not only meet all qualifications laid out above, but which have not received any other federal aid for the same purpose. Specifically, this means:
- They must not have received a Paycheck Protection Program (PPP) loan or an Economic Injury Disaster Loan Emergency Advance;
- They must not have received or been awarded reimbursement under any other federal program any expenses that would be reimbursed by the state’s program; and,
- They must not have received compensation from an insurance company for business interruption.
This 21-day prioritization period is particularly important for the 74 percent of Louisiana businesses that have not accessed the PPP. Approximately 69,000 Louisiana businesses were approved for a PPP loan as of June 12, 2020, just 15 percent of the 457,000 business entities Louisiana State Treasurer John Schroeder says are operating in the state. The prioritization period is also key to ensuring that minority owned and rural businesses are able to access recovery funds. The federal Inspector General’s May 8 report on the PPP underscored that minority owned and rural businesses were less likely to access the program, and that there was no evidence the SBA told lenders to prioritize business owners in “underserved” markets, which would include much of the Capital Region.
The legislation creating the Main Street Recovery Grant Program requires that in the first 60 days of the program, no less than $40 million of the Fund be awarded to minority business enterprises. These are defined in the law as those for which there is at least a 50 percent ownership by one or more minority, female, or veteran individuals. Louisiana Workforce Commission data from 2018 show minority individuals having the highest concentration of workers in service occupations, making up a full half of workers in those industries, or approximately 195,000 people. The service industries were among the hardest hit by the effects of the virus and related Stay at Home orders, as bars, restaurants, salons, and other service businesses faced closure or dramatically reduced occupancy.
This economic impact has been coupled with an outsized health impact on Louisiana’s Black citizens, who make up less than 35 percent of the population, but nearly 55 percent of deaths from the virus, according to the CDC. The $40 million minimum set aside in the Main Street Recovery Grant fund is extremely important to ensure that diverse business enterprises, which are critical to the economic health of diverse communities, receive the support they need to prevent further disparate impacts from COVID-19.
On June 22, Treasurer Schroeder presented a proposal for distribution of the funds to the state legislature. Although the details of the program, beyond those provided legislatively, are still being worked out, the Treasurer offers a few helpful details. The program will be modeled after Back to Business Mississippi, and the website will be modeled after that of Idaho Rebounds. The Treasurer’s office has established an Advisory Council for the Program, which will be chaired by Kelisha Garrett, the Executive Director of the New Orleans Regional Black Chamber of Commerce and Louisiana Chamber of Commerce Foundation.
Treasurer Schroeder estimated that 450,000 of the 457,000 businesses in Louisiana would be eligible for the program. He also noted that his office will have a dedicated telephone line for the program: 225-342-0012.
More details on the program will become available over the next few weeks, and BRAC will continue to monitor the program as it moves forward.
As BRAC’s senior vice president of economic competitiveness, Liz leads the organization’s public policy advocacy, strategy, research, and reform activities aimed at advancing the quality of life and economic competitiveness of the Baton Rouge Region.