Hutchinson: Business Aid Fund Jumped the Gun, Will Be Back

Hutchinson: Business Aid Fund Jumped the Gun, Will Be Back
Gov. Asa Hutchinson announced how restaurants will be able to begin opening for dine-in service on May 11. (Arkansas Governor's Office/YouTube)

Gov. Asa Hutchinson said Thursday that a $15 million state-administered fund to help Arkansas small businesses reopen took applications "prematurely" yesterday, and that his administration hopes to relaunch the fund next week.

The state Economic Development Commission began taking applications for the "Arkansas Ready for Business" grant program at about 5 p.m. Wednesday, according to Alisha Curtis, AEDC's chief communications and legislative director.

Within the hour, it received 2,392 applications totaling more than $35 million, well beyond the limit of the program, which would be funded by Arkansas' share of the federal Coronavirus Aid, Relief, and Economic Security Act funds.

So the AEDC stopped taking applications and closed the webpage. A message on the AEDC website on Thursday said that "due to overwhelming demand, we received grant applications that would exceed funding limits."

The move left some business owners frustrated. At least one legislator, Rep. DeAnn Vaught, R-Horatio, called the process unfair. She said it skirted legislative oversight and alleged that some businesses received early word about the grants, making them better prepared to submit applications faster than others.

During his daily briefing on the state's COVID-19 response, Hutchinson denied that some businesses were shown favoritism and said the issue was one of poor communication. He said the program should have received legislative approval before AEDC began taking applications. He said the application was put on the website "prematurely because we didn't have the approvals that I indicated we need to have."

"I would say that this is the result of people working remotely, people working quickly and trying to get the job done, and it was just a simple failure of clear communication, which I take responsibility for," he said.

In a post Thursday on Facebook, Vaught wrote that the program should have come through the Arkansas Legislative Council for approval before going live. And she said that if a business wasn't a member of an association, "then you didn't know anything about the grant or what documents you even needed to apply."

"To me, that was an unfair advantage for all my Mom and Pop shops who are also trying to open back up for business!" she wrote. "So, today I will be voting NO until they find more money to support business in rural Arkansas and they go thru the correct process so everyone has a fair shake at getting those funds."

Video of Thursday's Briefing

The governor said Thursday that it's not usual for state associations to get word of a grant program before the state begins taking applications. For example, he said if the Department of Commerce were to roll out a new program on Monday, it would notify the appropriate associations whose members might want to apply.

"We're going to notify the Hospitality Association, because this is geared toward many in the hospitality association," he said. "We want to notify the National Federation of Independent Business — all kinds of different groups we want to make sure are notified, including those in the small minority business category. And so that's the kind of outreach we always do before we roll out and put something live like this."

Still, the governor said the administration should have gotten legislative approval before taking applications, and "when we realized it was prematurely up, it was brought back down."

How It Happened

In emails to Arkansas Business, AEDC denied that anyone had a heads-up about the program before the governor's daily briefing on Wednesday.

"The program was publicly announced at the governor's press briefing on April 29," Curtis told Arkansas Business in an email. "[Commerce] Secretary [Mike] Preston directed the public to the AEDC web site and advised that the application would go live that afternoon. Anyone watching the briefing had access to this information. Various members of the news media also discussed this in their social media posts."

Preston talks about the website and applications being available later that day in this video here.

Curtis said that, after press briefing, Preston hosted a 3 p.m. teleconference with 100 local economic development officials from throughout the state about the program. He asked them to help publicize the program and said applications could be submitted beginning at 5 p.m. that evening, she said.

The system went live at 5 p.m. Curtis said each application was electronically dated and time stamped automatically by the application system. The first applicant, from Garland County, submitted its application at 5:04 p.m.

On Target

On Thursday, the governor said response to the program showed that it was targeted to the right group: small businesses that are struggling because of the economic effects of the pandemic.

Hutchinson said 92% of the 2,392 applications were from businesses with fewer than 50 employees, and 59% had fewer than 10 employees. Fifty-seven percent of the requested amount was for businesses with fewer than 50 employees.

"It shows that it's really going to the people that were targeted, which is primarily those that are struggling, that have had their businesses impacted, the small business people, and that's who responded to it," he said.

Under the program, businesses could receive $1,000 per employee and up to $100,000 total. Businesses could spend the money on personal protective equipment for employees, hand sanitizer stations, cleaning supplies and services and other one-time expenses related to reopening or resuming normal operations.

More: Read an overview of the program, which AEDC cautions could change as it considers how to stretch the dollars.

Preston said the grant program would help mitigate the risk of lowered consumer confidence for businesses by giving them what they need to make customers feel safe.

AEDC said Arkansas law prevents it from sharing details about the businesses that submitted applications before the website closed. But it said businesses that eventually receive grant money will be a matter of public record, along with the date and time of their application.

The governor said his administration will work with the Legislature to see whether it needs to make changes to the program or allocate more money before reopening it for applications. 

Hutchinson said businesses would still have a chance to apply when the program relaunches, which he hoped would happen sometime next week. 

Curtis said that "due to the significant demand" it experienced for the program on Wednesday, AEDC is evaluating the total allocation of dollars "to determine the level of funding that we'll be able to provide each approved applicant."

"In the event that the legislature approves additional funding and we have the opportunity to reopen for another application cycle, there will be no need the reapply," Curtis said. "We will keep applicants updated on the status of the program."