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Select committee updated on economic impact of COVID-19, additional aid for small businesses

When it comes to taking care of those who lost their jobs when COVID-19 came sweeping into the state, Minnesota is among the national leaders. Is that a good thing?

At first blush, it would seem so. But some small-business owners have complained that the generous unemployment benefits provided by a combination of federal and state programs have made rehiring difficult, as some potential employees are making more than they otherwise would.

That said, Steve Grove – the state’s commissioner of employment and economic development – considers the state’s programs for workers and small businesses a success, as he told the House Select Committee on Minnesota’s Pandemic Response and Rebuilding Friday. And he offered hope that more aid to small businesses would soon be taking the form of grants, rather than loans.

Before offering an overview of programs administered by the Department of Employment and Economic Development, Grove spoke of the work that must be done for those affected by the arson, looting and vandalism in Minneapolis and St. Paul after the death of George Floyd in police custody on May 25.

“I’ve been touring and seeing some of the damage and it’s devastating,” Grove said. “We’re still trying to understand the full scope of the impact. We’re planning on following the lead of business leaders on this, very much in a spirit of partnership. What are the existing tools we have, and what are the new tools we’ll need? We are working very closely on the disaster declaration for that federal component.

“Among the best tools we have are the Small Business Development Centers, and Minnesota has some of the most robust ones in the nation. … The University of St. Thomas has hired another 17 consultants to help small businesses, which has proved fortuitous timing. … And our dislocated worker program is seeing what it can do to help workers find their next step.”

Grove then offered a summary of how his department’s work has changed since mid-March.

“We’ve had more applications for unemployment insurance over the past 12 weeks than we had in the previous 214 weeks combined,” Grove said. “Despite this influx, we’ve never crashed. We have a reputation of being a stable and strong program.”

Grove spoke of measures in the federal Coronavirus Aid, Relief and Economic Security Act that allowed states to offer additional compensation of $600 per week and Minnesota adding 13 extra weeks of eligibility for unemployment insurance. He said that one of its biggest tasks was expanding the program to include self-employed, independent contractors.

“That was a much more complex benefit to integrate, a completely new program we had to stand up,” he said. “That one took longer than we would have liked. We’re still in the top three or four states to do it, but it was a big lift. We had to make sure that we avoided fraud. … But we’ve reached 100,000 Minnesotans with those payments.”

Another major responsibility of Grove’s department is the administration of federal Small Business Administration loans. The coronavirus rescue package also expands eligibility and parameters for those.

“We have the largest number of SBA lenders in the country,” he said. “We are again among the top five states as far as taking advantage of these federal programs.”

Grove said the state’s businesses have received 92,000 small-business loans as a result of the new federal Payroll Protection Program, with an average loan size of $121,000.

“The state has its own small-business programs that are smaller, but we’re able to get them out faster,” Grove said. “We used an existing loan network to help businesses shut down by COVID. The average size of those loans is $26,745. We estimate that 30 to 35% of those businesses are owned by people of color.

“We’re also working on $60 million for grants. Of that, $30 million would go to Greater Minnesota, $30 million to the metro. These would have specific carve-outs for certain types of businesses, such as those with six or fewer employees, minority-owned businesses, those owned by veterans and other factors.”

Much of the hearing dealt with the financial difficulties faced by bars and restaurants – particularly in Greater Minnesota – due to COVID-related state policies. Grove and Gov. Tim Walz announced a new set of changes to social distancing policies Friday afternoon. Grove added that the state's funding for unemployment insurance will be exhausted this month, and that it will soon be funded entirely by federal monies. He said that this has been the case with several states.

“From the beginning, we knew that you can’t just have a public health response to this pandemic,” Grove said during the morning hearing. “By slowing down businesses, we have saved thousands and thousands of lives. The data bears that out. … We know it’s come at an enormous cost, but we know that the time we’ve bought has been incredibly valuable.”

 

 


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