Small Business Recovery:

A Framework for Assistance

Ellen Harpel, PhD

Founder, Smart Incentives

Small business recovery after the COVID-19 pandemic is critical to the states’ economic well-being. Strategies to accelerate this recovery were the focus of the September 9 Senate Presidents’ Forum online meeting. A presentation by Ellen Harpel, PhD, Founder of Smart Incentives, which helps communities formulate sound economic development incentives, was followed by reports from the states on the status of small businesses and their impact on state economies.

Uncertainty

The pattern of economic recovery is uncertain and the picture is rapidly changing, Dr. Harpel pointed out, depending on how the coronavirus and health metrics continue to evolve. Therefore, small business recovery programs need to be flexible and ongoing — not based on “set-and-forget” one-off initiatives. Economic incentives are only a part of a state’s larger economic development strategy and must work in concert with other efforts, she noted.

Assessing Needs and Measuring Results

Upfront planning and full transparency are critical to ensure the success of small business development programs. Dr. Harpel said state legislators should explicitly and transparently:

Define the objectives — be clear what the programs intend to accomplish

Specify how achievement of those objectives will be measured

Keep it simple. All procedures — from eligibility and application to outcomes reporting — should be as simple as possible

Allocate authority for flexibility as needed for the programs’ evolution

Communicate the outcomes

Designing Programs for Small Businesses

Beyond Dollars

Prepare Now For Scrutiny Later

Guardrails to guide the programs are essential, Dr. Harpel noted. Budgets must be clearly defined but administrative discretion should also be enabled to allow changes to programs without a full legislative process. States should be prepared to address key questions including: How much did we spend? Who received incentives? What happened as a result? Dr. Harpel pointed to Michigan as an example of good transparency in reporting on grant and loan recipients.

In order to effectively answer these questions, legislators need to define how outcomes will be measured, what reports will be required, and how information will be shared.

Summary

In conclusion, Dr. Harpel recommended the following for all small business economic development programs:

1. Keep itsimple. Streamline the rules and procedures, and require 1 or 2 easily obtained core metrics to assess outcomes.

2. Keep itconnected to the objectives. Define how and when to assess achievement of the objectives.

3. Keep ittransparent. Inspire confidence in the system by making the objectives, measures, and data readily accessible in a format that can be shared with stakeholders; for example, via a website.

State Reports

Sen. Cathy Giessel (AK): Internal politics slowed the deployment of Alaska’s small business relief program, as the legislature and the Governor debated a grant-based versus a loan-based program. Finally, a grant program was approved with less restrictive eligibility guidelines and, last week, funds became available. The AK CARES program was seeded with $290 million of the more than $1.25 billion the state received in federal CARES Act funding. To date, 2,542 AK CARES grant applications with requests totaling approximately $114 million have been received.

Sen. Nicole Poore (DE): Delaware has embraced a hybrid approach for education, with most classes online. Schools are considering plans to restart their sports programs. Meanwhile, the state has allocated $100 million in relief dollars to small businesses.

 

Sen. Kalani English (HI): Hawaii has been hard hit by COVID-19, and severe restrictions have been imposed including a complete lockdown of Oahu through September 24 and a 14-day quarantine requirement for all visitors. As a result, tourism has plummeted, and many of the state’s small businesses have failed. For example, almost 70% of the small businesses in one town closed after landlords refused to lower rents. On the positive side, Hawaii successfully launched a mass testing program, shutting down a major highway and using it for drive-through COVID-19 testing, processing 5,000 people per day over 2 days.

Sen. Brent Hill (ID): Idaho’s report was upbeat. The state’s revenues in July and August were up 15% over last year; sales taxes up 8%; and the unemployment rate at 5%. Some regulations on business have been suspended for greater flexibility, and liability for COVID-19 claims is limited. Many people are moving to the state, stoking activity in the real estate and construction sectors. A proactive grant process was created for businesses that did not receive Paycheck Protection Program funds from the federal government. Additionally, a “Back-to-work” cash bonus was offered to incentivize unemployed people to return to work.

Sen. Don Harmon (IL):  Federal COVID-19 relief funds were allocated directly to Chicago and other large urban counties, so when a business interruption grant program was developed, some geographic preferences were established to provide equity across the state. We also set some money aside for disproportionately affected communities and specific businesses such as childcare providers so that these resources would be available when people started returning to work.

Sen. Roderic Bray (IN): Indiana has decreased regulations and is taking a critical look to determine which regulations were necessary in the first place. Businesses, non-profits and other organizations have been granted immunity from COVID-19 liability, within reasonable bounds, to build confidence about getting back to work. Additionally, grants have been available to help small businesses survive. Indiana’s situation also is improving with unemployment recovering from a high of 17% to 7% currently, and revenues are starting to recover.

Sen. Charles Schneider (IA):  Iowa's budget is “the most resilient and fiscally sound budget in dealing with the COVID-19 pandemic,” according to a study commissioned by the Council of State Governments, Sen. Schneider reported. Factors that contribute to this include a high concentration of state GDP in the finance and insurance sector and a low concentration in leisure and hospitality. A bill providing immunity for businesses from COVID-19 liability was passed by the legislature. Some regulations on business have been suspended to allow greater flexibility, and those regulations will be reviewed to determine if they will be necessary after the economy rebounds.

Iowa entered into the crisis with a sound budget. The state’s economic emergency accounts were full (at 10% of the General Fund balance) and Iowa had an additional budget surplus of about $200 million. The state’s healthcare capacity is good and this has enabled the state’s re-opening.

Sen. Bill Ferguson (MD): The state’s withholding taxes have stayed stable, but the sales tax and transportation funds have been decimated. The unemployment trust fund is being used up. Federal support is critical to backfill these losses. Meanwhile, an unemployment reassessment on business may put the state’s business recovery at risk.

Sen. Mary Kay Papen (NM): The state relies on tourism, and restaurants have suffered most; they are only now opening for outdoor dining, and at limited capacity. With unemployment at 12% and many businesses closing permanently, New Mexico’s Finance Authority created a small business loan program with more lenient eligibility requirements.

Sen. Phil Berger (NC): The state’s unemployment trust fund is strong, holding more than $2 billion, and the Rainy Day Fund remains untouched. Only the Transportation Fund has been hard hit by the pandemic. Federal dollars were allocated to local governments and may be used at local discretion for activities such as testing or small business loans. A bill providing immunity for businesses from COVID-19 liability was passed by the legislature. Some regulations on business have been suspended. The schools are still virtual and grant funds are available for parents who need child care support. People keep moving to the state, which stimulates the economy.

Sen. Ginny Burdick (OR): The pandemic-related issues have been overshadowed by the fires raging across Oregon which pose a very serious threat. Sen. Burdick also reported that the 100 days of demonstrations in Portland, which have focused negative attention on the city, actually affect only a 6-block area and are being contained. In the housing sector, a moratorium on evictions, which was scheduled to expire at the end of September, may be extended, and the moratorium on foreclosures may be extended through the end of the year.

Sen. Larry Taylor (TX): Despite the plunge in oil and gas revenues, things are getting better in Texas, Sen. Taylor reported. Sales tax revenues are recovering largely due to online sales. Safe opening of the schools is an ongoing priority, and virtual learning has been supported by the purchase of over one million laptops and wi-fi “hot spots” for students at home.

A challenge facing the Texas legislature arose from the state’s biennial legislative calendar. January 2021 is the next scheduled session, which has left all decisions during the pandemic on the Governor’s plate. The legislature is working to determine how crises arriving in an adjourned year will be managed in the future.

Speaker Biography

Ellen Harpel, PhD

Ellen Harpel is the founder of Smart Incentives, which helps communities make sound decisions throughout the economic development incentives process. She is also president of Business Development Advisors LLC (BDA), an economic development and market intelligence consulting firm in Arlington, VA.

CONTACT US

Senate Presidents’ Forum

579 Broadway

Hastings-on-Hudson, NY 10706

 

Tel: 914-693-1818

Copyright © 2020 Senate Presidents' Forum. All rights reserved.

Small Business Recovery:

A Framework for Assistance

Ellen Harpel, PhD

Founder, Smart Incentives

Small business recovery after the COVID-19 pandemic is critical to the states’ economic well-being. Strategies to accelerate this recovery were the focus of the September 9 Senate Presidents’ Forum online meeting. A presentation by Ellen Harpel, PhD, Founder of Smart Incentives, which helps communities formulate sound economic development incentives, was followed by reports from the states on the status of small businesses and their impact on state economies.

Uncertainty

The pattern of economic recovery is uncertain and the picture is rapidly changing, Dr. Harpel pointed out, depending on how the coronavirus and health metrics continue to evolve. Therefore, small business recovery programs need to be flexible and ongoing — not based on “set-and-forget” one-off initiatives. Economic incentives are only a part of a state’s larger economic development strategy and must work in concert with other efforts, she noted.

Assessing Needs and Measuring Results

Upfront planning and full transparency are critical to ensure the success of small business development programs. Dr. Harpel said state legislators should explicitly and transparently:

Define the objectives — be clear what the programs intend to accomplish

Specify how achievement of those objectives will be measured

Keep it simple. All procedures — from eligibility and application to outcomes reporting — should be as simple as possible

Allocate authority for flexibility as needed for the programs’ evolution

Communicate the outcomes

Designing Programs for Small Businesses

Beyond Dollars

Prepare Now For Scrutiny Later

Guardrails to guide the programs are essential, Dr. Harpel noted. Budgets must be clearly defined but administrative discretion should also be enabled to allow changes to programs without a full legislative process. States should be prepared to address key questions including: How much did we spend? Who received incentives? What happened as a result? Dr. Harpel pointed to Michigan as an example of good transparency in reporting on grant and loan recipients.

In order to effectively answer these questions, legislators need to define how outcomes will be measured, what reports will be required, and how information will be shared.

Summary

In conclusion, Dr. Harpel recommended the following for all small business economic development programs:

1. Keep itsimple. Streamline the rules and procedures, and require 1 or 2 easily obtained core metrics to assess outcomes.

2. Keep itconnected to the objectives. Define how and when to assess achievement of the objectives.

3. Keep ittransparent. Inspire confidence in the system by making the objectives, measures, and data readily accessible in a format that can be shared with stakeholders; for example, via a website.

State Reports

Sen. Cathy Giessel (AK): Internal politics slowed the deployment of Alaska’s small business relief program, as the legislature and the Governor debated a grant-based versus a loan-based program. Finally, a grant program was approved with less restrictive eligibility guidelines and, last week, funds became available. The AK CARES program was seeded with $290 million of the more than $1.25 billion the state received in federal CARES Act funding. To date, 2,542 AK CARES grant applications with requests totaling approximately $114 million have been received.

Sen. Nicole Poore (DE): Delaware has embraced a hybrid approach for education, with most classes online. Schools are considering plans to restart their sports programs. Meanwhile, the state has allocated $100 million in relief dollars to small businesses.

Sen. Kalani English (HI): Hawaii has been hard hit by COVID-19, and severe restrictions have been imposed including a complete lockdown of Oahu through September 24 and a 14-day quarantine requirement for all visitors. As a result, tourism has plummeted, and many of the state’s small businesses have failed. For example, almost 70% of the small businesses in one town closed after landlords refused to lower rents. On the positive side, Hawaii successfully launched a mass testing program, shutting down a major highway and using it for drive-through COVID-19 testing, processing 5,000 people per day over 2 days.

Sen. Brent Hill (ID): Idaho’s report was upbeat. The state’s revenues in July and August were up 15% over last year; sales taxes up 8%; and the unemployment rate at 5%. Some regulations on business have been suspended for greater flexibility, and liability for COVID-19 claims is limited. Many people are moving to the state, stoking activity in the real estate and construction sectors. A proactive grant process was created for businesses that did not receive Paycheck Protection Program funds from the federal government. Additionally, a “Back-to-work” cash bonus was offered to incentivize unemployed people to return to work.

Sen. Don Harmon (IL):  Federal COVID-19 relief funds were allocated directly to Chicago and other large urban counties, so when a business interruption grant program was developed, some geographic preferences were established to provide equity across the state. We also set some money aside for disproportionately affected communities and specific businesses such as childcare providers so that these resources would be available when people started returning to work.

Sen. Roderic Bray (IN): Indiana has decreased regulations and is taking a critical look to determine which regulations were necessary in the first place. Businesses, non-profits and other organizations have been granted immunity from COVID-19 liability, within reasonable bounds, to build confidence about getting back to work. Additionally, grants have been available to help small businesses survive. Indiana’s situation also is improving with unemployment recovering from a high of 17% to 7% currently, and revenues are starting to recover.

Sen. Charles Schneider (IA):  Iowa's budget is “the most resilient and fiscally sound budget in dealing with the COVID-19 pandemic,” according to a study commissioned by the Council of State Governments, Sen. Schneider reported. Factors that contribute to this include a high concentration of state GDP in the finance and insurance sector and a low concentration in leisure and hospitality. A bill providing immunity for businesses from COVID-19 liability was passed by the legislature. Some regulations on business have been suspended to allow greater flexibility, and those regulations will be reviewed to determine if they will be necessary after the economy rebounds.

Iowa entered into the crisis with a sound budget. The state’s economic emergency accounts were full (at 10% of the General Fund balance) and Iowa had an additional budget surplus of about $200 million. The state’s healthcare capacity is good and this has enabled the state’s re-opening.

Sen. Bill Ferguson (MD): The state’s withholding taxes have stayed stable, but the sales tax and transportation funds have been decimated. The unemployment trust fund is being used up. Federal support is critical to backfill these losses. Meanwhile, an unemployment reassessment on business may put the state’s business recovery at risk.

Sen. Mary Kay Papen (NM): The state relies on tourism, and restaurants have suffered most; they are only now opening for outdoor dining, and at limited capacity. With unemployment at 12% and many businesses closing permanently, New Mexico’s Finance Authority created a small business loan program with more lenient eligibility requirements.

Sen. Phil Berger (NC): The state’s unemployment trust fund is strong, holding more than $2 billion, and the Rainy Day Fund remains untouched. Only the Transportation Fund has been hard hit by the pandemic. Federal dollars were allocated to local governments and may be used at local discretion for activities such as testing or small business loans. A bill providing immunity for businesses from COVID-19 liability was passed by the legislature. Some regulations on business have been suspended. The schools are still virtual and grant funds are available for parents who need child care support. People keep moving to the state, which stimulates the economy.

Sen. Ginny Burdick (OR): The pandemic-related issues have been overshadowed by the fires raging across Oregon which pose a very serious threat. Sen. Burdick also reported that the 100 days of demonstrations in Portland, which have focused negative attention on the city, actually affect only a 6-block area and are being contained. In the housing sector, a moratorium on evictions, which was scheduled to expire at the end of September, may be extended, and the moratorium on foreclosures may be extended through the end of the year.

Sen. Larry Taylor (TX): Despite the plunge in oil and gas revenues, things are getting better in Texas, Sen. Taylor reported. Sales tax revenues are recovering largely due to online sales. Safe opening of the schools is an ongoing priority, and virtual learning has been supported by the purchase of over one million laptops and wi-fi “hot spots” for students at home.

A challenge facing the Texas legislature arose from the state’s biennial legislative calendar. January 2021 is the next scheduled session, which has left all decisions during the pandemic on the Governor’s plate. The legislature is working to determine how crises arriving in an adjourned year will be managed in the future.

Speaker Biography

Ellen Harpel, PhD

Ellen Harpel is the founder of Smart Incentives, which helps communities make sound decisions throughout the economic development incentives process. She is also president of Business Development Advisors LLC (BDA), an economic development and market intelligence consulting firm in Arlington, VA.

CONTACT US

Senate Presidents’ Forum

579 Broadway

Hastings-on-Hudson, NY 10706

 

Tel: 914-693-1818

Copyright © 2020 Senate Presidents' Forum. All rights reserved.

Small Business Recovery:

A Framework for Assistance

Ellen Harpel, PhD

Founder, Smart Incentives

Small business recovery after the COVID-19 pandemic is critical to the states’ economic well-being. Strategies to accelerate this recovery were the focus of the September 9 Senate Presidents’ Forum online meeting. A presentation by Ellen Harpel, PhD, Founder of Smart Incentives, which helps communities formulate sound economic development incentives, was followed by reports from the states on the status of small businesses and their impact on state economies.

Uncertainty

The pattern of economic recovery is uncertain and the picture is rapidly changing, Dr. Harpel pointed out, depending on how the coronavirus and health metrics continue to evolve. Therefore, small business recovery programs need to be flexible and ongoing — not based on “set-and-forget” one-off initiatives. Economic incentives are only a part of a state’s larger economic development strategy and must work in concert with other efforts, she noted.

Assessing Needs and Measuring Results

Upfront planning and full transparency are critical to ensure the success of small business development programs. Dr. Harpel said state legislators should explicitly and transparently:

Define the objectives — be clear what the programs intend to accomplish

Specify how achievement of those objectives will be measured

Keep it simple. All procedures — from eligibility and application to outcomes reporting — should be as simple as possible

Allocate authority for flexibility as needed for the programs’ evolution

Communicate the outcomes

Designing Programs for Small Businesses

Beyond Dollars

Prepare Now For Scrutiny Later

Guardrails to guide the programs are essential, Dr. Harpel noted. Budgets must be clearly defined but administrative discretion should also be enabled to allow changes to programs without a full legislative process. States should be prepared to address key questions including: How much did we spend? Who received incentives? What happened as a result? Dr. Harpel pointed to Michigan as an example of good transparency in reporting on grant and loan recipients.

In order to effectively answer these questions, legislators need to define how outcomes will be measured, what reports will be required, and how information will be shared.

Summary

In conclusion, Dr. Harpel recommended the following for all small business economic development programs:

1. Keep itsimple. Streamline the rules and procedures, and require 1 or 2 easily obtained core metrics to assess outcomes.

2. Keep itconnected to the objectives. Define how and when to assess achievement of the objectives.

3. Keep ittransparent. Inspire confidence in the system by making the objectives, measures, and data readily accessible in a format that can be shared with stakeholders; for example, via a website.

State Reports

Sen. Cathy Giessel (AK): Internal politics slowed the deployment of Alaska’s small business relief program, as the legislature and the Governor debated a grant-based versus a loan-based program. Finally, a grant program was approved with less restrictive eligibility guidelines and, last week, funds became available. The AK CARES program was seeded with $290 million of the more than $1.25 billion the state received in federal CARES Act funding. To date, 2,542 AK CARES grant applications with requests totaling approximately $114 million have been received.

Sen. Nicole Poore (DE): Delaware has embraced a hybrid approach for education, with most classes online. Schools are considering plans to restart their sports programs. Meanwhile, the state has allocated $100 million in relief dollars to small businesses.

Sen. Kalani English (HI): Hawaii has been hard hit by COVID-19, and severe restrictions have been imposed including a complete lockdown of Oahu through September 24 and a 14-day quarantine requirement for all visitors. As a result, tourism has plummeted, and many of the state’s small businesses have failed. For example, almost 70% of the small businesses in one town closed after landlords refused to lower rents. On the positive side, Hawaii successfully launched a mass testing program, shutting down a major highway and using it for drive-through COVID-19 testing, processing 5,000 people per day over 2 days.

Sen. Brent Hill (ID): Idaho’s report was upbeat. The state’s revenues in July and August were up 15% over last year; sales taxes up 8%; and the unemployment rate at 5%. Some regulations on business have been suspended for greater flexibility, and liability for COVID-19 claims is limited. Many people are moving to the state, stoking activity in the real estate and construction sectors. A proactive grant process was created for businesses that did not receive Paycheck Protection Program funds from the federal government. Additionally, a “Back-to-work” cash bonus was offered to incentivize unemployed people to return to work.

Sen. Don Harmon (IL):  Federal COVID-19 relief funds were allocated directly to Chicago and other large urban counties, so when a business interruption grant program was developed, some geographic preferences were established to provide equity across the state. We also set some money aside for disproportionately affected communities and specific businesses such as childcare providers so that these resources would be available when people started returning to work.

Sen. Roderic Bray (IN): Indiana has decreased regulations and is taking a critical look to determine which regulations were necessary in the first place. Businesses, non-profits and other organizations have been granted immunity from COVID-19 liability, within reasonable bounds, to build confidence about getting back to work. Additionally, grants have been available to help small businesses survive. Indiana’s situation also is improving with unemployment recovering from a high of 17% to 7% currently, and revenues are starting to recover.

Sen. Charles Schneider (IA):  Iowa's budget is “the most resilient and fiscally sound budget in dealing with the COVID-19 pandemic,” according to a study commissioned by the Council of State Governments, Sen. Schneider reported. Factors that contribute to this include a high concentration of state GDP in the finance and insurance sector and a low concentration in leisure and hospitality. A bill providing immunity for businesses from COVID-19 liability was passed by the legislature. Some regulations on business have been suspended to allow greater flexibility, and those regulations will be reviewed to determine if they will be necessary after the economy rebounds.

Iowa entered into the crisis with a sound budget. The state’s economic emergency accounts were full (at 10% of the General Fund balance) and Iowa had an additional budget surplus of about $200 million. The state’s healthcare capacity is good and this has enabled the state’s re-opening.

Sen. Bill Ferguson (MD): The state’s withholding taxes have stayed stable, but the sales tax and transportation funds have been decimated. The unemployment trust fund is being used up. Federal support is critical to backfill these losses. Meanwhile, an unemployment reassessment on business may put the state’s business recovery at risk.

Sen. Mary Kay Papen (NM): The state relies on tourism, and restaurants have suffered most; they are only now opening for outdoor dining, and at limited capacity. With unemployment at 12% and many businesses closing permanently, New Mexico’s Finance Authority created a small business loan program with more lenient eligibility requirements.

Sen. Phil Berger (NC): The state’s unemployment trust fund is strong, holding more than $2 billion, and the Rainy Day Fund remains untouched. Only the Transportation Fund has been hard hit by the pandemic. Federal dollars were allocated to local governments and may be used at local discretion for activities such as testing or small business loans. A bill providing immunity for businesses from COVID-19 liability was passed by the legislature. Some regulations on business have been suspended. The schools are still virtual and grant funds are available for parents who need child care support. People keep moving to the state, which stimulates the economy.

Sen. Ginny Burdick (OR): The pandemic-related issues have been overshadowed by the fires raging across Oregon which pose a very serious threat. Sen. Burdick also reported that the 100 days of demonstrations in Portland, which have focused negative attention on the city, actually affect only a 6-block area and are being contained. In the housing sector, a moratorium on evictions, which was scheduled to expire at the end of September, may be extended, and the moratorium on foreclosures may be extended through the end of the year.

Sen. Larry Taylor (TX): Despite the plunge in oil and gas revenues, things are getting better in Texas, Sen. Taylor reported. Sales tax revenues are recovering largely due to online sales. Safe opening of the schools is an ongoing priority, and virtual learning has been supported by the purchase of over one million laptops and wi-fi “hot spots” for students at home.

A challenge facing the Texas legislature arose from the state’s biennial legislative calendar. January 2021 is the next scheduled session, which has left all decisions during the pandemic on the Governor’s plate. The legislature is working to determine how crises arriving in an adjourned year will be managed in the future.

Speaker Biography

Ellen Harpel, PhD

Ellen Harpel is the founder of Smart Incentives, which helps communities make sound decisions throughout the economic development incentives process. She is also president of Business Development Advisors LLC (BDA), an economic development and market intelligence consulting firm in Arlington, VA.

CONTACT US

Senate Presidents’ Forum

579 Broadway

Hastings-on-Hudson, NY 10706

Tel: 914-693-1818

Copyright © 2020 Senate Presidents' Forum. All rights reserved.