Econ 919 — Economic help on the horizon amid pandemic

Mar 20, 2020

Alaska businesses and workers struggling with impacts from the COVID-19 pandemic might soon have help on the horizon. Gov. Mike Dunleavy announced Thursday a variety of efforts to help support Alaska’s economy and workers.

“This is a government-induced situation because of the health issue and we believe that government needs to be involved in this particular case. This is not something that occurred because it was a bad business deal or one sector was not doing well. This is widespread across all sectors and, so, we are going to do everything we can to stabilize the economy,” Dunleavy said.

Alaska has applied for eligibility for Economic Injury Disaster Loans through the Small Business Administration. The program offers up to $2 million in low-interest loans to help weather a temporary loss of revenue due to the pandemic.

Loans are meant to be working capital and can be used for payroll, accounts payable and other bills. They are not meant to replace lost sales or for expansion. Terms can be as long as 30 years to keep payments affordable. Interest rates are 3.75 percent for businesses or 2.75 percent for nonprofits. Loans over $25,000 require collateral — preferably real estate.

Dunleavy said the state Department of Commerce, Community and Economic Development also has loan programs that provide temporary working capital and the department is working to expedite those programs.

For individuals affected by business slowdowns or shutdowns, Dunleavy said the Alaska Department of Labor, which handles unemployment insurance, has been tasked with efficiently helping Alaska’s workers.  

“This is no fault of the working Alaskan. And we’re going to do everything we can to make sure that we assist them as quickly as possible so that they can pay their bills, buy their groceries, take care of their medical bills just as if they were working and employed,” Dunleavy said.

The Alaska Department of Labor website has a COVID-19 page with answers to various scenarios workers may be facing. If you are laid off because of the pandemic, you qualify for benefits. If your work asked you to quarantine yourself but you’re not sick, you could be eligible. If you’re not working because you are sick, you are not eligible. Those are just a few of the scenarios discussed.

Dunleavy urged the Alaska Legislature to agree to pay out a full dividend this year, as well as paying back the difference from previous years. 

“I can’t think of a time in the last four years that people would need more cash in their hands than they do now to pay for their bills,” he said.

He did not recommend how to fund such a measure, given the state is facing a $1.5 billion deficit, exacerbated now by dropping oil prices and stock markets.

Locally, businesses are getting creative to limit fallout from the crisis. Restaurants are shifting to take-out and delivery service. Alaska Cab is promoting delivery service as well — pick up and drop off of food, groceries and whatever else.

Owner Brett Hibbert said the company had already seen a reduction in rides early in the week, 25 percent down during the day shift. They do a lot of transports to and from doctor’s appointments, which have dropped off. Rides to and from the airport are declining, as well. He expects the closure of bars and restaurants to impact the night shift.

Alaska Cab has 56 employees. If rides decline too far, Hibbert says he’ll have to look at layoffs but so far, employees are shifting hours to prevent sending anyone home. Hibbert says dispatchers and office staff are voluntarily cutting their hours and drivers who work for extra money are parking their cars to let people who drive for their livelihood have what fares do still come in.

“I have a great bunch of guys and gals that think about each other and, yeah, it’s a good feeling. And it’s making my job a whole lot easier, for sure,” Hibbert said.

Dunleavy expected to have more information on the SBA loans today.