Out of $240 million set aside for businesses impacted by COVID-19, just 1% has gone out

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Mississippi lawmakers set aside $300 million for small businesses impacted by the coronavirus pandemic, but Gov. Tate Reeves might ultimately decide how to spend much of that money.

A fraction of the money has been disbursed so far, and whatever remains of the $300 million by Nov. 1 will be spent at the discretion of Reeves, according to state law.

Much of that money — $240 million — is supposed to fund a small business grant program called Back to Business Mississippi, which starting taking applications in mid-June.

As of Thursday, 1% of that money has been distributed.

Dig deeper: Officials say help is coming for small businesses. This barbershop can’t wait much longer.

What you need to know: Does your small businesses qualify for $300M COVID-19 relief money?

Mississippi Development Authority spokeswoman Melissa Scallan said the Back to Mississippi grant program has sent out $2.7 million to 2,231 business owners, for an average of $1,210 per applicant.

According to Scallan:

  • 33,178 businesses have registered with the grant program,
  • 20,113 have submitted applications,
  • and of those applications, 58% were submitted by businesses owned by women or minorities. 

After a contentious fight with Reeves over who had the authority to spend federal CARES Act money, lawmakers applauded themselves in May for how quickly they acted to set up $300 million of relief for small business owners.

“We are one of the first states in the country to allocate our money, to allocate the money that was given to us,” Lt. Gov. Delbert Hosemann told reporters in the Capitol rotunda. “Mississippi has taken the lead.”

At the current rate of the grant program, it appears much of that relief money could go unused.

The Back to Business Mississippi grant program was set up to give grants of up to $25,000 to small businesses to pay for expenses such as rent, mortgage interest, payroll and utilities during the pandemic — not to cover lost profits.

Business owners who didn’t want to itemize their costs could apply for a base payment of $1,500. According to Scallan, that’s what 70% of them did.

Eligible businesses had to fit the following criteria:

  • Have 50 or fewer employees;
  • be controlled by a Mississippi resident; 
  • have been registered with the Mississippi Department of Revenue before March 1;
  • have filed state taxes in either 2018 or 2019, or if the business was formed after Jan. 1, must plan to file taxes in 2020.

Business owners who have yet to apply can still do so by visiting www.backtobusinessms.org.

While MDA is overseeing the Back to Business Mississippi grant program, the work is being done by a third-party contractor, as was outlined in the bill passed by lawmakers. Scallan said corporate law firm Balch and Bingham submitted the lowest of three bids, at $732,000, and was the most responsive in addressing the scope of work.

What about the other $60 million?

In addition to the $240 million grant program, lawmakers set aside $60 for automatic payments to businesses that were forced to close by the governor’s orders.

Businesses who qualified — hair salons, gyms, certain retail stores and many others —were supposed to be sent the $2,000 check automatically.

Speaker Phillip Gunn told reporters in May that state data showed about 29,000 would qualify for these automatic payments.

It appears the actual number of qualifying businesses was significantly lower.

Mississippi Department of Revenue spokesman Jacob Manley told the Clarion Ledger in early July that the agency sent out checks to 11,905 businesses for a total of $23.6 million, which is about a third of what the program was supposed to distribute.

Manley did not respond to a question this week about whether the agency had distributed any additional money.

Reeves will be able to spend whatever money remains from this program and the Back to Business Mississippi grant program on Nov. 1, as long as he spends it within the parameters of the federal CARES Act.

Contact Giacomo “Jack” Bologna at 601-961-7282 or [email protected] Follow him on Twitter @gbolognaCL.

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