State won't widen eligibility for COVID grant program; new plan proposed

Originally published in Newsday on February 16, 2022.

The state isn’t planning more changes to a $800 million pandemic-relief program for small businesses despite complaints from applicants who’ve been turned down for a grant, Gov. Kathy Hochul’s economic development chief said on Wednesday.

Instead, said Hope Knight, CEO of Empire State Development, the state’s primary business-aid agency, the governor has proposed creating a $200 million aid program for businesses that opened in the past two years. They are ineligible for the larger grant program, she said.

"A lot of businesses that were started right before COVID began [in early 2020] or right after have been shut out" of the COVID-19 Pandemic Small Business Recovery Grant Program, Knight told the State Legislature, referring to the $800 million in grant funding. "So, this Seed Funding Program is really focused on those businesses that weren’t eligible" for the earlier aid.

Knight said about $300 million remains to be distributed via the recovery grant program. The grants are between $5,000 and $50,000.

To date, close to $500 million in grants have been awarded to 27,000 small businesses across the state out of more than 53,000 applications. Among the recipients, 98.6% employ 10 or fewer people and 80% are owned by women or members of minority groups, she said during the virtual legislative hearing.

In December, ESD released a report showing almost $32 million was awarded last year to 1,434 businesses in Nassau County and $20.5 million to 817 businesses in Suffolk County.

To be eligible for the recovery grant program, a business must have yearly revenue of up to $2.5 million, 100 or fewer employees and show a 25% loss in gross receipts in 2020 compared with 2019, according to the ESD report.

Democrat Hochul expanded eligibility requirements in August by raising the revenue cap and permitting more recipients of Paycheck Protection Program loans to apply for grants. But to expand the recovery grant program to a new group of businesses requires legislative action, Knight said on Wednesday.

She said the governor's seed funding initiative, which also requires approval from lawmakers, would involve grants to small firms.

Knight was responding to questions from State Sen. Anna Kaplan (D-Great Neck) who successfully lobbied her colleagues and then-Gov. Andrew M. Cuomo a year ago to establish the recovery grant program with more funding.

That program "is flush with cash due to overly restrictive qualification requirements," Kaplan said. "Why are we creating a new program instead of improving the one that we already have?"

Assemb. Jodi Giglio (R-Baiting Hollow) agreed, saying, "Do we need to make changes to [the $800 million program] to open it up to people that suffered losses in 2021?"

Knight responded that ESD cannot unilaterally expand the program to another group of businesses. She said the smallest businesses "are the hardest to reach but we are reaching them" through the recovery grant program.