When Dasia Kavia signed a lease for her first business in the Locust Point neighborhood of Baltimore, she had no idea a global pandemic would turn her business model upside down.
“I signed my lease and then a week later, the world shut down,” Kavia, the owner of Ice Queens Snowball Shop, told Baltimore City’s state senators Monday evening.
Kavia was still able to open her doors, although six weeks later than she had planned. Then she was forced to quickly shift from an inside business to an outside business model. As the weather got colder and fewer people ate outdoors, Kavia decided to close her snowball shop in December and does not plan to open again until April.
“I’m not able to staff people the correct way because we just don’t have the funds in order to do that right now,” she said. “Though I’m closed, my rent is still due.”
What made matters even harder, Kavia continued, is the fact that new businesses like hers were not qualified to apply for some of the relief grants.
This is partly because entities such as the Baltimore Development Corporation, an economic development agency for Baltimore City, prioritized relief grants to longer-standing businesses that were “obviously caught off guard,” rather than businesses that opened during the pandemic, Colin Tarbert, the president and CEO of BDC, told lawmakers.
But this system had flaws, and it was not fair for business owners like Kavia who was also “caught off guard” by the pandemic but was unfortunately not open long enough to be considered eligible for such subsidies. BDC based its grants, not on a first come, first served basis, but on tax returns and decided that businesses that started after 2019 weren’t eligible, Tarbert explained.
“It wasn’t a perfect system and obviously we’re trying to take care of those businesses that kind of got caught in that two- or three-month period,” he said.
When the Maryland Department of Commerce, the state’s leading economic development agency, began its business relief programs on March 23, it also prioritized those that were already in business, the state’s Commerce secretary, Kelly M. Schulz, said. Only businesses that had been open at least since March 1, 2020 could apply, she continued.
Especially because there is a substantial amount of capital risk when starting a business, it is important to close such loopholes in a timely fashion, said Kenneth C. Holt, the secretary of the Department of Housing and Community Development.
“I think it’s unfair that that sort of sunk capital could be lost or stranded, and so we’re going to try to address this,” Holt said. “I’m hopeful that federal CARES money that’s going to flow in will give us the capital to address it.”
So far, the state has provided more than $220 million to support over 12,000 individuals, small businesses and non-profits, Schulz said. Maryland has an additional $50 million that has gone out to all 24 local jurisdictions, $50 million for hotel relief and $80 million for restaurants.
Last week, Gov. Lawrence J. Hogan Jr. (R) proposed a billion-dollar stimulus package, which would give small businesses (which Maryland Department of Commerce defines as under 50 employees) up to $3,000 per month of sales tax credits for up to four months, if passed by the legislature. Small businesses could also earn back $12,000 from their taxes, Schulz said.
Hogan’s Relief Act of 2021 would repeal all state and local income taxes on unemployment benefits, which means that all Marylanders who have been receiving those benefits will not have a tax implication because of COVID-19, Schulz continued. In addition, small businesses would not be hit with tax increases as a result of accepting emergency COVID-19 grants.
In Baltimore City, some local business owners are still asking for assistance in cleaning costs, as hand sanitizer and personal protective equipment can quickly become a burden for small businesses in the city, said Quintin Lathan, the owner of Beauty Plus, a beauty shop on North Charles Street.
Construction workers are putting their “life on the line” by simply showing up for work, so having a clean job site is critical, said Jeffrey Hargrave, the founder of Mahogany, Inc., a commercial construction firm.
“Any help that can be given with PPE (personal protective equipment), we can’t have enough of it,” he said.
Businesses that still need help with cleaning costs should reach out to the Maryland Department of Commerce, Schulz said, as there is an “abundance” of cleaning supplies.
State agencies and other economic development entities say they have also focused on helping minority-owned businesses. For instance, about 65% of total funds distributed by the Baltimore Development Corporation went to businesses owned by people of color, Tarbert said.
The Maryland Department of Commerce recently created a new position called the Minority Business Outreach director, Schulz said.
Since it is not mandatory for business owners to specify their demographics on grant applications, however, the state does not have full demographic data on who has received funding relief, Schulz said.
But this does not allow for any accountability to ensure that people of color have benefitted from these small business relief grants, Sen. Antonio L. Hayes (D-Baltimore City) said.
“On a first come, first served basis, usually businesses that are already established and have the resources are usually the ones that benefit, and some of the startups and smaller businesses may not,” Hayes said.
The state must be very intentional when offering grants to minority-owned businesses, locals said.
“When the majority community has a cold, the minority community has the flu. The minority community — they’re hurting right now,” Hargrove said. “Part of the problem is we just get the crumbs and we can’t grow the company and so you don’t have a lot of established minority businesses because of that.”