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COVID aid for small businesses in Rhode Island getting caught up in red tape

Small businesses trying to secure the latest round of federal grants to offset losses from the pandemic are finding increased restrictions on the process and, in many cases, delays in receiving their checks.

The primary reason: the federal government is making the businesses jump through more hoops to receive funding from the latest tranche of money provided to the states for COVID relief.

 

“It is not as easy for a small business to receive [money] through these funds as it used to be,” Hannah Moore, assistant secretary at the Rhode Island Commerce Corporation, said this week. “The federal government has undergone a transition in their technical assistance that seems to have exacerbated some of the delays. We hear this multiple times every day.”

 

The Rhode Island Commerce Corporation announced in February that it was launching a program called RI Rebounds, offering small businesses grants up to $5,000 from a pool of $12.5 million in American Rescue Plan Act funds awarded to the state.

 

And while the federal government has tightened its restrictions, several businesses say Commerce is responsible for some of the difficulty in securing grants.

 

“I would have much rather gotten a root canal at the DMV than what we went through with the application process,” said Robert Burke, a Providence businessman and restaurant owner who said he has applied for dozens of grants since the pandemic began and this one was the most challenging.

Technical advisors needed to help navigate the application process

Since the program started on Feb. 1, 65% of the 2,800 businesses that applied for funding have received checks. But Commerce has had to contract technical advisors to help navigate the application process, which is being handled by Witt O’Brien’s, a business management consulting company based in Washington, D.C.

Witt O’Brien’s receives 7% of every successful grant, paid by Commerce and not subtracted from the grant itself.

“Why they made this so cumbersome is bewildering,” said Gerald Schiano, a business consultant who helps emerging companies find capital. “I’m a finance guy with years of experience filling out forms. There shouldn’t be this many hurdles to go through for a small grant.”

More than a dozen businesses contacted The Hummel Report, citing a federal identification process as the primary culprit.

Up until April 1, applicants had to get a Dun & Bradstreet number, a unique nine-digit identifier that eliminates any ambiguity if there are multiple businesses with the same name. But applicants also had to have a System Award Management number, commonly known as SAM, which traditionally has been used if a business wants to work as a contractor for the federal government.

 

“The number 1, by far, complaint is the federally required SAM process,” Moore said. “It is a multi-step federal registration process and applicants are in many cases frustrated, and rightly so. The federal government has undergone a transition in their technical assistance that seems to have exacerbated some of the delays. We hear this multiple times every day.”

Schiano and Burke said they had difficulty reaching people to troubleshoot and days or weeks would go by trying to solve a problem in the application process.

 

It started for Schiano when he found out he had to supply a Dun’s number.

 

“I knew as soon as I heard that, there was going to be a problem. Whenever the federal government gets involved you just know it’s a big bureaucracy and there’s a potential minefield that you can’t overcome,” he said.

 

Two months into the application period, Moore said the government changed from requiring a Dun’s number to its own identification, called a Unique Entity Identifier. She added that when the federal programs to help businesses began two years ago under the federal  CARES Act, many of the requirements were waived to expedite getting the money out the door. Under ARPA, the requirements are not being waived, making the process more complex.

 

Schiano said he made the mistake of putting his date of application on the form instead of the date of his business incorporation – a mistake he later learned had also been made by others.

 

“This job requires more than just checking a box,” Schiano said. “You have to think. I’d think they could understand that if a business supplied tax returns for a number of years, and you write 'Feb 15' as the beginning of the company, they should be able to think around that and create an exception so that the process moves ahead. Not just create a pool of people being forgotten about and delayed.”

 

Burke wanted to know how many businesses had started an application, but gave up because of the obstacles in the process. Commerce said it did not have that data.

 

“It’s a good test of your software; if 100% of the people start an application and follow through it’s a good program,” Burke said. “I’m on 12 different platforms running a restaurant these days. You know good software from bad software immediately.”

 

He offered to help Commerce test drive software going forward. Schiano and Burke each received checks for $5,000 last week.

 

Burke joked on Tuesday that with his SAM number: “I am now a licensed to deliver intercontinental ballistic missiles to the government.”

 

The Hummel Report is a 501(c)(3) nonprofit organization that relies, in part, on donations. For more information, go to HummelReport.org. Reach Jim at Jim@HummelReport.org.