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Help for Maui businesses trickles down slowly

Carlos Montano, owner of The Sun Spot in Kihei, saw business drop dramatically in the aftermath of the Aug. 8, 2023, Maui wildfires, but held on for months hoping that the Maui Bridge Grant would help him turn it around.

Montano said he received half of a $6,190 bridge grant up front, but that the other half was held up in processing so long that he couldn’t avoid a bankruptcy filing.

He said he was told that the funds were coming, but that they still hadn’t arrived on Tuesday, the day that he finished moving out of his retail store at the Azeka Shopping Center. If the funds arrive, Montano said he will try to resurrect his business by converting it to an online, swap meet and private party model.

“If the grant had come earlier, I wouldn’t be in this situation. I sell items from 60 small businesses so they are all affected by our closing,” he said. “It just became this big huge hassle to get just what was guaranteed to us last year. I’m so distraught.”

Montano is not alone in his frustration. It’s been more than nine months since the Maui wildfires, but thousands of Maui business owners who applied for the Maui Bridge Grant or a Small Business Administration disaster loan are still waiting.

The process has sometimes been delayed by applicants who filled out the paperwork wrong, did not turn in itemized receipts or couldn’t get the records promptly in the aftermath of the fire. It’s also been complicated by the stringency of the requirements to prevent the fraud that occurred during COVID-19 relief distribution.

Montano said he’s been trying to pursue a Maui Bridge Grant since Sept. 8 when Gov. Josh Green first announced a plan to work with House and Senate leadership, Maui County and the Hawai‘i Community Foundation to make $25 million immediately available in the form of $10,000 and $20,000 bridge grants to help businesses survive.

When the program finally launched in November as a collaboration between Maui County, the state of Hawai‘i, Maui Economic Opportunity (MEO), and Maui Economic Development Board, there was only $12.5 million available for the program, and starting award amounts had been reduced to $1,000.

The hardship grants also came with stringent guidelines that required applicants to prove eligibility, as well as meet document requirements and grant activity requirements.

By the middle of May, only 62 percent of the total Maui Bridge Grant applications had been approved and only 53 percent of the applications for smaller businesses with revenues under $300,000, according to data from MEO, which is processing the small business awards.

MEO Chief Executive Debbie Cabebe said so far at least 1,350 applications have been received for Maui Bridge Grants and of those at least 850 grants have been awarded collectively totaling more than $9 million.

She said 783 of the applications were made to MEO by businesses with revenue under $300,000 for awards of up to $10,000. Cabebe said so far 395 awards, averaging about $7,000 each, have been made to that pool. MEO has collectively approved about $2.5 million in awards, she said.

Cabebe said MEO denied 16 applications and has another 377 or so pending.

“Our staff doesn’t want to deny anyone. I think there are always challenges when you are dealing with government funds because it comes with very strict requirements such as detailed receipts,” she said. “If they spend $4.25 with the money that they got, I need a receipt for $4.25 showing what they bought. The reason for that is that if we get audited and it’s considered an ‘unallowable expense’ then we have to find our own funds to cover it.”

Cabebe said MEO hired three additional employees to process the grants, and would like to hire a couple more to speed up processing, but has not been able to find enough applicants.

“These additional workers are only working on bridge grants all day long,” she said. “It’s really cumbersome. In a perfect world, if they could just give people a check and walk away that would be great, but I know that can’t happen because of the accountability.”

Cabebe said MEO requires itemized purchase receipts from applicants because the grant’s funders require it.

“For larger businesses that may be easier to do that because they have the infrastructure,” she said. “A lot of times smaller businesses they may be one person that’s doing everything. It becomes a little overwhelming for them and it’s a process.”

Cabebe added, “There’s a lot of communication and documents being sent electronically back and forth and not everyone is computer savvy so documents may not come in a format that is readable and so there are just a few challenges there.”

Montano said he sent the same email full of receipts to MEO multiple times. He said that he heard the application had been approved after he contacted the Honolulu Star-Advertiser, but had not received the check as of Wednesday.

The process went more smoothly for Kim and Ross Scott, who own Maui Powder Works, which bonds powdered paint to metal through a process that they tout as longer lasting and environmentally friendly.

Kim Scott said the couple applied for a Maui Bridge Grant with MEO, which approved $9,444 and kept “us operating and gave us a cash flow cushion when things got slow.”

Scott said despite the assistance from the Maui Bridge Grant as well as a $5,000 grant from America’s Charities and a $1,000 Walmart grant, Maui Powder Works has not been immune to challenges.

“After the fires happened it was like our 9/11 moment. Suddenly all the momentum ended. Things got scary quiet. The phone stopped ringing. We laid off two full-time workers,” she said. “Thankfully, we have cultivated a dedicated clientele that demands our quality finishes. If we didn’t, we would be right there with (the other businesses that have closed).”

The slowdown on Maui has had a trickle-down impact across the state, Scott said.

“Expanding to other islands is off the table for now. We are pivoting outside of Hawai‘i by teaching our aged patina powder coat effects to other industry coaters like us. Something that was on the back burner is suddenly our new opportunity,” she said.

Maui businesses are still struggling in silence, Scott said.

“When sharing my thoughts to our bookkeeper who services many accounts she explained that there were some business accounts that should have closed weeks/months ago,” she said. “As cheery as I want to be about the future, I think we’re on the precipice of business closures that will happen in the next two to six months.”

Scott said she worries that there is not enough support for all Maui businesses to weather the continuing storm.

“We are painfully aware of what people are going through,” Cabebe said. “I’ve been an advocate for more grants to businesses as opposed to more small business loans as they can’t do it. They absolutely can’t do it, they still have COVID-19 loans that they are trying to pay off.”

Montano is now pursuing a Small Business Administration disaster loan, which he knows might be more difficult to obtain after a bankruptcy. However, Scott said the couple took out an SBA loan during COVID and did not want to extend the debt.

Maui businesses have generally been slower to apply for loans, even from the SBA, which offers businesses of all sizes and private nonprofit organizations an opportunity to borrow up to $2 million to repair or replace damaged or destroyed real estate, machinery and equipment, inventory and other business assets.

The SBA says it also may lend additional funds to help with “the cost of improvements to protect, prevent or minimize disaster damage from occurring in the future.”

SBA offers Economic Injury Disaster Loans (EIDL) to help small businesses meet working capital needs caused by the disaster, regardless of whether the business suffered any property damage.

Disaster loans up to $500,000 are available to homeowners to repair or replace damaged or destroyed real estate.

Interest rates and terms for SBA loans are based on an applicant’s financial condition, but are generally 4 percent for businesses, 2.375 percent for private nonprofit organizations and 2.5 percent for homeowners and renters with terms up to 30 years.

SBA just extended its EIDL application deadline on Maui to Nov. 9, and will continue accepting property damage loan applications through June 11.

To ease the process, SBA is not requiring applicants to provide an explanation when applying for an SBA disaster loan that is past the original deadline. Still, the application process is cumbersome much like with the Maui Bridge Grants.

SBA is processing most of the applications for business loans and for economic injury loans on Maui. As of May 27, the SBA reports that it has received 1,377 applications for business loans, and is still processing 1,236 of them. So far, SBA has approved loans totaling more than $89.2 million for 316 businesses.

During the same period, SBA received 1,815 EIDL loan applications and 1,587 of them were still pending. SBA approved EIDL applications totaling more than $43.4 million.
Source: The Garden Island

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