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Franchot calls on governor and General Assembly to approve emergency grants to Maryland’s struggling small businesses

Comptroller Peter Franchot urged the governor and the General Assembly on Thursday to approve more financial relief for Maryland small businesses still struggling to hang on nearly two years into the coronavirus pandemic.

Franchot is seeking to provide $500 million in emergency grants to those in the hardest-hit industries, such as retail and hospitality.

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The state should tap into its budget surplus for a fresh round of relief, the comptroller said during a virtual news conference, particularly to support minority-owned and women-owned small businesses, which he said bore a disproportionate brunt of the economic crisis. Franchot said his office estimates that the state lost 40,000 small businesses in the first year and a half of the pandemic, including many family-owned and operating for decades.

“Those business owners who have managed to survive have dealt with many challenges including staffing shortages, supply chain issues, drastic operational changes,” he said. “Frankly our small businesses will not survive the economic devastation with the absence of state support.”

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Franchot, who is among the crowded field of Democratic candidates for governor, is proposing that of the $6 billion estimated state surplus, $2 billion go into the state’s rainy day fund, $2 billion go toward improving infrastructure, and $1 billion to provide $2,000 economic survival payments to 473,000 families and individuals.

He said $500 million should go to rebuild the state’s child care sector, while $500 million should be set aside for direct financial support to “hard-hit small businesses, especially those that lack resources.”

Although the state’s 2021 fiscal year closed June 30 with a $2.5 billion budget surplus, Franchot is using a roughly $6 billion figure that includes $2 billion in increased revenue projections for the current and next fiscal year and a $1 billion upward revision of adjusted revenues for the current and future fiscal years announced in December by the Board of Revenue Estimates.

The comptroller said small businesses eligible for grants could be identified quickly by third parties such as Main Streets program officials and vetted through the state’s tax rolls to eliminate concerns about fraud.

Gov. Larry Hogan has proposed putting much of the roughly $2.5 billion surplus into the rainy day fund and spending the rest on tax cuts, aid for some struggling residents and some type of boost for state employees. The Republican governor offered his proposal in broad terms in January, after the state finished its budget year with leftover cash thanks largely to the waves of federal pandemic relief that flowed into the coffers of Maryland and other states.

Sean Stinnett, deputy director of the Baltimore Mayor’s Office of Minority and Women-Owned Businesses and director of Baltimore Main Streets, said he supports the comptroller’s proposal. It would work, he said, in conjunction with the mayor’s recent $25 million allocation of federal American Rescue Plan funds to small, minority- and women-owned businesses in the city.

“Throughout all these business districts, we have thousands of minority- and women-owned businesses that have been hit very hard during this pandemic, and we still have some businesses that haven’t yet been able to open back up because of the challenges as far as operating costs and the increase in food costs and supplies and so forth,” he said.

Abbey Burger Bistro co-owner Marigot Miller, who runs three locations in Baltimore that employ 150 people and a restaurant in Havre de Grace, said she had to shut down an unsustainable Ocean City location during the pandemic and for a period relied on a carryout model at the other sites that was not cost-effective.

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“It continues to be a struggle,” she said. “Every week, we are looking at payroll and are we going to make it this week?”

She said the federal Paycheck Protection Program was helpful, but “we don’t want more loans. That is definitely a scary factor when we know how bad it is and we also think about what we still owe on top of it.”

Craig Martin, owner of The QG near Baltimore’s Inner Harbor and Hunt Valley, a barbershop, a menswear store and a restaurant under one roof, said the business model revolved around serving business professionals in office districts.

QG’s sales dropped 70% in 2020, while sales last year and so far this year are down 40%, he said. Staff has been cut to 22 from 48, and about half now work part-time. It’s been difficult finding staff to fill open jobs and deal with supply chain backlogs and inflation, he said.

“As new variants and restrictions are still here, our business is on the verge of needing life support,” Martin said. “Many of the buildings around both locations are still empty. Every time businesses started coming back, a new variant seems to send them back home. Going back home seems very quick, but coming back is always very slow.”

Franchot has been urging state leaders to make direct payments to small businesses throughout the pandemic, including in 2020 when he called the governor and lawmakers to dip into the rainy day fund to hand out grants of $10,000 each.

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He warned Thursday that thousands more small businesses could be at risk of closing if aid is not offered quickly.


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