Maryland Gov. Hogan draws $250 million from Rainy Day Fund to help businesses struggling due to coronavirus

Maryland Gov. Larry Hogan said Thursday he’s drawing down the state’s Rainy Day Fund to offer $250 million more in financial relief for businesses struggling due to the coronavirus pandemic and the ensuing recession.

The biggest chunk of the money — $100 million — will be used to create an “emergency rapid response fund” for small businesses, so the state can pivot to help hard-hit areas or industries.


The Republican governor also announced $50 million more toward small business grants of up to $10,000, after an earlier program quickly ran out of money. Hogan said he hopes the additional funding will enable the state to “fully fund" a backlog of businesses that applied and were eligible, but did not receive grants.

Another $50 million is set aside for restaurants to pay for equipment and services needed to comply with pandemic restrictions, including tents and heaters for outdoor dining, protective equipment for staff, technology to improve carryout and delivery ordering, ventilation upgrades and cleaning services. The grants also can be used to pay employees or for rent.


Hogan also announced funding to expand existing programs, including: $20 million for a layoff aversion fund; $20 million for Main Street Maryland and Baltimore Main Street communities; $5 million for low-interest loans to small and minority businesses; $3 million for arts grants; and $2 million for the state’s hometown tourism program.

“Our economy is doing better than the rest of the country and most states, but it’s still really bad,” the governor said during a news conference at the State House in Annapolis.

Hogan’s move will leave $935 million in the state’s Rainy Day Fund.

Businesses have struggled since the pandemic arrived in Maryland in March. Many were closed for months. Since reopening, nearly every business has faced restrictions to limit the spread of the virus, such as reduced capacity or hours and social distancing requirements.

Some businesses are facing a decision point of whether to fight to stay open or shut their doors, said Mike O’Halloran, state director of the National Federation of Independent Business. They’ve burned through their savings and used up their federal Paycheck Protection Program aid, so the prospect of more help is promising, he said.

“This financial relief is welcome news and will hopefully serve as a lifeline, so Maryland job creators can hold off on making the toughest decision facing any business owner: closing for good,” O’Halloran said.

Since March, nearly 138,000 Marylanders have tested positive for the virus and 3,924 people have died in the state. Maryland reported Thursday 743 more cases and 12 more deaths — the highest single-day report of deaths since late August.

Hospitalizations have been on an upward trend since hitting a low of 281 on Sept. 20. On Thursday, the state reported 458 people were being treated in hospitals, including 125 in intensive care.


Despite those trends, Hogan touted the state’s new case rate as “low, and continuing to stay low” and much better than much of the country. He noted that hospitalizations are still down by 73% since they peaked in the spring.

Some businesses are eager for additional aid.

At The Shrimp Boat in West Ocean City, Joe White has been able to keep his family seafood restaurant open with the help of the federal Paycheck Protection Program and a state grant.

If he were able to get another grant, White said he would upgrade the outdoor seating area that he and his staff quickly put together last spring. Instead of picnic benches and sun shades, he’d like to upgrade the seating and add heaters and fans. Keeping the area warm will be key to the business making it through winter to the next tourist season and warm weather in 2021.

“In the current state, we’re not going to be able to do winter with the limited indoor seating capacity,” White said.

In the early weeks of the pandemic, Hogan announced $175 million of help for businesses, including a $75 million fund for low-interest loans of up to $50,000 and a $50 million fund for grants of up to $10,000. Hogan also announced a “layoff aversion” fund of $7 million, as well as payments totaling $5 million for in-state companies to make protective equipment.


Applications for the grants and loans flooded in, and some business owners who desperately needed the money complained that the state’s process for awarding the money was too slow.

Since then, almost all business have been allowed to reopen in some fashion. But limitations on capacity and requirements for social distancing and protective gear have meant that many businesses still are struggling to stay afloat. Others — particularly bars and restaurants — have had to periodically shut down after employees tested positive for the coronavirus.

State Sen. Katie Fry Hester, a Democrat from Howard County who has advocated for small business relief during the pandemic, said she hopes the application and allocation processes take company size, as well as equity, into consideration.

“I hope this goes to the ones that need it most — the smallest of the small businesses," the freshman lawmaker said.

Fry Hester said she had not yet received additional details on the application process for some of the newly announced programs.

In a May letter from a bipartisan group of 10 legislators, Fry Hester was among those calling on Hogan, Democratic Comptroller Peter Franchot and Democratic state Treasurer Nancy Kopp to designate a portion of the Rainy Day Fund for small business support.


In the months that followed that letter, an unknown number of businesses in Maryland closed for good. Franchot estimates that of the state’s 170,000 small businesses, 30,000 have closed or will close “through no fault of their own.”

He has faulted Hogan for not doing more to help businesses. When the state closed its books on the most recent budget year, it ended up with a $585 million surplus, which Franchot suggested should go to help businesses.

“Right now, we’ve got an emergency out there. Please, what can I say?" Franchot said Wednesday. “I’m happy to work with you and get something done. It’s a tragedy that’s going on right now.”

Following the governor’s announcement Thursday, Franchot criticized the additional aid as insufficient.

“Today’s announcement by Governor Hogan is a good start, but it’s simply not enough,” Franchot said in a statement.


Hogan has said it would not be wise to spend all that surplus money with even worse financial problems likely in the future.

The national economic recovery is stalling, Hogan said Thursday, due to the federal government’s failure to pass a second stimulus bill.

“We need both parties in Washington to stop playing politics, end the gridlock, and get this done for the American people,” who can’t afford to wait any longer, he said.

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Hogan also criticized jurisdictions that have yet to allocate federal CARES Act funding the state sent them, saying only a third of the money has been used. The money is required to be spent by the end of the year, so the state is calling on local jurisdictions to match some of the new funding with unspent CARES Act dollars.

“Equally important to their survival will be all 24 jurisdictions finally moving into Stage 3” of the state’s reopening plan, Hogan said. Several jurisdictions have been slow to allow some businesses to reopen, he said, referring indirectly to Baltimore City.

“We don’t want to take away their authority, but it is hurting [businesses],” he said. “We’re trying to get the schools open, we’re trying to get the businesses open, but it’s their right.”


James Bentley, a spokesman for Democratic Mayor Bernard C. “Jack” Young, said Baltimore has not yet determined it’s safe to fully align the city with state’s reopening plan. The city has had about 17,000 cases and the number of new infections is on the rise.

“We will continue to follow the data and guidance of public health officials,” Bentley said.

Baltimore Sun reporter Talia Richman contributed to this article.

This news was included in our weekday morning audio briefing on Oct. 23. Here’s how to listen.