Des Moines’ Historic East Village Neighborhood Association is asking the state to review its Small Business Relief Program so that more businesses suffering losses because of the COVID-19 pandemic can receive help. Photo by Emily Blobaum

While some Iowa businesses received a boost from small business assistance grants disbursed by the state, others, battered by social distancing restrictions and layoffs as a result of the coronavirus pandemic, continue to languish, worrying how long they can survive.

“It was heartbreaking and added salt to the wound,” Cassie Sampson, owner of East Village Spa in Des Moines, said about seeing others receive assistance while her business was turned away.

Sampson was one of 14,000 businesses that applied for a grant from the state’s Small Business Relief Program, designed to help businesses experiencing losses because of COVID-19. In the first round of awards, announced earlier this month, 500 businesses in 97 of the state’s 99 counties received grants ranging from $5,000 to $25,000. While restaurants and bars received the lion’s share of funding, other businesses that received assistance included antique stores, doggy day cares, gift and flower shops, and clothing and shoe stores, among others.

Businesses with two to 25 employees who have been affected by the COVID-19 pandemic were eligible to apply.

In response to what some saw as a disparity in how funds were disbursed, with many grants going to restaurants and bars, the Historic East Village Neighborhood Association wrote a letter to Gov. Kim Reynolds and Debi Durham, the director of the Iowa Economic Development Authority, the agency that administered the program. In the letter, neighborhood representatives asked that changes be made so that more businesses could benefit.

Durham, in an email obtained by the Business Record, acknowledged potential problems with the program, but defended how it has been managed.

“I would be the first to admit if we were designing the program today there would be changes, however, with that said, I do believe our actions are defendable,” Durham wrote.

Sampson and others said they are sympathetic to the task facing the state, but worry that because so many businesses received the maximum award of $25,000, too many businesses were left with nothing.

The program initially made $4 million available for small businesses, but because of the high demand, it was expanded to $24 million. The grants were intended to provide immediate, short-term relief for the period from March 15, when social distancing restrictions were first put in place, through April 15.

While small businesses also could apply for the federal Payroll Protection Program, that funding ran out almost as quickly as businesses could apply, leaving many worried about their future. The Senate on Tuesday approved a $480 million aid package, with much of it intended to further help small businesses. The House was expected to take action on the bill on Thursday.

For some business owners, like Sampson and Jay Kozel of Back Country, an outdoor gear and travel store in Des Moines’ Beaverdale neighborhood, the Payroll Protection Program wouldn’t make sense because they would only bring employees back to work in a business that couldn’t open. And in some cases, they said, the program would have negatively affected employees who receive more from unemployment compensation. 

Sampson said she shut down her business on March 15 knowing she could not ensure the safety of her staff and clients as the virus spread. The following day, Reynolds issued restrictions on businesses — spas, such as Sampson’s, were among the first businesses ordered closed.

Sampson said between 90% and 95% of her business is service-based, coming from massage therapy and skin and nail treatments. What’s left comes from retail, which Sampson said she has been able to continue after she and another employee developed an online store. But the closing of her business resulted in Sampson laying off her 23 employees.

When she first saw the list of state grant recipients, it was a gut punch that she said left her shaken.

“When I saw they prioritized restaurants, bars and breweries, I broke down sobbing,” she said.
Sampson said she doesn’t hold any ill will toward those businesses that received help; she only wishes the funding would have been provided more equitably.

Chris LoRang, owner of Capital Chiropractic in the East Village neighborhood of Des Moines, said he has seen his patient load decrease as much as 60% since social distancing restrictions were put in place. While his business has taken a hit, he said others are much worse off.

“It becomes clear in a neighborhood like this, and how diverse it is, that so many people are  hurting, and it’s hard to see others get it and you don’t. This is everything about the human condition. It’s exemplified when stress is high and people are worried about losing their business.”

LoRang, a former neighborhood association president and current board member, said fewer businesses should have received the maximum amount so that aid could have gone to more businesses in need. 

In their letter to Reynolds and Durham, neighborhood representatives asked that “there is deliberate thought going forward in the impact of these dollars in a community.”

“We would like the funds to be distributed in a way that better represents the diversity of businesses within our state,” the letter reads. “Without a more equal distribution of these funds, we are going to see so many more businesses transfer from temporarily closed to being closed permanently.”

In her response, Durham wrote that the number of applications and the financial need that was identified exceeded everyone’s expectations.

“At one point, I even considered shutting down the program early, but decided we needed to capture the information,” she wrote.

Durham wrote that every application was screened for eligibility, and that more than 4,000 were missing information and were diverted into a separate file to be addressed. Applications were then scored from 0-4 on revenue loss.

Durham said that she made an “executive decision” to address those completed applications that scored 4 and were consumer-facing and forced to close by the governor’s proclamation.

“So yes, you saw many bars/restaurants, plus priority was given to child care facilities,” she wrote in her response.

LoRang said he and others in his neighborhood commend the state for helping, and for acting quickly to get aid in the hands of local business owners, but only wishes more businesses could be helped. “It’s unfortunate,” he said. “From a neighborhood perspective, so many people are hurting bad.”

Kozel said he also applied for the Small Business Relief Program, but didn’t receive a grant. He said he wasn’t overly disappointed because of the high number of businesses applying and the limited aid that was available.

“The odds weren’t on our side,” he said.

Kozel, who said he’s not aware of any business in his neighborhood that received a grant, had to temporarily lay off 10 employees and is currently doing business online, offering video shopping, various promotions and gift card incentives.

“I’m less worried about how the emergency stopgap measures are administered and more concerned with how we open things back up when the time comes,” Kozel said. “I’m turning my attention to how do we operate a business with an economy of 70-80% capacity?

“You can say we’re opening the economy back up, but if the policies haven’t succeeded in flattening the curve and you let me open my doors, and everyone is too freaked out to come out, that won’t help us. Where states come in is, when we open our doors again the timing is right.”