Kate Rosson was fearful of losing her small business during the pandemic in late summer of 2020, and like thousands of others she had applied for a Mississippi COVID-19 Back to Business grant — up to $25,000 to help small companies stay afloat.

But seven weeks after applying, Rosson was tangled in a web of red tape and had received scant info about her application despite numerous calls and supplying the state the info it requested. She had to lay off workers as business with her college advertising and direct-marketing company tanked. She was talking with numerous neighboring businesses in Oxford in the same boat. Some had to close their doors for good.

Rosson finally received her grant — she won’t disclose the amount, but says it was not the full $25,000 — but not until mid-October, months after she applied for the emergency funding that was supposed to provide quick relief for struggling small businesses.

Rosson’s company has survived. Business is picking back up, but is still a struggle. She knows of many small businesses that gave up on the emergency grants, or took a small minimum amount after being daunted by the bureaucratic maze. Sadly, she can rattle off the names of numerous businesses — large and small — in her college town that didn’t survive the pandemic shutdown. And, she says, “it’s still happening, constant.”

When Mississippi received $1.25 billion in federal CARES Act pandemic relief, one of the first things lawmakers did, besides fight with Gov. Tate Reeves over who had authority to spend it, was to earmark $300 million for emergency relief to small businesses.

But only about half the money was spent, according to a Mississippi Today analysis of public records. The rest was redirected to other pandemic programs, such as rental assistance grants, help for hospitals and veterans, with the bulk swept into the state’s unemployment insurance fund.

Here is a breakdown of the state’s small business grant programs and how they fared:

Back to Business

  • Lawmakers appropriated $240 million for grants up to $25,000 each, administered by Mississippi Development Authority.
  • Grants approved: 21,200, for a total of $118 million. This means that $122 million of the appropriated funding went unspent.
  • Grant applications rejected: 11,200.
  • Of the grants approved, a majority — 15,563 — were for the "base amount" of $3,500 (the base was initially $1,500, but lawmakers increased it). Some chalk this up to the red tape and delays involved in claiming more in pandemic expenses or "employee-based" calculations.

Emergency small business grants

  • Lawmakers appropriated $60 million for "automatic" grants of $2,000 each, no application necessary, administered by Department of Revenue.
  • Initially, more than 29,000 shops of various categories temporarily shuttered by statewide shutdowns would be eligible. Lawmakers expanded this to potentially add thousands more businesses.
  • Grants approved: 16,617, for a total of $33 million. This means that $27 million of the appropriated funding went unspent.
  • Of the initial list, the Department of Revenue reported about 25% of businesses had not paid state taxes in a timely manner, a prerequisite for the program.

The business grants did help thousands of small businesses, eventually. Legislative leaders said they were in uncharted water with the program, and under an extremely tight deadline imposed by Congress to spend the money. Other problems included thousands of businesses not having paid their state taxes in a timely fashion — a perennial problem in Mississippi. And the Mississippi Development Authority, which administered the largest grant program, asked to be allowed to increase administrative spending for it from $900,000 to $3.6 million to get it moving more quickly and smoothly. Lawmakers denied this request.

READ MORE: Former DOR director: Mississippi is losing ‘tens of millions’ in uncollected business taxes each year

Mixed reviews

"The Back to Business program helped thousands of small businesses impacted by the pandemic, like retailers and restaurants, stay afloat," said Lt. Gov. Delbert Hosemann. "Some of the businesses which applied did not meet the basic qualifications, such as timely filing their tax returns. Those who did meet the basic qualifications received much-needed assistance."

Sen. Derrick Simmons, D-Greenville, said he received numerous complaints from constituent business owners, "who were so frustrated with the process that they gave up, and unfortunately in some cases lost their businesses."

"I think it was a colossal fail," Simmons said. "And I'm really concerned about how many businesses closed and will never reopen again."

House Speaker Philip Gunn — whose House leadership team championed the business grants and had pushed for millions more than the Senate finally agreed to — did not respond to requests for comments.

House Appropriations Chairman John Read, R-Gautier, said he was disappointed more businesses didn't receive grants.

"I had assumed that money would be sucked up like a vacuum cleaner," Read said.

In late summer 2020, as business owners were complaining about problems getting grants, a Hope Policy Institute analysis found Mississippi was lagging behind most other Southern states in deploying CARES Act funds to small businesses. Lawmakers reconvened, and made changes to the program in effort to speed up the process and allow more businesses to qualify.

"First of all, there is not a playbook for something like this," said Senate Finance Chairman Josh Harkins, R-Flowood, who helped pass changes to the program to speed it up and help more people. "We had to adjust on the fly, and we didn't have a whole lot of time to do it ... After the initial onslaught, I haven't heard of a whole lot of angst from businesses, but have heard at least a couple of thank yous.

"We didn't know how much to allocate for it, and we didn't want to be caught out there with too little, but we also didn't want to overcommit," Harkins said. "We wanted to make sure people qualified, but we didn't want the Inspector General coming back and saying this was improperly spent ... In retrospect, if we ever have something like this happen again, we have something to go by ... A postmortem may reveal there's things we could have done better, differently, but there was no playbook."

Harkins noted that because Congress set such a tight deadline — Dec. 31, 2020 — on spending CARES Act money, lawmakers approved a "catch-all" for unspent money to go into the state's unemployment insurance fund, which was being depleted by pandemic unemployment claims. A major dip in the unemployment fund would result in large increases in unemployment insurance payments for businesses, Harkins said, so sweeping unspent CARES Act money into the account also helped small businesses. Congress later relented on its CARES Act spending deadline, but only in the eleventh hour after state lawmakers had allocated the money and adjourned their session.

The unemployment fund was at $706 million pre-pandemic, and is now back up to $560 million after and infusion of more than $400 million including the CARES Act sweep. No large increases for Mississippi businesses are on the immediate horizon.

No figures are readily available for the number of small Mississippi businesses permanently shuttered from the pandemic, but at its peak, state unemployment hit about 16% compared to about 5.5% pre-pandemic. As of March, despite a robust recovery, the state's overall jobs number remained down about 3% from a year ago, and unemployment was at 6.3%.

How other states fared

Other states, including neighboring ones in the Deep South, attempted to help small businesses with grants from federal CARES Act funding.

Mississippi's two programs spent a combined $151 million, providing grants (most either $3,500 or $2,000 each) to 37,817 businesses. The grants overall average $5,570 each.

Alabama had multiple grant programs for small businesses, nonprofits and agribusinesses. Its main small business programs, the "Revive Alabama" and subsequent "Revive Plus," provided more than $303 million in grants to 19,141 businesses — an average of $15,860 per grant.

Louisiana, with its "Main Street" small business grant program, spent $262 million on grants (plus another $7 million on contracts to administer it), providing grants to 20,700 businesses at an average of $12,600 per grant. The state had received more than 40,800 applications.

Tennessee earmarked $200 million for the Tennessee Business Relief grant program, plus another $50 million for the "Supplemental Employer Recovery Grant," or SERG program, plus $50 million for grants for agriculture and forestry businesses. Numbers on grants provided by the programs were not readily available.

Arkansas appropriated nearly $129 million for "Open for Business" grants and another $50 million for tourism business interruption grants administered by its parks and tourism agency.

Rosson said getting her business back in trim after the worst of the pandemic "has been like starting a business all over again," and she's thankful for the Back to Business grant.

"I won't say it's what made me survive, but it certainly helped," Rosson said.

Rosson said she wishes the CARES Act money earmarked for small businesses — besides providing more grants than it did — could have gone to provide continuing help as businesses still struggle.

"I'm not saying putting cash in people's pocket, but more at investing in businesses — not just to unemployment insurance," Rosson said. "... We have lots of spaces for rent in downtown Oxford in the Square. Take that money and provide business incubators, let incubator businesses go in and give free rent for six months — I'm just throwing out ideas."

Overall, Rosson said as she recounted hours on the telephone, getting "kicked out of the system" and the months it took to get a Back to Business grant, she gives the program fairly low marks.

"I would say for the average person, average business owner, this ran poorly," Rosson said. "... It could have run better. They could have maximized that $240 million."

READ MORE: Billions will flow to Mississippi from Rescue Act. Where will it go?

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Geoff Pender serves as senior political reporter, working closely with Mississippi Today leadership on editorial strategy and investigations. Pender brings 30 years of political and government reporting experience to Mississippi Today. He was political and investigative editor at the Clarion Ledger, where he also penned a popular political column. He previously served as an investigative reporter and political editor at the Sun Herald, where he was a member of the Pulitzer Prize-winning team for Hurricane Katrina coverage. Originally from Florence, Mississippi, Pender is a journalism graduate of the University of Southern Mississippi and has received numerous awards throughout his career for reporting, columns and freedom of information efforts.