In March 2020, not long after Maryland businesses were forced to close because of the pandemic, Gov. Larry Hogan announced grant and loan programs to help small businesses.
New data, presented during a meeting with Comptroller Peter Franchot Wednesday, reveals disparities in how that money was distributed.
The Maryland Department of Commerce awarded 14,286 grants of up to $10,000 each, totalling nearly $141 million, and 1,654 loans of up to $50,000 each, totalling about $75.3 million. To qualify, businesses could have no more than 50 employees.
The largest share of grants — 18.6%, or $26.2 million — went to businesses in Montgomery County, according to data from the state Department of Commerce presented Wednesday.
By comparison, Prince George’s County, the state’s second most-populous county, is home to roughly the same number of qualified businesses as Montgomery County, but received less than half as much money — $12.5 million or 8.9% of the state’s grants.
Likewise, Montgomery County businesses received 15.6% of the loans, or $11.7 million, compared to Prince George’s County businesses, which received 8.6% of the loans, or $6.6 million.
The Baltimore area saw a similar phenomenon. Baltimore County businesses received $22 million in grants, or 15.7% of the state’s total, and just under $11 million in loans, or 14.6% of the total. Baltimore City had more qualified businesses by the Department of Commerce’s measures, but received just under $14 million in grants, or 9.9% of the total, and $8 million in loans, or 10.6% of the total.
“We're concerned about those trends, particularly because Prince George's County and Baltimore City, two majority-minority jurisdictions, have really borne the brunt of the public health and economic consequences of the pandemic,” Franchot said.
Commerce Department Director of Education and Workforce Sarah Sheppard, who said she oversaw “in some capacity” all of the department’s pandemic spending programs, said the grants and loans were awarded on a rolling basis as businesses applied.
“This program was announced and immediately started accepting applications the moment it was announced during our press conference on March 23, 2020,” Sheppard said. “If they were qualified businesses, that's how it was done — by first in, first out. There was no rhyme or reason in this programming as to population size.”
She said in the case of grants, the department actually had a surplus of funding and was able to offer grants to every qualified business.
Franchot also pointed out disparities in the way the grants and loans were distributed across different industries.
He highlighted the sector described as “Professional, Scientific, and Technical Services,” which Sheppard said includes law firms, accounting firms and other professional services.
“According to our data, that sector received approximately 13% of all Commerce funds, while the industry itself — the sector itself — represented about 3% of the job losses,” Franchot said. “Compare that with the food service industry, which we all know was devastated by the pandemic. That industry got about 17% of Commerce funds, but it accounted for nearly 33% of the job losses in the state.”
Franchot questioned whether the practice of giving grants and loans to the first to apply “basically ended up as an abuse of the system,” as lawyers and other well-connected professionals who are more familiar with grant and loan application processes had an easier time securing funding.
When asked by Deputy Comptroller Sharone Bonardi how the programs were marketed to businesses across the state, Sheppard said they initially relied heavily on “word of mouth marketing." Commerce also sent information to businesses already on its distribution list and used social media to get the word out, Sheppard said.
In hindsight, Sheppard agreed, they might have done things differently, and later programs included in the pandemic relief legislation passed by the General Assembly distributed funding more evenly.
“Hopefully we never have another pandemic — we don’t have to do this again,” Sheppard said.