Business/Economy

Many Alaska businesses weren’t expected to survive the pandemic. Aid is helping most pull through, but impacts linger.

Last spring, many Alaska businesses predicted they would not survive the pandemic. But that scenario did not pan out, thanks to federal programs that pumped billions of dollars into Alaska, according to business groups and owners.

The aid propped up thousands of businesses, but not all of them. Some operations did shut their doors forever, though no one appears to have an exact accounting of the losses, business groups say.

Well over a year later, the number of businesses that closed turned out to be far fewer than anticipated, said Jon Bittner with the Alaska Small Business Development Center.

Last May, about 15% of businesses in Anchorage feared they would close permanently, according to surveys.

“What we’re seeing is nothing near what anyone was thinking,” Bittner said.

Over the last year, more than $3 billion flooded into the Alaska economy to help businesses, primarily through the Small Business Administration, according to the center.

The key factor that often separated businesses that survived from those that didn’t was the federal aid, Bittner said.

“When the economy was shut down, businesses could not innovate their way out this,” he said.

But even businesses that received millions of dollars haven’t returned to full operations.

Hook Line and Sinker, which owns three restaurants in Alaska, dipped into multiple funding programs, and received about $4 million in federal aid, said manager Mike Middleton.

But the restaurant group still hasn’t reopened Subzero Bistro and Microlounge in downtown Anchorage, in part because of the ongoing worker shortage. Subzero is currently serving as a distribution center to provide meals to the needy, under an Anchorage program that uses federal pandemic aid.

The restaurant group, which also owns Humpy’s Great Alaskan Ale House and Flattop Pizza and Pool, originally feared it wouldn’t survive the pandemic.

But as federal money poured into Alaska, the group was fortunate to have expertise on hand to apply for help, Middleton said.

“One of our partners is a very, very good accountant, and they were proactive when it came to any forms of assistance,” Middleton said.

‘Impacts are still very much with us’

The applications for federal aid weren’t as simple as they seemed, Middleton said. They involved multiple steps, good record-keeping and sometimes regular interaction with banks. And the rules often changed.

But in the big picture, he said the programs did their job, helping keeping the economy afloat. He said the three restaurants received the relatively large sum of federal aid because they have large operations and employed more than 300 people before the pandemic at peak times.

“The money was absolutely instrumental in the survival of many of our businesses through that time period, for sure,” he said.

The percent of business closures in Alaska has likely been in the single digits, said Sarah Oates, who represents some of the sectors hit hardest by the pandemic as head of the Alaska Cabaret, Hotel, Restaurant and Retailers Association.

Oates said the potential damage is not over.

“The impacts are still very much with us,” she said.

Many businesses are now struggling to pay off debts, she said. They face a shortage in workers and higher prices for materials. And the highly contagious delta variant is putting economy at risk of sputtering again.

Roscoe Wyche III, owner of Roscoe’s Catfish and Barbeque, is in a rebuilding phase after he received about $80,000 in federal aid, about half from the Paycheck Protection Program that provided forgivable loans to help cover expenses.

He said the money was “not even close” to saving his two restaurants, part of a family-run business with roots in Anchorage back to the 1980s.

Roscoe closed the downtown location in May. He closed the Roscoe’s food trailer off Muldoon Road last year.

The slowdown in business during the pandemic and a shortage of workers contributed to the closures, he said. He still had to make lease payments and cover his debt.

It’s unfortunate that some businesses received large sums of money but others didn’t because the funds were depleted, he said.

He’s still optimistic. An “angel investor” he declined to name is keeping the business alive, he said. He plans to reopen Roscoe’s downtown location next month — despite a recent incident when a man vandalized the building, starting a fire in the kitchen in July.

In June, Roscoe’s merged with Tropical Latin Foods in East Anchorage, to sell his “food for the soul” dishes there, alongside Puerto Rican and Dominican fare.

“It’s a real tough time for restaurants between the pricing and the labor costs,” he said. “But even with this setback, we are survivors. We have to tighten the belt, but we are real confident of the food product that we put out and that people will come and support us.”

‘Our newest fear is staffing’

Michael Cervantes, owner of The Banks Alehouse in Fairbanks, said he tapped multiple aid programs, taking in about $1.5 million in grants.

“It was a tremendous amount of work to do it, but I felt it was what we needed to do to survive and take care of employees,” he said.

Business has come back strong, but things are still uncertain because of the struggle hiring workers, he said. He’s been operating at reduced hours, five days a week instead of seven.

“So the financial fear is no longer there, but our newest fear is staffing,” he said. “So one fear changed to another. It’s the next evolution in the pandemic.”

Suphamat “Bunn” Yeesaeng, who owned Bunn’s 4th Avenue Barbershop in downtown Anchorage, said she applied for aid multiple times.

She never got a dime, she said.

She shut down in October after 16 years in business. Bills had piled up and sales were down, following municipal and state restrictions on personal care businesses and customer concerns with COVID-19.

“It was sad,” she said. “But finally, I just can’t afford it any more.”

Yeesaeng, originally from Thailand, said she thinks her limited English hurt her chances when she tried applying for aid. And she was also the lone employee. More of the aid seemed to go to businesses with lots of workers, she said.

“Some people got it again, a second round,” she said. “I feel like, ‘How come they got a second?’ I didn’t even get a first one.”

Since closing, she’s moved to Utqiagvik, where she’s working seven days a week, managing a pizzeria to pay off her home mortgage in Anchorage. In the years to come, she hopes to return and run a barber shop out of her house.

The changes over the last year were scary, but she’s grateful to at least have a job.

“You know a lot of people lost more than I do,” she said. “Like I say, I (am) really thankful to have opportunity.”

Alex DeMarban

Alex DeMarban is a longtime Alaska journalist who covers business, the oil and gas industries and general assignments. Reach him at 907-257-4317 or alex@adn.com.

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