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Economist: $1.63B in federal aid keeping Guam economy afloat

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HAGÅTÑA (The Guam Daily Post) — As the coronavirus pandemic pounds Guam, federal relief that could go as high as $1.63 billion has been delivering its promise of stabilizing the local economy, at least for now.

"The $1.63 billion is at this point helping the Guam economy survive," according to Dr. Roseanne Jones, a professor of economics at the University of Guam.

Without this infusion of funds, she said, "it would be a very different kind of economic environment, even more of a hardship than it is now."

Federal relief funds for more than 5,000 small businesses alone reached $275 million, according to Kenneth Lujan, branch manager of the U.S. Small Business Administration Guam branch office.

Small businesses, he said, are "the driving force of economic stability" and are "leading the way to allow our nation and our island to rebound safely."

"Without the outstanding work and strong partnership from the seven SBA participating lenders on Guam, our community might have been in dire straits economically and socially," Lujan said.

Lacking in resources to begin with, Guam struggled financially in the beginning of the pandemic. The story changed when federal funds started coming in.

Because of federal pandemic funds, no single government of Guam job has been lost, hospitals have remained open, water and power services remain uninterrupted, and grocery stores are bustling with activity.

Thousands of private sector workers who lost their jobs or got pay cuts because of Covid-19 are covered by a $924 million Pandemic Unemployment Assistance program.

Working households got a one-time aid of at least $1,200 each in economic impact payment.

Nearly every sector of the Guam community got direct federal help, thanks to the $2.2 trillion Coronavirus Aid, Relief, and Economic Security, or CARES, Act from Congress.

The governor recently participated in a congressional committee on finance hearing to express Guam's need for additional federal funding. Gov. Lou Leon Guerrero said without additional funding, the government may see drastic cuts to local education, safety and health agencies.

Unusual times

Instead of overall shortfalls, GovGuam's revenue exceeded projections by $26 million in the first 11 months of fiscal 2020 and is on its way to close the year with more revenue than targeted, all with the help of federal aid.

"All in all, it would be quite dire without this kind of stimulus," Jones said.

Federal funds authorized for release not only exceed GovGuam's annual budget, but is also the largest relief package in the island's history.

"It's very unusual but these are very unusual times," Jones said, comparing the Covid relief efforts to those provided in the wake of major typhoons and other disasters.

This round of disaster relief, she said, is not just about trying to rebuild after a weather disaster but an "across-the-board economic disaster that is shaking the very structural foundation of an economy," especially one that is dependent on tourism.

'Overwhelming success'

The bulk of the small business relief funds, about $192 million, for Guam came from the Paycheck Protection Program, a forgivable loan program meant to help employers keep their payroll and their doors open.

"The PPP has been an overwhelming success for Guam's small business sector. The program approved more than 2,200 loans worth over $192 million in emergency relief funding in just four months," Lujan said.

Federal data showed that these small businesses who accessed PPP loans employed nearly 32,000 workers. The PPP was closed on Aug. 8.

There's also long-term financing options, such as the Economic Injury Disaster Loan, to cover other expenses not covered by PPP, Lujan said.

EIDL, he said, approved more than 2,800 loans and grants worth over $83.3 million in emergency relief funding. It is still available to eligible Guam businesses who continue to be affected by the pandemic.

There's also a local $20 million initiative to help small businesses.

Gov. Lou Leon Guerrero used direct CARES Act funding for GovGuam to establish a Guam small-business pandemic assistance grant that the Guam Economic Development Authority administers.

GEDA awarded it to 88% or 2,261 of 2,575 applicants, according to GEDA Administrator Melanie Mendiola. She said 290 applicants were ineligible, and 24 are in process.

In the end, $16.08 million was awarded. Nearly $4 million in unawarded grant money was eventually transferred to pay for hotel quarantine facilities.

Permanent closures

Some 30,000 private sector workers displaced by Covid-19, however, aren't sure whether PUA payouts can be extended if Guam's tourism continues to be a standstill beyond calendar year 2020.

GovGuam's prolonged lockdown and restrictions have also forced hundreds of businesses to close on and off or open partially for six months now.

At least one bar owner that's been allowed to open for only a few weeks since March 20 has recently taken GovGuam to court.

The governor's business shutdown orders, according to bar owner Thomas Peinhopf's lawsuit, "are illegal, unconstitutional and void."

In the end, even businesses that obtained PPP and other relief had to let go of employees or permanently shut their doors.

From a 44-year-old travel agency to beloved local restaurants, and from Chuck E. Cheese to Forever 21, the list of businesses forever lost to the pandemic keeps on growing by the week.

"If we're losing well-established businesses, it's sad to see that loss as well," Jones, the economist, said.

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