Archive for April, 2012

Delay in Vote on Credit Union Lending Bill

The U.S. Senate was supposed to vote on the bill to increase the lending cap for credit unions by the end of April, but the vote has now been delayed.  The Credit Union Small  Business Jobs Bill would increase the amount of lending that credit unions are allowed to do– from the current 12.25 percent of assets to 27.5 percent.

Whatever the reason, banks who oppose the bill seem to think this could signal its end. This is unfortunate when so many small businesses cannot get loans from mainstream banks. According to the Small Business Administration, total outstanding small business loans among the largest banks fell by 1.2% between June and September of 2011, roughly $7.2 billion in just one quarter. It’s even harder for very small and minority-owned businesses, as they are more often denied loans, or are offered less affordable loans than non-minority owned firms.

There is plenty of demand for small business loans. Where banks are receding from lending, credit unions could fill the gap by reaching out to this underserved market.


April 30, 2012 at 3:57 pm

Incentives for Inmar Include Workforce Training and Clawbacks

Winsten-Salem went through the common back-and-forth with the technology company, Inmar, on whether they would stay and expand in the city or relocate to another state. Usually these negotiations end up in a zero-sum game, in which the municipality– or several municipalities, if they are competing– throws incentives at a company until they stay, with questionable real benefits to the community. But in this case, it seems that Winsten-Salem may have struck a good deal.

In exchange for the $2.8 million in incentives, Inmar expects to create 212 new jobs and the company has said it is committed to hiring locally. One of the reasons Inmar was seeking to relocate is the lack of qualified workers in information technology, accounting, customer service, and operations. According to the National Skills Coalition, these types of “middle skills jobs”– those that require more than a high school diploma, but less than a 4-year college degree– make up a large share of the labor market in the state, and demand for these jobs will remain strong.  However, there is a gap in the demand and workers with the right skills. Inmar has said it will work with local colleges to train worker for jobs that the company is seeking to fill.

The deal with Inmar will also include “clawback” provisions, which means that the company will have to pay back all the money to the city if it does not deliver on its promises to invest $62 million and create 212 jobs with an average salary of $72,783 over five years. The median household income in Forsyth County is$46,749. Creating well-paying jobs and workforce training opportunities, with the safeguard of the clawback provisions, could provide and economic boost for Winsten-Salem, and the state overall.

The Governor is expected to make an announcement confirming this plan at 12:30 today.

April 26, 2012 at 3:37 pm

Increasing Small Business Lending in Underserved Areas

Check out our guest post on the UNC School of Government’s Community & Economic Development blog!

Tuesday, April 24, 2012

By CED Guest Author

Sadaf Knight is the Policy and Research Director of The Support Center

Access to affordable financing is a growing challenge for small businesses, particularly in low-income, rural, and underserved areas of the state.  It is also true, however, that banks, credit unions, and intermediaries in these areas have capital to lend. How can we connect businesses in need of financing with the financial institutions that are ready to make loans? The Support Center and other partners explored this topic at a recent summit on small business lending and services in Ahoskie, NC.* This post describes some of the key ideas that came out of the summit.

The day-long summit was organized around a series of panels. Panelists included:

  • Technical assistance providers who discussed the training they provide entrepreneurs to prime them for accessing financing and grow their business
  • Community-based organizations, who explained how they partner with lenders within their communities
  • Small business lenders, who described their lending programs and their desire to expand the reach of those programs.

Two major themes emerged for improving access to capital for small business: coordination and outreach.


A major challenge raised by panelists is effectively coordinating the efforts of business service providers and lenders to ensure that small businesses can access both the assistance and capital they need to be successful.  One way of doing this is to create a more robust referral system in which the various institutions more regularly and effectively direct small businesses to the appropriate assistance provider or lender.  This is critical to ensuring that these businesses do not get lost or discouraged in the shuffle between lenders and assistance providers.  Success will lie in lenders and assistance providers maintaining comprehensive knowledge of the resources that each offers, and in taking the time to facilitate personal connections between borrowers and various providers.


Coordination between lenders and business service providers is only part of the solution. It is also necessary to conduct effective outreach to small businesses that are in need of financing but are unaware of or unable to access available resources.  The need is particularly acute in underserved rural and low-income areas.  Summit participants advised service providers and lenders to go into these areas to conduct joint workshops and trainings in order to reach and educate entrepreneurs. Additionally, participants recommended using existing networks, such as the chambers of commerce and economic development commissions, to reach entrepreneurs where they are. Finding new community partners, such as churches and libraries, may also offer a means to connect rural entrepreneurs to available resources and financing.

The information sharing and face-to-face interaction during the summit was invaluable. It sparked a much-needed dialogue and generated enthusiasm for forming a more strategic partnership among participants. Most importantly, the participants agreed that more summits should be convened to deepen our collaboration and benefit other parts of the state. As a result, The Support Center is currently in the early planning stage for a second summit in Halifax County.

*The Ahoskie summit was convened in December 2011 by The Support Center, the Federal Reserve Bank of Richmond, the North Carolina Rural Economic Development Center (Rural Center), and the North Carolina Indian Economic Development Initiative. The forum was hosted by the Roanoke Chowan Community College Small Business Center. There were more than 50 participants representing local chambers of commerce, Small Business Centers, community development credit unions, banks, community organizations, municipal economic development agencies, technical assistance providers, and representatives of Congressional leaders.

April 25, 2012 at 3:07 pm

BB&T Gets Naming Rights for Knights Stadium, Charlotte City Council Debates Public Assistance

BB&T Corp was able to secure naming rights for the proposed Charlotte Knights baseball stadium late last week.  The total cost for the stadium is estimated at $74 million. The minor league team has already secured $28 million in aid from Mecklenburg County. But it is unclear how much aid it will be able to get from the City of Charlotte.

Under the most recent proposal, which will be voted on by the Charlotte City Council in May, the stadium would be financed through $7.5 million from Knights owner Don Beaver and$30 million from naming rights, suite sales, and sponsorships– leaving $36.65 million to be picked up by the public. Mecklenburg County would provide $8 million for infrastructure and would lease the 8 acres of land for the stadium, a value of $20 million, for $1 per year. The City of Charlotte would provide the remaining $8.5 million through hotel/motel tax revenue and property taxes generated by the stadium.

Supporters of the stadium say that it would boost economic activity in the area, even though the Knights have among the lowest attendance in the entire league. Even if the team is able to double attendance, as it promises,will the stadium actually generate economic growth for the City and its residents?

It is well documented that for all the hype around big projects like stadiums, they hardly generate the economic growth and jobs that they promise. Baseball is seasonal and half of the games would be played in other cities and towns, leaving the stadium unused for a significant part of the year. The jobs created would also be temporary and seasonal, and mostly low-wage. Even the indirect impact of the surrounding economy are questionable. Around the country, from New York to Los Angeles and everywhere in between, cities and states have invested millions into similar projects, with little real benefit for their communities.  As reported by Good Jobs First,

“The conclusion of the overwhelming majority of studies is that stadium subsidies do not pay off in terms of economic growth or job creation. The limited number of jobs that might be created come at a high cost to taxpayers—often well above $100,000 each.”

The push for a stadium in Charlotte is particularly questionable now, when the city and state are already strapped for resources.  Charlotte is facing an increase in the property tax, as well as increases in water fees and transportation fares. And the Charlotte Observer has reported that despite a modest increase in revenue, the City does not have enough funds for sidewalks (even where two young boys were killed after being hit by a delivery truck), roads, affordable housing, or neighborhood improvement.

The Council’s efforts would be better spent supporting the City Manager’s Capital Plan, which would use the increased property tax revenue to support infrastructure improvements in the City’s oldest and most distressed areas. These are the investments that would generate real economic benefits for communities in the long run.

April 24, 2012 at 3:37 pm 1 comment

New Technology to Help Small Businesses Ignores the “Digital Divide”

Brad Kime of On Deck Capital wrote a piece for CNBC today about small business’ barriers in accessing capital. He outlines the well-documented reasons for why small businesses face such difficulties in securing financing: problematic credit histories, over-reliance on credit scores by lenders, and the time and cost to lenders for underwriting small loans, among others. 

Kime is on point when he says that “businesses can only expand, hire and meet their potential when our lending system works efficiently.” Improvements in technology, he says, can break down these barriers. For lenders, programs like those developed by On Deck, help lenders aggregate information about potential borrowers from a range of sources to make a more comprehensive evaluation of businesses. For borrowers, new websites allow business owners to input their information and market themselves to several potential lenders at once.These tools will certainly help improve this system and increase flow of capital from lenders to businesses that need it.

However, for many of the very small businesses that have just a handful of employees, or are located in rural areas, these tools themselves will be out of reach. Some areas of the state don’t even have the infrastructure to support broadband, making web-based technologies nearly impossible. For others who do have access to the internet, many do not have the skills or know-how to navigate and utilize it.

Despite all the advances in technology, face-to-face interaction will still be vital to getting borrowers the information and assistance they need to access affordable capital. A functioning and efficient lending system has to take into account the needs of businesses in undeserved, rural communities that may not yet be able to use new technology. Lenders and technical assistance providers– the state’s Small Business Centers and Small Business Technology Development Centers, for example– can help businesses gain the skills they need to eventually take advantage of new technology. For now, though, those of us working to expand small business opportunities must meet the entrepreneurs where they are. 

April 23, 2012 at 4:34 pm

Fairness in Foreclosure Act of 2011

A deficiency judgment is issued when a house has been auctioned off, but did not sell for enough to pay off the total amount owed to the lender. Many homeowners fear the bank will sue them and go after their wages, assets, and retirement accounts—threatening any financial security that they may have remaining.

Many states have made deficiency judgments impossible for lenders to pursue.  In December of 2011, a bill was introduced in the U.S. House of Representatives that would extend limitations on deficiency judgments to all states. Called the Fairness in Foreclosure Act, it would “ensure uniformity and fairness in deficiency judgments arising from foreclosures on mortgage for single family homes.” It would stipulate that a deficiency judgment can only be pursued within one year of the foreclosure of the home, except in states that currently have shorter time limits in place. In addition, the bill proposes that lenders not be allowed to go after low-income borrowers for deficiency judgment.

Defaulted borrowers are already behind thousands of dollars on their mortgage payments and facing public auction of their houses. With a deficiency judgment, the ordeal may continue indefinitely. For these homeowners living in fear of receiving a deficiency judgment after a short-sale or foreclosure, the Fairness in Foreclosure Act of 2011 would provide some safeguards.

Sonia Jones, Housing Resource Director

April 20, 2012 at 2:27 pm

EXPERT ADVICE: Collaborations Are Key for Success

Collaboration is defined as “the act of working with another or others on a joint project, or as “something created by working jointly with another or others”. Similarly, Partnership is defined as “the state or condition of being a partner; participation; association; joint interest”. What both of these words indicate is that it requires more than just one individual or institution to fulfill a purpose. As an example, The Support Center was created  over twenty years ago on the very basis of partnership; working together with Community Development Credit Unions to enable them to serve their communities better through homeownership and loans to small businesses.

In the current state of our economy, partnerships and collaborations are more important than ever. For organizations and institutions working to expand access to financial services in underserved communities, collaborating will be vital to achieving common outcomes. As we have discussed in a previous blog post about access to capital, successfully serving small businesses requires an effective flow of information from lending sources down to the small business owners. On the lending side, creating working partnerships can help information flow smoothly and enable lenders and providers to work together to more effectively serve our communities. For example, partnering with organizations like Community Development Corporations (CDCs) to offer financial literacy, access to capital, and technical assistance for their clients can be a successful method of serving some of the state’s smaller communities with little or no financial options. Additionally, working with small business centers and Small Business Technology Development Centers located in community colleges and universities, which offer one-on-one counseling to worthy future and existing small business owners, can help create a constant stream of loan-ready small business owners to offer funding.

Local, state, and federal governments are also important engines of growth that can bring valuable resources to the table when partnering with non-profits, lenders, and other intermediaries to expanding entrepreneurship. At the local level, economic development initiatives, such as neighborhood revitalizations or local development projects, are opportunities for municipalities, CDCs, community groups, lenders, and other partners to target and encourage small business development.

Finally, the larger mainstream banks can help smaller banks, credit unions, and lenders provide small business financing to underserved markets. Through program-related investments (PRIs) for lending purposes, banks can help increase the capacity for lending in areas typically outside their reach.

The take-away is this: one organization or institution can’t meet all the needs of a community. For great ideas to be successful, collaborating and creating partnerships can make the best out of our efforts.

Roberta McCullough, Vice President, Business Services & Operations

April 5, 2012 at 3:14 pm

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