BOONE — The Watauga Economic Development Commission and the Watauga County Board of Commissioners have both approved an emergency small business loan program — with a goal of providing $400,000 in funding — for local companies struggling financially due to the COVID-19 pandemic.
Planning and Inspections Director Joe Furman approached the commissioners with the loan program proposal during the board’s April 21 virtual meeting. Furman explained that he and David Jackson, the president and CEO of the Boone Area Chamber of Commerce, were approached with the idea by Mountain BizWorks roughly two weeks ago. Mountain BizWorks is a U.S. Treasury-certified nonprofit community development financial institution that serves Western North Carolina, with offices in Asheville and Boone.
The loan program is proposed to be called the Reenergize Watauga Fund, and would be first-come-first-serve when established. The loans could be used to help businesses reopen or might help fill the void until federal funding is available, according to information from Furman included in the commissioner’s meeting materials.
Furman added that the Small Business Administration is overwhelmed with loan requests.
“Many businesses are not able to get (any funding) at all or get what they need, and many are not able to access the funds quickly,” Furman said.
The Reenergize Watauga Fund would help to remedy some of those issues, according to Furman. With commissioner approval, the EDC has appropriated $100,000 from its capital reserve money for the Reenergize Watauga Fund. Organizers hope to supplement this amount with funding from other organizations to reach a total of $400,000.
All funds would funnel through Mountain BizWorks, and the organization would then make the loans and administer the repayments. The Reenergize Watauga Fund cannot award grants or low-interest loans, as public funds can’t be used for low-interest loans, according to Furman.
“A loan is not an unconstitutional gift so long as the loan is reasonably secured with collateral and carries an appropriate risk-adjusted interest rate based on the terms and collateral provided,” according to the University of North Carolina School of Government.
This is different than when local governments give low-interest loans and grants to businesses as incentives for location and expansion, as N.C. General Statutes provide authority for this, Furman said.
Furman also mentioned that the Blowing Rock Chamber of Commerce and The Village Foundation of Blowing Rock have also established the Blowing Rock United Relief Fund — a grant program for Blowing Rock businesses.
Carolina Small Business Development Fund conducted an April research report assessing the economic impacts of COVID-19 to the state’s small business community. According to the report, 85 percent of employer businesses in North Carolina are small establishments with one to 19 employees. The group stated that data suggests that these businesses are likely to see the most severe impacts from COVID-19. The group’s research suggests that up to 56 percent of all North Carolina small businesses will see adverse impacts from COVID-19.
Medium-sized businesses with between 20 and 99 employees are also likely to be heavily impacted. Up to 69 percent of employers of medium-sized establishments are projected to experience impacts, according to the Carolina Small Business Development Fund’s data.
“The economic disruption from the COVID-19 pandemic has already started in earnest across the state,” the report stated. “The size and scope of the economic ripples from the pandemic will likely be unprecedented.”
Included in the commissioners’ agenda was Mountain BizWorks information on a similar loan program started in Buncombe County, called the One Buncombe Fund, to help businesses remain open and limit job losses. Information is also included about a program in Haywood County.
“It sounds like a win-win,” said Watauga Commissioner Billy Kennedy. “Our local businesses need it as soon as possible.”
The establishment of the Watauga fund will go before public hearing during the commissioner’s May 5 meeting at 8:30 a.m. Chairman John Welch said the county would propose details on how the public can comment on the creation of the fund, as it’s possible the board will still be meeting remotely.
The commissioners were also unsure of the format for the board’s May 14 (noon to 8 p.m.) and May 15 (9 a.m. to 1 p.m.) budget work sessions. County Manager Deron Geouque said the meetings were scheduled for conference calls via Zoom. Some of the commissioners noted that meeting remotely would not be an ideal way to discuss the county’s budget. Welch said the board would continue to discuss the May 14-15 meeting format.