Businesses in low-to-moderate income areas in Fayetteville could be eligible to receive up to $750,000 under a new city loan program designed to grow small businesses in economically disadvantaged areas.
Administered by the Fayetteville Cumberland Economic Development Corporation and supported with $2.5 million of Fayetteville’s American Rescue Plan Act funds and $2.5 million in state funding, the “Can Do Grant Program” aims to address funding inequities by providing capital to businesses that are often overlooked or underserved by traditional financial institutions, said FCEDC President Robert Van Geons. During a presentation to the Fayetteville City Council Monday, he explained that the program is designed to address economic disparities facing local businesses, especially those harmed by the pandemic, and is an offshoot of the city’s establishment of the Economic Equity Venture Capital Fund in 2022.
The goal is to launch the program and open the application period by Jan. 1, Van Geons said. Van Geons estimated between 10 and 15 businesses will be able to receive funding from the initial $5 million allocated for the program.
A business must operate in a low-to-moderate income area, or Qualified Census Tract, to receive a loan. A Qualified Census Tract, as defined by the U.S. Department of Housing and Urban Development, is a geographic area in which 50% of households have incomes below 60% of the Median Gross Income — a measure of the average income in a metropolitan area.
According to the project scope, minority-owned businesses will receive higher preference in receiving grants, as will companies in industries with strong growth potential in Fayetteville, including aerospace, technology, defense and cybersecurity. Companies that can fulfill contract needs of local institutions in Fayetteville, such as the city, county, community college or hospital system, will also be favored, according to Van Geons.
Van Geons emphasized that the loan program is for businesses who need non-interest bearing capital and long-term investment, but “have historically had the hardest time acquiring it.”
Van Geons said FCEDC had researched how to develop a loan program that would benefit economically disadvantaged businesses in Fayetteville, and found that providing interest-free capital opportunities to small businesses in low-to-moderate census tracts was an impactful solution.
“And what we found through research, it wasn’t the ability to get a loan, it wasn’t the ability to get training or to have a willing customer like the city [that impedes businesses],” Van Geons said. “It was about having the capital that didn’t immediately start accruing interest so you could buy the equipment, machinery or the other things you need to be able to provide services.”
The funding can be used for capital expenses such as purchasing machinery and equipment, acquiring commercial vehicles, purchasing computer equipment and improving or expanding facilities.
“It is designed to take a business that is operating and doing well to grow them to be able to do a whole lot more,” Van Geons said.
FCEDC will work closely with the businesses to ensure they meet the qualifications of the loan and are able to use the funds to grow; companies who successfully reach benchmarks will have their loans forgiven, or “translated” into grants, Van Geons said. Van Geons described the program as an “accelerator fund” designed to propel businesses with unmet capital needs but strong potential to the next phase of their company, thereby also boosting the local economy.
“You are building an ecosystem for local success stories,” Van Geons said.
Additional requirements:
- The business must be majority-owned by residents of low- to moderate-income census tracts, or commit to hiring low- to moderate-income households.
- Have 15 or fewer employees at the time of the application
- For every $25,000 in funding provided, the business must create one job. They must create and retain a total of five positions.
- New employees must be hired at a wage that is at least 10% above the median wage for that job classification.
- The business must create 50% of the qualifying jobs within the first 18 months of receiving the funding.
- The business must work with local business support partners and provide regular updates on project progress and employment.
- Businesses will be required to document their performance and adhere to the terms of the funding agreement.
- The program will require reasonable security measures to ensure that the funds are used appropriately and to protect public investment.
Although the grant has many stipulations, Van Geons expressed confidence that companies who fit the bill will be able to achieve success with its offerings.
“This won’t be perfect for everyone, but this will be an incredible catalyst to grow qualifying companies,” Van Geons said.
Council members expressed appreciation and enthusiasm for the grant. Mayor Mitch Colvin connected it to other efforts the city has taken to boost local businesses and entrepreneurs, such as intentionally offering contracts to local businesses and propping up the Fayetteville-Cumberland Regional Entrepreneur and Business HUB.
“So that’s a full phase approach that we’ve had,” Colvin said of the initiatives. “And so now you may have companies at different phases at different times that this program may not fit. But I think this is something that’s needed to help continue to encourage people to do better.”
Contact Evey Weisblat at eweisblat@cityviewnc.com or 216-527-3608. This story was made possible by donations from readers like you to CityView News Fund, a 501(c)(3) charitable organization committed to an informed democracy in Fayetteville and Cumberland County.
