ASHEVILLE, N.C. (828newsNOW) — A nonprofit that has helped dozens of Buncombe County businesses secure financing is questioning a possible moratorium on loan guarantees involving Mountain BizWorks, warning that the move could make it harder for entrepreneurs to get funding as Western North Carolina continues recovering from Helene.
The Mountain Community Capital Fund’s operating committee has been discussing a possible pause in loan guarantees involving Mountain BizWorks while members work through concerns about borrower information, technical assistance and the program’s future.
Mountain BizWorks Executive Director Matthew Raker said the organization knows about the discussion but isn’t sure what a moratorium would accomplish.
“Mountain BizWorks is aware of the MCCF committee’s discussion of a possible moratorium, however we are not fully aware of the reasoning behind the discussion or what MCCF mission outcomes the moratorium would help to address,” Raker said in an email to 828newsNOW.
He said a moratorium could hurt the very businesses the program was created to help.
“A moratorium would interrupt this resource for local small businesses, and we would hope the committee has other alternative ways to address any concerns,” Raker said.
No moratorium has been approved.
Committee raises concerns about lending program
The Mountain Community Capital Fund was created to help entrepreneurs who have trouble qualifying for traditional business loans because of limited credit histories, insufficient collateral or other financial barriers.
The fund doesn’t lend money directly. Instead, it guarantees a portion of loans made by participating lenders, reducing their risk and helping businesses get financing they might otherwise be denied.
The program is a partnership involving Asheville, Buncombe County and participating lenders, including Mountain BizWorks.
During an Oct. 15 meeting, members of the fund’s operating committee discussed several issues they want to address as they develop a new strategic plan.
Among them were concerns about whether borrowers are receiving appropriate technical assistance and whether committee members have enough information about loan recipients to make informed decisions.
One committee member questioned the effectiveness of the assistance being provided, particularly for low-income entrepreneurs and entrepreneurs of color. The member also raised concerns about the amount of borrower information available to the committee.
Another member said there had been considerable discussion about a moratorium involving Mountain BizWorks while the committee worked through several substantive issues.
Members also raised questions about the fund’s long-term financial capacity, including when it should be considered fully committed and how that might affect future lending.
The committee has not taken action to suspend loan guarantees involving Mountain BizWorks.
Mountain BizWorks points to program’s success
Raker said Mountain BizWorks helped establish the fund seven years ago and has used its guarantees to finance 64 local businesses.
Those businesses now support 180 jobs, according to the organization.
“Mountain BizWorks is proud to be a co-founder and a co-funder of this important and innovative resource to expand access-to-capital for under-resourced and underrepresented entrepreneurs in Buncombe County,” Raker said.
He said the program creates opportunities for people who have promising business ideas but lack the credit history or collateral needed to obtain conventional financing.
Raker also emphasized the importance of keeping financing available as businesses continue to recover from Helene.
Questions about technical assistance and borrower information
One issue raised during the committee’s discussions was whether entrepreneurs receiving loans are getting the kind of help they need to succeed.
Raker said the Mountain Community Capital Fund does not provide funding for technical assistance.
When the program began, Asheville and Buncombe County provided separate funding for those services, but those programs have since ended.
Mountain BizWorks continues to offer business coaching and classes to its loan clients, he said.
Committee members also discussed whether participating lenders should be required to obtain permission from borrowers to share more information about their businesses.
During the meeting, members were told that two of the three lenders consulted supported a proposed borrower release form, while one generally did not.
The committee has been considering a system that would allow borrowers to choose how much information could be shared, including whether their businesses could be publicly identified.
Raker said Mountain BizWorks supports efforts to highlight businesses helped by the fund but must also protect its clients’ privacy.
“We also recognize the fact that the MCCF committee is a public body and that this limits the level of borrower information that can be shared without breaching regulatory client privacy and confidentiality requirements,” he said.
What’s next for the fund?
The committee is working on a strategic plan that could bring changes to how the loan guarantee program operates and how it works with participating lenders.
Members have discussed gathering additional feedback from lenders before making decisions about the program’s future.
Raker said Mountain BizWorks believes the fund has been successful but that lessons from its first seven years could help it serve more entrepreneurs.
“We look forward to continuing to engage with our program partners and the committee on these opportunities,” he said.
The Mountain Community Capital Fund Operating Committee is scheduled to meet again at 9 a.m. Nov. 6 at 70 Court Plaza in Asheville.