Mecklenburg County wants to get into the loan business

Plus: Lowe's tech hub could put Dallas in its place; Charlotte banks ruin BBQ; Panthers outlaw music reporting

Good morning! Today is Friday, May 24, 2019. There will be no Ledger on Monday in observance of Memorial Day. Be thankful for those who gave the ultimate sacrifice.

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County government says nobody will lend to small businesses. Lenders and business owners say otherwise.

In a city filled with banks big and small, you might think that we’d have every possible financial product covered, from loans to credit cards to annuities.

But the county government says it sees an opening to pitch in by helping provide loans to small businesses. In its proposed 2019-2020 budget, released this month, Mecklenburg County suggests spending $3.25M next year to create what it calls a “small business micro-loan fund.” It’s a small part of a $1.9B budget that raises taxes and increases spending by 9%, with parks, schools, employee salaries, public health and affordable housing getting more money.

County leaders say that for all of Charlotte’s financial prowess, there exists a huge gap at the lower end of the market and that small businesses that need the smallest loans – those under $50,000 – can’t get them. But that’s not quite true.

To hear the case for Mecklenburg County getting into the lending business, here’s County Manager Dena Diorio last week on WFAE-FM’s “Charlotte Talks with Mike Collins” (42:00 mark):

We hear a lot from small businesses that want to expand their business that the amount of money that they want to borrow is not large enough that they can get it from a traditional bank, and there’s really no other place where they can access capital. This is an important area. Those are the kind of companies that actually employ people. They create jobs. And if they can access those small amounts of capital, they can actually have a pretty good impact on the local economy.

And so nobody is doing it. One of the things we like to do, if there’s a gap, and we have identified a gap, and no one else is going to step in and fill the gap, then Mecklenburg County is prepared to do that.

Asked if private investors and not government usually make those loans, Diorio said:

We don’t see that there’s anybody in Charlotte-Mecklenburg that is stepping in and filling the gap. If that were the case, we wouldn’t be doing it.

That seems like a serious and troubling charge – that in one of the country’s financial capitals, small-business owners are suffering because nobody is interested in lending them money.

So the Ledger asked for more specifics from the county’s Office of Economic Development. Its director, Peter Zeiler, didn’t return several calls. But the county’s public information department was able to wrangle some information and provided this statement, which suggests the county’s plan is not yet fully formed:

The County is hoping to secure $2.75 million to provide micro-loans to qualified small businesses who experience difficulty obtaining loans from other sources. The County is still in the process of negotiating a contract with an established lending entity. If the funding for this program gets approved by the Board of County Commissioners we will be able to provide more details.

It is true that small-business owners tend to have a tougher time getting small loans from big banks. However, in Charlotte, there are several nonprofit lenders who provide exactly the kinds of loans Mecklenburg County says are unavailable here.

An entrepreneur story: In 2009, Nate Ford had been flipping houses in Charlotte’s Hidden Valley neighborhood and wanted to get into a business that was recession-proof. So he took some of the money he had made, bought a truck and 125 trash cans and started a sanitation business that hauls trash from townhouses and condos.

But by 2010, he needed some cash to stay afloat. So he turned to the Self-Help Credit Union, a nonprofit with offices in Elizabeth. It loaned him $20,000.

“They bridged us. They kept us afloat. They kept us funded,” Ford tells the Ledger. “They took a chance on us, and we showed ourselves worthy.” He paid off the loan and took out another one for $40,000 in 2016 when he had to replace a truck’s engine. Today, he has $400,000 in annual revenue – more than five times what he did in his first year.

Ford says having those small loans from Self-Help saved his business: “It’s peanuts to these big banks, but it was lifeblood to me.”

Two small loans from Self-Help Credit Union in 2010 and 2016 helped Nate Ford’s Charlotte sanitation business stay afloat. (Photo courtesy of Self-Help Credit Union.)

  • New Charlotte branch: Last month, Self-Help opened a branch on Providence Road in Eastover, near the intersection with Queens Road. A Self-Help spokeswoman said the credit union has lent $8M in the Charlotte area in the last 15 years to businesses seeking loans between $15,000 and $125,000, plus additional money at lower amounts. If clients don’t qualify for a loan, Self-Help can steer them to resources that can help modify their business plans or fix their cash flow. She said the default rates are “very low.”

  • Other local loan-makers: There are other nonprofits making micro-loans in Mecklenburg, too, including Raleigh-based Thread Capital, which opened last year, and the Carolina Small Business Development Fund, which has an office uptown. Even big banks say they can help. Bank of America spokesman Don Vecchiarello said: “We can help you figure out your cash flow and help you grow your business.”

  • Often, big banks contribute to nonprofits who make small loans. Bank of America, Wells Fargo and other banks also contribute to the Charlotte Community Capital Fund, a city-run fund that backs small loans by nonprofits in the Charlotte region and allows them to have more flexible lending standards for “traditionally underserved small business borrowers.”

In other words, there’s a lot going on locally to ensure that small-business owners get the help and money they need. Maybe even enough that the county doesn’t have to spend $3.25M it doesn’t have.

Smug Dallas thinks it has edge in Lowe’s tech-hub battle

In yesterday’s special news-alert Ledger, we noted that Dallas is already talking trash about Charlotte in the competition that is shaping up for Lowe’s 2,000-worker tech hub.

The home-improvement giant, based in Mooresville, told the Observer that it is scouting sites in uptown and South End — as well as in Dallas. Landing a huge tech hub for a Fortune 500 company would be a major and surprising coup for Charlotte, which is not usually thought of in the same league as major tech regions. No doubt the tax-incentives spigot will be turned all the way on to try to make it happen.

The Dallas Morning News boasted that the Dallas-Fort Worth area has three times as many tech workers as Charlotte, citing CompTIA, the computing industry’s trade association. That’s a big advantage.

What the paper didn’t mention was that last year, that same trade association, CompTIA, ranked the best cities for tech workers to live in. The results?

CompTIA’s 2018 Tech Town Index found that Charlotte is the number one city for IT pros when it comes to job opportunity and cost of living. … Our researchers analyzed metropolitan areas where demand for tech workers is the greatest, and then ranked them based on cost of living, number of open IT positions, and projected job growth over the next five years.

Dallas-Fort Worth was way, way back at #6.

Charlotte’s competition for the Lowe’s hub is an up-and-coming city in northeastern Texas that’s laboring to shed its image as a town filled with egocentric oil tycoons.

And it sounds as though Lowe’s could use some new technology. The company’s stock plunged on Wednesday as the company announced it was cutting its profit forecasts. The problem, CEO Marvin Ellison said, was outdated technology that apparently left the company unable to do what sounds like a basic retailing task: setting prices that reflect costs. From Bloomberg:

What happened, according to Ellison, is this: Essentially, Lowe’s merchandising executives were accepting price increases from vendors on certain items without taking any offsetting action to raise retail prices. There are a number of ways it could have done that; typically, instead of raising retail prices on frequently-bought, highly competitive items, they might raise them in less price-sensitive categories.

None of that ever happened, though, because Lowe’s outdated systems and tools meant that his leaders, many of whom were new to their roles, did not “have a clear line of sight” about the cost increases, Ellison said.

Quote of the week: Charlotte BBQ

“What’s replacing the old spots are nouveau-Southern dining experiences in cities like Charlotte, some of them even claiming to be ‘barbecue restaurants,’ which cater to city folks and offer menu items like beer and chicken wings and nachos and salads, and which may also serve what they call Carolina barbecue. But they use electricity or gas to cook the meat, and, sorry, to the likes of Jim Early [founder of the N.C. Barbecue Society], that ain’t barbecue.

“This is, in part, a long-winded way to say he doesn’t care for anything you might find in Charlotte. ‘With Charlotte, because of the banks and the business, there’s such an influx of people from all over the country coming in …’ He pauses, a look of mild disgust on his face. ‘Things are different in Charlotte. They just are.’”

— Greg Lacour, writing in the June issue of Charlotte magazine, on North Carolina’s barbecue heritage

Panthers to reporters: Don’t write about music

If you’re wondering what kind of music the Carolina Panthers were playing at their spring practices this week, or whether Cam Newton was acting as DJ, well, you’re going to have to just keep wondering.

That’s because the team bars reporters from writing about anything having to do with music as a condition of being granted entry to the practices — an arrangement beat reporters apparently go along with, according to a series of Twitter posts this week from Observer sportswriter Jourdan Rodrigue:

Rodrigue further wrote that the restriction is “not really a big deal,” which is true, in the sense that most football fans want to know about football, not the team’s music selection.

But the larger issue is whether journalists’ sources should be allowed to manage their coverage for reasons that have nothing to do with giving away sensitive business secrets and everything to do with avoiding undesirable storylines. Asking news organizations not to write about the Panthers’ formations as a condition of attending a practice? Sounds reasonable. Asking news organizations not to write about the music being played? Sounds like ridiculous PR manipulation.

Panthers spokesman Steven Drummond did not return an email from the Ledger asking him to explain.

For the record, Rodrigue wrote a piece last year in which she detailed Cam’s playlist at practices. It included Marvin Gaye’s “What’s Going On,” Otis Redding’s “(Sittin’ On) The Dock of the Bay,” and The Beatles’ “Come Together.”

In brief

  • Charlotte living wage: “Council members propose cutting police training budget to give themselves a raise” (WBTV)

  • Still growing: The Charlotte region added 13,151 people between July 2017 and July 2018, the fifth-largest increase in the nation. Only Seattle; Fort Worth, Texas; San Antonio and Phoenix grew faster. (WFAE)

  • Keeping the change: The Transportation Security Administration has collected $3M in loose change that was left in trays at airport security screenings. (NBC)

  • Realtor commissions under scrutiny: “U.S. antitrust officials are investigating potentially anti-competitive practices in the residential real estate brokerage business, with a focus on compensation to brokers and restrictions on their access to listings.” (Bloomberg)

  • Retirement-savings changes ahead: “House Votes to Ease Rules for IRAs” (Bloomberg)

  • Currency: “Harriet Tubman $20 bill no longer coming in 2020: Mnuchin says redesign postponed” (CNBC)

Food and booze news

A weekly wrap-up of the week’s eating and drinking developments

  • Second location: Burtons Grill & Bar opens at Blakeney on June 3 (Craigslist)

  • Matthews popsicle shop: Want to beat the heat with an avocado lime popsicle? Or spicy pineapple? Now you can. (Agenda)

  • Improper Pig at Cotswold, closing July 1, moving to Rea Farms, south of I-485 and Providence Road. (Charlotte magazine)

  • Taco Mac, a.k.a. T-Mac, in SouthPark has closed. (Twitter)

  • Cupcake closing: Owner of FuManChu Cupcakes in Plaza-Midwood, once called “Charlotte’s bad boy of baking,” says the store is closing Sunday because the landlord wants to triple his rent. “His most famous flavor is a cupcake flavored with Guinness stout, filled with chocolate ganache spiked with Jameson Irish whiskey and topped with Bailey’s Irish Cream frosting.” (WBTV)

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The Charlotte Ledger is an e-newsletter and web site publishing timely, informative, and interesting local business news and analysis Mondays, Wednesdays, and Fridays, except holidays and as noted. We strive for fairness and accuracy and will correct all known errors. The content reflects the independent editorial judgment of The Charlotte Ledger. Any advertising, paid marketing, or sponsored content will be clearly labeled.

The Charlotte Ledger is published by Tony Mecia, an award-winning former Charlotte Observer business reporter and editor. He lives in Charlotte with his wife and three children.