Several years ago, Guilford County government purchased the former BB&T building in downtown Greensboro, which now houses, among other government services, the Register of Deeds Office and a health gym used by county employees.
However, on Thursday, Nov.21, at the Board of Commissioners’ last meeting, the commissioners voted to start a bank – loaning out taxpayer money to small start-up businesses and hoping that those businesses will pay the money back.
If not, the county’s taxpayers are out of luck.
The goal is to make it easier for businesses that can’t get funding through ordinary financial channels to get money from Guilford County taxpayers. The new Guilford County bank will loan that money out to businesses and county officials will keep their fingers crossed that those businesses will pay the money back.
The motion passed on an 8-to-1 vote at the Nov. 21 meeting, with Republican County Commissioner Pat Tillman being the only no vote after Tillman asked staff if the county would be liable for loans that businesses don’t pay back – and finding out that the answer was yes.
It may have hit Tillman that, if someone is coming to you to borrow money to start a business because no one else will loan it to them, then maybe that’s not the person you want to be loaning money to.
The program was brought to the commissioners by Guilford County Minority and Women Business Enterprise Department Director Shaunne Thomas.
She came to the board with the idea earlier in 2024, and, back then, many commissioners seemed skeptical of the wisdom and even the legality of using county funds to offer business loans to private sector businesses with the chance that those businesses might fail and the county might lose the money.
However, the details must have been worked out sometime during 2024 because, last week, the overwhelming majority of commissioners approved the move.
According to program information provided to the commissioners regarding the project, “Access to capital has been identified as a barrier for economic growth for Small Business Enterprises. Guilford GAINS [the new program] is designed to improve the small business access to capital and contracting opportunities with Guilford County firms and stimulate the economy through the empowerment of entrepreneurial efforts which are expected to increase the population, taxable property, employment, or business prospects within Guilford County.”
The “Guilford GAINS Fund” will be administered by Carolina Small Business Development Fund and will operate under a loan guarantee program that will provide access loans to small businesses by offering loans ranging from $25,000 to $75,000.
The Carolina Small Business Development Fund is a Community Development Financial Institution with the stated mission of “fostering economic development in underserved communities.”
Though the county’s MWBE Department works primarily to increase the county’s use of minority and women-owned businesses, Thomas said when asked after the meeting that male and non-minority-owned businesses would be allowed to apply for the start-up capital as well.
To start and fund the program, Guilford County has now established a $400,000 fund made up of taxpayer money. Of course, there are administrative fees as well – in this case, the county is paying $50,000 annually to the non-profit to administer the money – bringing the total cost of the contract to $550,000. That money will now flow into the private sector where a small business borrowing the money may or may not succeed.
The November 21 vote by the commissioners approved a three-year contract award with an administration fee of $50,000 a year and a guaranteed loan amount of $400,0000 for a total contract of $550,000 with the vendor Carolina Small Business Development Fund.
While commissioners discussed the idea quite a bit earlier this year in a work session, there wasn’t much discussion on the matter before the board voted to adopt the measure last Thursday night.
Written materials arguing for the move stated that “Small businesses in Guilford County have been adversely impacted by economic conditions caused by a pandemic, supply shortage, and significant inflation,” and noted that the funds appropriated by the Guilford County Board of Commissioners will be “for the purpose of stimulating the economy through the empowerment of entrepreneurial efforts which are expected to increase the population, taxable property employment, or business prospects within Guilford County.”
The Carolina Small Business Development Fund – which will get the $50,000 a year for administering the program – is a 501(c)(3) non-profit entity as well as a certified community development financial institution with a stated mission of “fostering economic development in underserved communities by providing capital, business services, and policy research to support small businesses.”.
Acting as a service provider for Guilford County, that group will administer the program using the $400,000 as guaranteed loan funds from the county’s taxpayers. The non-profit will get $150,000 over the initial three years of the program.
