Durham OKs $1M for small-business loan program. Why some aren’t happy.
The Durham City Council approved $1 million for a planned small-business loan program this week after some said the process isn’t moving fast enough.
“Many of the temporary closures have become permanent, already,” City Council member Mark-Anthony Middleton said after a presentation at Thursday’s City Council work session. “There are folk going out of business right now, as we speak.”
Andre Pettigrew, director of the city’s Office of Economic and Workforce Development, provided the first glimpse into a planned Durham loan program for small businesses struggling to survive during the pandemic.
Eligible businesses must be independently owned Durham companies that have been in operation at least 18 months. They must have fewer than 25 full-time employees and total income under $2 million.
Priority will go to businesses in neighborhood revitalization areas and opportunity zones, typically low- income areas, and to those who haven’t secured other funding.
City Councilman Charlie Reece said focusing on those areas will help achieve the City Council’s goals to help minority and disadvantaged business owners.
“That is a great way to identify parts of the city that need investment, and also identify businesses that are owned by folks that live in these areas who need the support,” he said.
Other cities moving faster, council member says
Middleton said businesses are frustrated at seeing other cities that have acted sooner.
“What can’t we do in Durham that our neighbors are doing to immediately respond to this crisis?” Middleton asked. “This isn’t happening fast enough for me, given who are, given our wherewithal and given our bandwidth as a city.”
In Raleigh, more than 300 businesses have applied to a grant program seeded by $1 million in city money along with additional private donations.
Wake County opened its application process Wednesday for $5 million in loan money.
Pettigrew said Wake and Raleigh were able to move more quickly because they already had small business programs and relationships with third-party organizations, the Carolina Small Business Development Fund and the N.C. Rural Economic Development Center, which administer the relief programs.
Durham is exploring working with three organizations but must build the partnerships from scratch.
City Manager Tom Bonfield, who has recommended $5 million in coronavirus-related spending in his proposed budget, said he didn’t want city officials to negotiate with a third-party administrator and create the program without City Council input.
“I really feel like it is more than just getting money on the street, we want to make sure we are meeting the priorities and objectives of the council before we embark on a program,” Bonfield said.
Durham not allowed to offer grants, attorney says
City Council members also asked why Durham is not offering grants, which don’t have to be paid back.
City Attorney Kimberly Rehberg said state law prohibits the city giving money to an individual without another public purpose defined by statute.
Raleigh, which has a grant program, is leaning on a local charter provision that Durham doesn’t have, she said.
In response, City Council members asked Pettigrew to make the interest on the loans as low as possible.
As close to zero percent interest as possible, Mayor Steve Schewel said.
City Council members told Pettigrew to bring to their June 4 work session a plan that can start in June.
City Council member DeDreana Freeman questioned whether the program will have enough money and reach those who need it the most, including businesses that might not use banks.
She said the city should be working with groups such as Communities in Partnership, Self-Help Credit Union and The Institute.
“There are a number of folks in this community that have been doing this work, and if we don’t have a relationship with them by now then there is problem,” Freeman said.
Mayor Pro Tem Jillian Johnson said she would like to see standards related to workers’ pay and benefits.
“I don’t want city money going to (businesses that pay) low wages or unsafe jobs,” Johnson said.
This story was originally published May 22, 2020 at 1:52 PM.
