Home Locations Asheville Republican Commissioners Vote Against Corporate Welfare

Republican Commissioners Vote Against Corporate Welfare

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By Leslee Kulba-Buncombe County Commissioners Brownie Newman and Ellen Frost worked together to bring to a vote an award of $50,000 for Mountain BizWorks. Newman had in past conversations about corporate welfare for large corporations; like GE Aviation, Linamar, and New Belgium; expressed an interest in using government money to fund small businesses.

The proposal touted the mantra of creating living-wage jobs. It was suggested that the $50,000 supplied by the commissioners would create 40 jobs. Commissioner Holly Jones faulted her peers who balked at the concept, reminding them of how they rush headlong into closed session to give mega-incentives to large corporations that will create the same number of jobs.

The $50,000 will fund a revolving loan for “low-income entrepreneurs” many of whom “are unable to access bank financing.” The written proposal stated, “In many cases, they lack the financial track record required by banks, have limited business experience, have blemished credit or no credit scores at all, lack the collateral necessary to access bank loans, or are considered ‘high risk’ due to the nature of the business they operate.” In contrast to conventional lenders, Mountain BizWorks judges credit-worthiness on an idea’s prospects for generating income.

$45,000 of the loan would serve to leverage a $300,000 Small Business Administration loan, funded in turn by the federal deficit. Another $5000 would be used to help pay interest on loans awarded. Mountain BizWorks charges interest rates between 7.5 and 11 percent because it funds risky businesses. The organization also provides “unlimited, free business consulting and technical assistance” with its loans to help ensure their repayment. It expects to award at least twenty-five loans in the coming year.

Mountain BizWorks has been lending to small businesses for 24 years. It has awarded over $7 million in loans since 2007, and it has a payback record of over 98 percent.

Eileen McMinn, a business attorney who works with nonprofits, advocated for the proposal before the commissioners. She reminded them that Mountain BizWorks began in 1989 with an educational focus. Its mission gradually migrated more toward lending. Then, last year as it experienced a “liquidity crunch,” it underwent downsizing and restructuring. Due to the number of other local agencies offering coaching and counseling for small businesses, Mountain BizWorks became chiefly a lending organization.

Once again, Mike Fryar was the one to ask the hard questions. He asked how he could face taxpayers and tell them he just gave away $50,000 to fund certain favorite-son businesses. He once ran a business. He didn’t get help from government. He had to rely on what he could earn satisfying customers. Like many others, he started small and built up.

The budget had been finalized. He asked if the county would have to dig into its fund balance and then take out a loan with interest to make up the difference. Taxes already went up considerably this year. He asked if somebody would have the nerve to be more direct and transparent about the redistribution and go down to the tax office and demand $1 from everybody standing in line.

At his prompting, County Manager Dr. Wanda Greene said she would do her best to find funding without dipping into the fund balance. To this, Jones said, “She’s being modest.” She highlighted that Greene had managed 21 budget cycles, sometimes dipping into the fund balance, but in only one instance was she unable to restore funding by the end of the fiscal year. Jones didn’t think it would be awfully tragic if the county couldn’t repay the $50,000, either. It was, after all, to be a revolving loan.

Joe Belcher took the non-confrontational approach of voting against a measure and blaming the timing. He said he would probably support it if it were to come in with all the other outside agency funding requests. It could get considered on a fair competitive basis that way and be subject to the performance criteria used to assess other grants. What’s more, the initiative might gain recurrent funding from the county. Belcher further believed the county would have to assign an administrator to oversee the loan management.

Frost scathed those who would vote or speak against creating jobs. She described the loan the county would be making as “a blessing” to help people who dare to dream. She added, “You can pick holes in anything.” She told how the commissioners keep hearing the number-one need of small businesses is an infusion of capital. This was a response to widespread constituent demand.

Newman elaborated that small businesses made up the heart and soul of the local economy. “Most people are probably employed by small business entrepreneurs in Buncombe County.” He echoed Frost. People wanted jobs. They wanted help with small business. By partnering with Mountain BizWorks, the county would not be “reinventing the wheel,” but fortifying existing efforts. Newman referred to the proposal as a “pilot program” and a “good approach.”

“I’m all about jobs,” explained chair David Gantt before calling the question. Fryar, Belcher, and David King voted against the measure, which passed on a 4-3 vote.

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