HomeMy WebLinkAboutAgenda - 09-16-2014-13 (4)INFORMATION ITEM
NORTH CAROLINA
Economic Development
MEMORANDUM
To: Orange County Board of Commissioners
From: Steve Brantley, Director
Date: September 9, 2014
RE: Follow Up to BOCC Information Item on Small Business Loan program's Activity
On 4/15/14, Orange County Economic Development presented a Report to the BOCC regarding Orange
County's "Small Business Loan Program ". This Report (see Abstract as attachment #2) outlined the history of
the loan program, described the typical fees & interest rates, typical loan amount and term, summarized the
current borrowers and loan balances, and identified the board of directors and loan committee members. A
copy of the Program's Bylaws, and Policies & Procedures was also included.
BOCC comments made during the April 15th Report presentation included a request for (a) clarification of the
loan committee's approval process, (b) a desire to see the Program increase its lending activity to Orange
County's small businesses, and (c) concern that certain credit considerations to approve loans (such as a
current prohibition to lend to non - profits, or to applicants with pending criminal issues) were unwarranted and
should be eased. The BOCC requested that Orange County Economic Development follow up with a
subsequent report on these items.
On 7/16/14, Orange County Economic Development convened the Small Business Loan Program's committee
to discuss a current loan applicant's status, and also discussed the Commissioners' concerns from the 4/15/14
BOCC meeting, as outlined in attachment #3. The Program's board of directors reacted favorably to consider
changing several current Policies & Procedures rules (such as the current prohibition against lending to non-
profits, or concerning an applicant's pending criminal matters). The board of directors asked Orange County
Economic Development to make proposed changes to the current Policies & Procedures document, and
circulate the draft document back to the Program's loan approval committee for comments. The goal is for
the loan committee to soon vote on the BOCC's proposed changes, and also to identify any credit analysis
concerns where such changes are not recommended. For example, the 2 professional bankers (BB &T,
Harrington Bank /Bank of NC) who serve on the Program's board of directors feel they have a duty to not
burden an Orange County resident or small business owner with a level of collateralized, borrowed debt that is
above the applicant's actual ability to repay.
On 9/4/14, the BOCC received an "Information Item" memo from the Orange County Economic Development
Office, and requested additional information on the loan program, to include a summary of the loan program's
history by gender, race, age, applicant identity and reason for loan denial. in response, the Economic
Development office has prepared a summary chart (see attachment #1, "Summary of Orange County Small
Business Loan Fund ") of all loans approved since 2010, when the loan program first had available funds to lend
to the first actual borrower. Although the Economic Development office has generated the summary chart
(attachment #1), as requested by the BOCC, and believe the information to be accurate, please note that the
loan program's current application does not ask for an applicant's gender, race or age, (nor past or pending
I
criminal issues). Furthermore, those factors are not considered by the loan approval committee when meeting
to decide on an applicant's creditworthiness.
Current loan activity includes eleven (11) individuals /small businesses that have either received an application,
have submitted all or parts of the required documentation, or have reached the final review stage with the
loan committee. Of these 11 applicants, there are 2 minority applicants (both male), 8 female applicants, and
1 brother /sister applicant.
Orange County Economic Development continues to market the loan program with a goal to increase overall
loan activity, expand the diversity of applicants and borrowers, and propose amendments to the loan
program's current Policies & Procedures (via the loan programs' board of directors), as requested by the
BOCC. The office is eager to pursue the BOCC's & Manager's direction in this regard.
Steve Brantley
Director, Orange County Economic Development