For too long, Carrboro’s revolving loan fund has been giving start-up businesses a lot for too little in return. Now, after the failures of two of the latest loan recipients, it stands to give more in the way of additional follow-up and support. As the town reevaluates the program, it must ensure that any more resources come with more accountability.
From Jessee’s Coffee & Bar to Neal’s Deli, a stroll down East Main Street is a testament to Carrboro’s start-up-friendly atmosphere and the $1 million that has flown in and out through the fund. But as the closings of The Original Ornament and Carrboro Creative Coworking have shown, the loans have limitations that have left everyone wanting more.
In exchange for more hand-holding, Carrboro must ask for more frequent progress reports detailing a business’s performance, especially since businesses must be denied loans by two banks to qualify. Businesses must also prove that they will retain or create at least one job per $10,000 borrowed. However, the current system doesn’t include any formal reporting mechanism to prove that these promises were kept. This mechanism would ensure efficiency.
The town should take Alderwoman Joal Hall Broun’s suggestion of requiring annual progress reports and consider more frequent reporting, perhaps on a bi-annual or quarterly basis. This would ensure that loans are repaid on time and promptly alert the town to businesses at risk of needing a new, prolonged repayment plan.
Consistent payments ensure that the fund can continue to “revolve” to other ventures. And consistent follow-up ensures the viability of the loan recipients and the loan fund alike.
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