After nine years of operating Noda Bodega, a Charlotte neighborhood sandwich shop, husband-and-wife Bryan and Lisa Moore experienced a life-changing business opportunity three years ago. Charlotte wedding venue Alexander Homestead hired them to as its exclusive caterer, meaning opening the door to 100-plus wedding parties each year.
Lisa Moore says she didn’t sleep for two weeks after getting the news. She worried about back-to-back, four-wedding weekends, while health inspectors said the small business would need a walk-in freezer at their shop within 30 days. The cost: $26,000.
“We could have possibly scraped it together, but we’d have been flat broke, which means no emergency fund, and we’re a family with two kids,” says Bryan Moore. They took out a loan to cover the cost, which they say they will finish repaying in the next year.
The loan, and the added catering work, has made all the difference at their sandwich shop, which now closes on Sunday and Monday to give the couple and 10 employees a break.
“We went from waking up every day and checking our bank account to putting our bills on autopay and investing in our future,” says Bryan Moore. “It put us on the road to real financial security.”
Moore’s story is not uncommon among small businesses in which people pour their lives into growing a business, but often face financial roadblocks without access to willing lenders, says Nate Hogan, president of the Charlotte Alliance Foundation.
Community lenders, corporate partners and the city of Charlotte used Moore’s story on Tuesday to help explain a new initiative to help small businesses, especially those in low- and moderate-income communities, including women- and minority-owned small businesses. The Charlotte Small Business Growth Fund aims to provide $40 million in loans to 2,000 or more underserved small businesses over the next four years.
The loans will range from $1,000 to $250,000, and have fixed interest rates of 9% to 12%, plus origination fees of 3% to 5%. The average length of the loan will be 48 months. Businesses must be headquartered in Charlotte.
City officials called it one of the largest access-to-capital opportunities directed at small businesses in the history of Charlotte. (Pandemic-era programs may have been larger, they noted.) Charlotte has more than 40,000 small businesses, nearly 40% of them minority-owned. It is anticipated that more than 70% of these loans could benefit entrepreneurs of color.
While everybody talks about the value of small businesses, the fund makes capital available for hiring staff, buying supplies and helping businesses grow, says Charlotte Mayor Vi Lyles, who attended a press conference disclosing the project.
“We are providing opportunities to small business owners who struggle to secure funding through traditional means,” says Lyles. While the Moores did not use the fund to get their financing, the balance of their loan, and a small number of others from small businesses, will be transitioned to the fund.
The fund is managed by Scale Link, a U.S. Treasury-certified Community Development Financial Institution (CDFI) that specializes in small business lending. Funding for the Charlotte fund comes from Ally Charitable Foundation ($3 million), Atrium Health ($2.3 million), Bank of America ($5 million), Truist ($5 million), Foundation of the Carolinas (about $2 million) and the city of Charlotte ($2 million). The CLT Alliance Foundation will provide ongoing support.
Small businesses will apply for the loans online and Scale Link will then match the applicants with the CDFI lenders working with the fund: New York-based Ascendus, Charlotte-based Aspire Community Capital, Charlotte-based Business Expansion Funding Corporation (BEFCOR), Raleigh-based Carolina Small Business Development Fund, and Albuquerque, New Mexico-based DreamSpring.
Scale Link plans to create a secondary market by purchasing and selling loans made by CDFIs through the fund, which it says can help expand CDFI land enabling them to expand lending to the $40 million target over the next four years.
Credit score and business cash flow requirements will be relaxed some to cast a “wider net,” says Hogan. “The traditional route doesn’t always work for everyone,” he says. For example, the loan will help businesses with no credit history or a FICO score as low as 575.
Loans can be used for equipment, payroll, utilities and rent, supplies, marketing and other expenses.
CDFI have become larger part of the small-business lending world since their inception in the 1990s. As of 2022, more than 1,300 certified CDFIs held nearly $247 billion in total assets, according to the Federal Reserve Bank of San Francisco.