Wednesday, July 17, 2024

N.C. Rural Center report details demise of small-town small business

A greatly under-reported story in North Carolina is the declining fortune of small businesses in most of the state’s 80 rural counties.

It’s easy to see this decline by driving around virtually every small town in the state. While downtown districts are showing some vitality in a lot of places, outlying strip shopping centers and industrial sites have emptied out it in many locations. This has happened despite near-record unemployment, rapid statewide population growth and impressive corporate expansions and relocations.

The N.C. Rural Center issued a report in May that provides some statistics backing up what appears obvious. The report’s conclusion says this: “Even a cautious assessment of the data leads to the reasonable conclusion that the inability to access capital by small rural businesses is real and in need of urgent attention by our state’s leaders, local governments, and private lenders.”

Rural Center researchers studying U.S. Census Bureau data determined that the number of businesses employing fewer than 10 people in the state’s 80 rural counties declined by 4,289 between 2005-15, a 7% decline.

Meanwhile, the state’s six core counties saw an additional 5,534 small businesses, up 9%. Times are very, very good in the metros.

Converging trends explain a lot of that change: shifts away from durable goods manufacturing that once propped up small towns; consolidation within industries; corporate America’s increased concentration around fast-growing urban areas.

But another key factor, the authors note, is the declining number of bank branches and expert commercial lenders in many rural areas. Commercial lending in the rural counties declined by $218 million, or 17%, between 2010-15, according to the report. Bank of America, Wells Fargo and others have pulled out of a lot of our state’s smaller cities, while less than a handful of banks formed by local business leaders are starting up.

To be sure, more small business owners are using a credit card from BofA or Wells Fargo for financing rather than seeking a loan from Joe or Joanie Banker who works down the street and leads the local chamber.

But there is an obvious cost when those 80 rural counties have 165 fewer bank branches in 2015 than only five years earlier. The change in the populous six urban counties was a negative 32 branches.

Rural Center Patrick Woodie and his staff are working hard to raise awareness of these problems. They’ve started loan programs and a small business lending subsidiary, Thread Capital, to promote entrepreneurial development.

The state’s thriving bigger metro areas are anticipating accelerated growth in coming years.  But that only tells a part of the story in North Carolina.

Few issues are more important to the state’s future. Woodie and his board need lots of support to get things moving in our rural areas.

David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at

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