Tuesday, March 5, 2024

Opinion: N.C. business leader says tight credit is blocking entrepreneurship


Winston-Salem media executive Ben Sutton doesn’t lack self-confidence, but he knows it took a village as he turned from company man to small-business owner. “I wouldn’t be where I am if First Citizens hadn’t given me a $50,000 loan in 1992. Then, a couple years later, [former CEO] Glenn Orr of Southern National Bank lent me $500,000.”

Sutton also credits loans from Southern Community Bank for assisting the growth of ISP Sports, which was acquired by sports and entertainment giant IMG in 2010.

Here’s the hitch: Sutton thinks it’s highly unlikely he could replicate that success in 2019 because no one now would have taken the risk on his startup, which helped university athletic departments maximize broadcast revenue. “That story is almost nonexistent in 2019,” he says. “It’s outrageously difficult for many small-business owners to ask a bank to take any degree of risk.

“Banks have abdicated the responsibility of financing small businesses,” he says. “Only wealthy people are generally able to borrow from banks these days. Even for great entrepreneurs, it is very difficult today to build a business from scratch.”

Echoing many bankers, Sutton says too much government oversight inhibits lending. No one wants a repeat of the 2007-09 debacle in which hundreds of U.S. banks failed or sold under duress. (One was Southern Community Bank, acquired by Capital Bank Financial Corp. in 2012.) But the resulting consolidation and stricter oversight is constricting many lenders, most of whom weren’t responsible for the upheaval, he says.

Venture capital and private equity groups have stepped up to fill some of the void, but those financiers are more selective and offer more onerous terms, Sutton says. He should know. After leaving IMG, he has raised $70 million from investors for his Teall Capital Group PE firm and made 14 acquisitions. Tight-fisted bank lending is “great news for us,” he says.

Lenders are supposed to be judicious. Loading debt onto unprepared businesspeople for ill-conceived projects causes more harm than good.

Yet Sutton’s conviction and track record make his comments disturbing. And he’s not alone. This month’s Business North Carolina tells the inspiring stories of 20 young leaders in our state’s smaller cities and towns. It’s thrilling for us to share their enthusiasm.

But we also heard echoes of Sutton’s concerns. Jason Cox is helping revitalize downtown Graham in Alamance County after working as a broker and manager of distressed residential real estate. As our story notes, Cox has had his ups and downs. After nearly 20 years of dealmaking and much contact with banks, he’s not optimistic.

“From what I see, actual new business starts are going down, and there is less new-business dynamism than there was a decade ago,” he says. He blames the shrinking supply of community banks and less lending in smaller markets by the bigger banks.

His first banker at BB&T “gave me a chance when I was 20, because he took time to understand me and my possibilities. I don’t think that story would happen today.”

What about the online lenders, who can make money accessible in a hurry? Cox doubts the trend. “You need to find a human being who really understands your crazy idea versus just relying on a spreadsheet.”

Small-business capital formation is fundamental to creating work, says Sutton, who calls himself “a wild-eyed entrepreneur and capitalist. Job creation is paramount for me. It’s not a talking point. Everyone has a calling card, and that is mine.”

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

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