How Morganton’s CDBG program supports local businesses
Funds are limited by how much federal HUD allocates each year
The Madness is expected to open in late March or early April. The restaurant’s owner received a $75,000 CDBG Small Business Loan.
Town Tavern was one of many businesses in River Village Shopping Center severely damaged by flood waters in the aftermath of Hurricane Helene’s visit to Burke County. The restaurant was recently granted a $75,000 CDBG loan to help it reopen.
The CDBG Small Business Loan program helps local businesses with financial matters such as expansion efforts or recovery from disasters like Hurricane Helene. Recent reactions of some Morganton residents show confusion surrounding how the program works.
The Paper reported on Town Tavern receiving a $75,000 Community Development Block Grant (CDBG) Small Business Loan through the City of Morganton to restore the restaurant and sports bar.
A social media post about The Paper’s article received multiple comments. Readers began asking questions about the program and its operation.
“Well, I’m in the city, I guess that comes off the hip! They will sure screw the working person! What about all the other businesses that had loss are they gonna supply them too!”
“I’m too frugal to pay this! Is the city assisting the other River Village on the Greenway businesses as well?”
Morganton Assistant City Manager Sonja Martson and the Western Piedmont Council of Government’s Jennifer Cannon offered clarification on the program. Cannon, community and economic development administrator, works with her department colleagues to oversee the loan’s follow-up process.
The following information was gathered from conversations with Marston and Cannon.
FUNDING
This program offers competitive loans to expanding and startup businesses inside the city limits. The funding comes from the U.S. Department of Housing and Urban Development (HUD) via the CDBG Entitlement Program, which is administered each year.
The Small Business Loan Program falls within this Entitlement program, along with funding for non-profits.
When June comes around, the council approves a specific amount each year in their budget process. This year, Morganton was budgeted $90,000. Another $272,000 not spent in previous years carried over. Unused funds transfer to the next year.
Municipalities that fall under the CDBG Entitlement Program guidelines is able to be a Small Business Loan Program holder. It is not something that they apply for or request. The only municipality in Burke that is within the entitlement program is Morganton.
Businesses can apply at any time. If they request from $5,000 to $30,000, they must create one new position that aligns with the HUD income guidelines. Applicants requesting over $30,000 must create 10 full-time jobs within a year and 51% of those jobs must be for low- to moderate-income individuals.
This grant can address the following needs:
- Construction/renovations
- Inventory
- Equipment
- Land and building purchases
- Operating capital
It does not include political activities or governmental uses.
Businesses submit their applications to the City’s Development and Design Department. This is then reviewed by the Small Business Loan Program Advisory Committee and a presentation is made to the committee.
During the review process, they look at the purpose of the loan and other financial matters such as credit, cash flow, and collateral.
“Priority is given to businesses aligning with the City’s Mission 2040 plan or located in redevelopment areas,” Cannon said.
Within 30 days of the presentation, the committee will make recommendations to the City council who make the final decision of awarding the loan.
EXPENDED FUNDS
Once funds are spent, the City must wait until the next budget year for the next allocation of monies. However, this year, the City has received more applications after Hurricane Helene and has currently expended their funds for this fiscal year.
The two granted businesses were The Madness and Town Tavern.
Typically, the number of businesses that apply vary by year, but Marston said, “It is not often that we have more applications than funds.”
When applications outpace available funds, the business can ask their application to roll over into the new fiscal year.
By summertime, new applications will be awarded to help businesses expand and rebuild.
Saydie Bean is the municipal and courts reporter. She may be reached at 828-445-8595, ext. 2011, or saydie@thepaper.media.
