Our story today about the Carrboro Citizen newspaper's request for a loan from a Carrboro small business development fund prompted a few questions. So here are a few tidbits that didn't make the story that may help.
The 2-year-old weekly newspaper, distributed free in 160 locations in Chapel Hill, Carrboro and the surrounding area, asked for $100,000 in order to expand its staff and headquarters and to increase its press run. It currently prints 6,000 copies and wants to expand its circulation to 10,000.
The town and an advisory board that reviews loan applications countered with $50,000. I spoke today with Peter Lee, who chairs that advisory board - the Economic Sustainability Commission. He told me the decision not to grant the newspaper's entire, $100K request was made for several reasons, including a desire not to deplete the town loan fund too much.
The fund is fed by loan and interest payments; currently, there are a dozen active loans and the fund has about $164,000 in it now, according to James Harris, Carrboro's economic development chief.
Here's how the loan process works: The business owners, in this case Robert and Victoria Dickson, who publish the newspaper, work with UNC Small Business and Technology Development Center to prepare the loan application. During that process, the business owner must provide financial information, business statements, cash flow documentation and information on the intended use of the public money.
The advisory commission reviews the materials and can ask questions of the business owners. It then makes a recommendation to the board of aldermen, who ultimately decide whether to make the loan.
The commission also considers the business and its impact on Carrboro.
"We don't just loan money to anyone," Lee said today. "You have to look at what the business is trying to do. The town is not a bank. It's purpose is to help potentially great businesses."
In its 23 years of existence, the loan fund has rarely lost money - once when a business went bankrupt and once when a business owner died.
The commission considered the newspaper a good financial bet in large part because the Dicksons put put personal property - a local condo valued at about $240,000 - up as collateral.
"The personal security and collateral makes it a reasonable loan," Lee said. "It's very unlikely for the town to lose its money."