$ 250,000 in delinquent loans guaranteed by Mecklenburg County taxpayers
A small business has not made a loan repayment for 381 days, according to an internal report. Two commissioners are now calling for an in-depth review of the program.
MECKLENBURG COUNTY, NC – More than a year after Mecklenburg County created a $ 5 million program to help small businesses survive the pandemic, public records show more than $ 250,000 in Low interest taxpayer funded loans are in arrears.
Watch the full report tonight on WCNC Charlotte at 11 p.m.
“I worry about it to the point that we must learn from it”
The COVID-19 Small Business Emergency Stabilization Loan Fund The most recent delinquency report identifies 11 companies that are at least a month and a half behind on their payments. According to the report, a handful of companies are 56, 77, 117, 148 and 381 days late.
“This clearly shows that when we try to reach out and support and keep businesses standing, we just haven’t been able to help everyone,” said Mecklenburg County Commissioner Mark Jerrell. “I think we need to dig deep and understand exactly what the data is showing us, what it is telling us, and how we can support businesses in the future.”
The county’s rapidly assembled loan program continues to serve as a lifeline for more than 200 small businesses, but in the face of its overall success, Jerrell said questions remain. He said the county expected some level of delinquency. Still, he calls for more monitoring.
“I think it has definitely been a success. Are there any tweaks or tweaks that probably need to be made? Yeah,” he said. “I think when you look at the dollars as a whole it’s a high number… I think we need to dig deeper and ask, ‘Do any adjustments need to be made? If there is, we have to make those adjustments, because we are here to get the best return on investment for the taxpayer’s money and therefore, we want to make sure that we are doing what we can and that we are doing it. let’s do it right. “
Jerrell, who has championed the program from the start, said he felt bad for companies that are behind in their payments. Federal records show that most delinquent recipients, including the four most delinquent, also received Paycheque Protection Program ready.
“There should be some concern, but I think we need to understand why,” Jerrell said. “It’s a really sad situation on so many levels.”
County commissioner Pat Cotham said she wanted a full-scale audit.
“I care so much that we need to learn from it,” Cotham said. “I think you have to figure out what went well, what didn’t work, how can we move forward in a better situation? I want to know. I’m going to ask that question.”
“I just want us to learn from it”
Cotham, who felt uncomfortable with the amount the county paid a third party to run the program, said she was happy the county created the program.
“I just want us to learn from it, so maybe next time it won’t be a quarter of a million, maybe it will be $ 100,000 – I mean nothing will be perfect,” he said. she declared. “If we can just learn from it and do better, that’s all we can hope for.”
The third-party provider, the Carolina Small Business Development Fund did not respond directly to questions from WCNC Charlotte. Instead, the organization responded through a spokesperson for Mecklenburg County.
“CSBDF sees no specific pattern that would indicate that the results of the Mecklenburg program are abnormal or unfavorable,” the association’s statement said. “The current ratios are consistent with other programs we manage and in line with our expectations for the Emergency Stabilization Loan Fund, given the economic environment in which businesses operate. We are not unduly concerned at this time. Good management of any loan portfolio includes policies and procedures related to handling delinquencies. We take a standardized approach to the collection of overdue accounts. We will continue to monitor the portfolio in accordance with our commitment to borrowers and the Mecklenburg County government.
WCNC Charlotte always asks “where’s the money?” If you need help contact the Defenders team by sending an email [email protected].
Mecklenburg County Response
Mecklenburg County refused to speak on camera about the delinquencies.
“The Office of Economic Development is confident that current delinquency rates are well within normal expectations for programs that respond to emergencies and natural disasters or those that target small businesses not served by traditional commercial lenders,” said the Office of Economic Development in a statement. declaration. “OED and CSBDF have bi-weekly meetings where all defaults and appropriate mitigation measures are discussed. As the portfolio loans shift from interest only to interest and principal payments, both organizations will be watching closely if there are any changes in default rates. and what measures, if any, are necessary to mitigate any adverse changes. Please note that according to the most recent portfolio reports, 12 borrowers paid off their 10-year loans in full in less than a year. In comparison, there are four loans with balances that are over 60 days overdue. There are 220 loans, so 1.8% of the portfolio is over 60 days past due while 5.4% of the portfolio has repaid its loans nine years earlier.
In response to WCNC Charlotte’s request for additional details, the county did not specify expected delinquency rates.
“The Emergency Stabilization Loan Fund is currently functioning as well as other non-emergency community small business loan funds,” the county said in a statement. “Disaster loan funds and other emergency funds have had widely varying default and default rates, depending solely on the circumstances of the emergency and their disparate geographic locations. It is therefore difficult to make meaningful comparisons between fund performance. Given the significant impact of the COVID-19 pandemic on small businesses, the overall performance of the Emergency Stabilization Loan Fund indicates that it was successful in its political intention to provide emergency emergency financing to qualified and stable businesses until other federal and state loan and grant programs become available. “
In a recent letter to the county, the CSBDF detailed its collection process, which typically includes written and verbal notices when businesses are overdue. However, two delinquent business owners told WCNC Charlotte that they never received a notice, calling into question whether the oversight of the program is strong enough.
WCNC Charlotte has since shared the names of these companies with the county for proper follow-up. The companies have made a commitment to make their late payments.
Jerrell is concerned the county financial aid “is coming too late for many.” Cotham, meanwhile, wonders if the companies have received the proper technical assistance.
“Should we have done more to help them manage it?” ” she asked.
Until WCNC Charlotte pushed for more transparency around the program, the county and elected leaders were unsure which companies were receiving loans. Following the release of this information, WCNC Charlotte discovered that the county was unknowingly making loans to delinquent taxpayers.
For the latest news, weather and traffic alerts, download the WCNC Charlotte mobile app.