Starting a small business and making it successful is a tremendous challenge – especially if you are in a low-wealth community, you come from a low-income family, or you are woman. Your community may lack the public infrastructure you need to make your business work. Or you may have difficulty accessing capital (in other words, banks won’t want to loan to you) and making the business connections necessary to grow your company.
Helping women entrepreneurs get their businesses going is important for North Carolina’s economic recovery. Twenty-eight percent of all businesses in the state are owned by women.
North Carolina’s community economic development organizations help women-owned and minority-owned businesses get established. Take for example the NC Institute of Minority Economic Development, which includes the Women’s Business Center of North Carolina. The organization helps would-be entrepreneurs develop business plans, apply for and qualify for loans, and market and promote their business.
There’s also the NC Community Development Initiative, which provides grants and loans to community organizations and makes investments in new small business “that promote economic growth in the state’s poorest and most distressed communities.” As stated on its website, “During the past two decades, the Initiative and its nonprofit partners have created more than 11,000 jobs….”
Then there’s The Support Center, which provides loans to small businesses – according to its website, the center has funded 43 small businesses since 2010, supporting more than 600 jobs. In April, it launched a new lending program to help service-disabled veterans start or expand businesses.
Apparently, our state leaders don’t think the work of these organizations is worthwhile. These three—as well as the NC Indian Economic Development Initiative, the Land Loss Prevention Project, and the NC Association of Community Development Corporations—would lose all state funding under the NC Senate’s budget proposal. Governor McCrory’s budget proposed eliminating funding for four of these programs and cutting funding for two (the NC Institute for Minority Economic Development and The Support Center).
This is not a huge savings –the state funding for all six organizations together totals less than $10 million. That’s a tiny fraction of the $1.3 billion North Carolina spends on economic development — $1.2 billion of which goes to tax breaks for businesses.
The kind of economic development these organizations do is essential for lowering the unemployment rate in North Carolina. Because when a community economic development organization considers a project, it’s not just looking at economics – it’s looking at building community. In order for people to build strong communities, they need access to good jobs and access to services – like a dry cleaner, a high-quality day care center, or a small construction firm that hires and serves people in that community. They also need affordable housing, which some community economic development organizations fund as well.
So by eliminating state funding for these organizations, North Carolina will save almost $10 million. But at what cost?