There will soon be more available funding to small, local businesses after the recent creation of Appalachian Community Capital (ACC), a capital intermediary that will fund community development financial institutions (CDFIs) in the Appalachian region. Western North Carolina’s Mountain BizWorks is one of 13 CDFIs that will be eligible for loan funds from the bank. The announcement was made at the Clinton Global Initiative meeting in Chicago in July.
Shaw Canale, CEO of Mountain BizWorks and one of the founding ACC board members said, “ACC is another important step to bring this kind of capital focused on and funneled to Appalachian businesses.” The intermediary is being funded by a number of different sources, including public institutions, commercial banks and private foundations.
CDFIs like Mountain BizWorks serve an important funding role in communities. They typically lend to small businesses that do not meet the underwriting requirements of commercial banks. In order to do so, CDFIs need to be well-capitalized. For growing businesses in Appalachia, however, finding capital is even more difficult, as a number of systemic factors have limited the sources of available capital.
The goal of establishing ACC is to fill that capitalization void. Appalachian small businesses receive only 82 percent of the loans their comparable counterparts do nationally, while businesses in the region’s economically distressed counties receive less than 60 percent of the loans of their national counterparts, according to the Appalachian Regional Commission
Within 24 months, the ACC is expected to raise more than $42 million. They will be able to leverage that capital to over $200 million of small-business investment. Earl Gohl, co-chair of the Appalachian Regional Commission, said “This will be a very valuable source of capital for Appalachian businesses that struggle to access funding.”
The local impact could be significant. Through its association as one of only 13 institutions invited to take part in the ACC, Mountain BizWorks is showing that it is a premiere CDFI in the region. Canale says, “This moves the bar up for us — other funders may look at us more favorably which means more capital for small businesses which in effect leads to more jobs. It could have a snowball effect.”
Mountain BizWorks is already well known in Western North Carolina as being a strong supporter of small business, from its lending to training and development for entrepreneurs. This new access to capital will only enhance its reputation and offerings. “We should really be proud that there’s an organization like Mountain BizWorks invited to be part of ACC — the funding need has been recognized and we are honored to act as a financial intermediary for 40 counties,” Canale says.
Local investors can also foster local businesses by investing in Mountain BizWorks as well. Nathan Harlan is in charge of development and can help in the process. The organization’s phone number is 253-2834.
— Peter Krull is President and Founder of Krull & Company, an Asheville-based, socially and environmentally responsible investment management firm. He can be reached at 877-235-3684 or firstname.lastname@example.org.