Cities across the country take varied approaches to creating better lives for their citizens. Using Department of Housing and Urban Development and Community Development Block Grant funds, the city of Hickory, N.C. is trying to help low- and moderate-income individuals and families building a small business.
As an entitlement city, Hickory receives funds from HUD yearly. Funds must be used specifically within its low- and moderate-income communities.
“You want to try to use it to bring people into better situations in their lives,” explained Karen Dickerson, community development manager for the city.
With those funds, Hickory does housing repairs and street or park improvements in those targeted areas. They also use the money for two small business programs, the Microenterprise Grant Program and the Small Business Loan Program.
The Microenterprise Grant, which began in 2016, provides funds to a small business with five or few people where the business owner’s income is below $53,900, which is 80% of the area median household income for a family of four.
“We get a lot of people who are individuals,” she said. “It’s there to try to really help them build their business. It gives them some extra capital. They may not be in a position where their business is large enough yet to maybe go to the bank and borrow money, but they have some expenses, and this will help them grow their business.” The maximum grant allotted is $4,000, based on need.
For example, a local yarn shop wanted to build an online presence. One woman used grant funds to purchase inventory for her new wig shop. Another woman opened a business designing cloth fabric bags to go over walker handles or hospital beds to keep the patient’s things as they move.
“Giving her that capital allowed her to buy extra fabric and to do some marketing,” Dickerson explained. “Most of what we see is really business equipment, business inventory and marketing.”
In order to qualify for a grant, the business owner must meet income and business criteria. They also have to meet with a board and present their idea to its members, who then vote on the idea.
“The goal is to improve people’s lives, but a lot of that can come from a business aspect,” Dickerson explained.
The hope is that individuals will increase their income and be able to qualify for a bank loan or even the city’s small business loan program using CDBG funds.
“We had a gentleman who had gone through the Microenterprise Grant program to start a woodworking business; then he came back to us to do the small business loan program to buy a new CNC machine,” Dickerson recalled. “It’s nice to see somebody start with a really small business and grow it. They come back for the small business loan, and now they’re helping people.”
The small business loan program, which began in 2019, is a low-interest loan of 4% for nine years to buy business equipment. If payments are made on time and other parameters are met, half of the loan is forgiven at the five-year mark.
“In that program, the owner of the business does not have to be low- or moderate-income, but they have to agree to hire someone who is low- or moderate-income,” Dickerson said. “They don’t have to pay them low and moderate wages, though. They can pay them more; they just have to hire that person in the first place. It’s to try to better people’s lives.”
In addition, the city boasts urban revitalization guidelines and incentives including a vacant building forgivable loan. Buildings that are vacant for 12 months or more are eligible for a loan of $20,000 or 15% of eligible project costs, for repairs if the building is between 5,000 and 15,000 square feet or up to $25,000 for larger buildings. Applicants must invest at least $35,000 in improvements on their own, including window replacements, facade improvements, HVAC, interior outfitting, door repair and more.
“Anything that’s going to take that vacant building and turn it into something that’s viable is what we’re looking for,” Dickerson said.
Other forgivable loans include a residential production program that helps to increase housing downtown by rehabbing upper floors for apartments. Another provides up to $8,000 for fire protection and insulation.
“The ultimate goal would be to have somebody maybe start with the Microenterprise Grant Program, move into the small business program, realize they’ve outgrown their space, and then come to us and say, ‘Hey I found a vacant building…’ for them to be able to use all aspects of it.” “It’s fun to see people be able to expand their business or if they have a startup, start their new business and see them succeed,” Dickerson added.