Smoky Mountain Development Corporation has spent the last 30 years assisting entrepreneurs with borrowing money to start their own businesses and providing them with affordable incubator space to grow at the Center for New & Expanding Business on Industrial Park Drive in Waynesville.
In the next month, Steinberg will be assisting in the transition as ownership of the 17,000-square-foot building is given to HCC. The HCC Board of Trustees has committed to using the building for economic development purposes and will honor the lease agreements SMDC has with all seven tenants through 2017.
HCC’s Small Business Center will be relocating from the HCC campus to the new building, which is conveniently located next to HCC’s Regional High Technology Center.
“The incubator is an amazing opportunity that will allow us to work with existing business owners and new business owners,” said Katy Gould, director of the Small Business Center. “It will help us further connect the college with the business community in Haywood County.
Other than moving some offices and the SBA’s business seminars to the donated building, the HCC Board of Trustees hasn’t determined exactly how the building will be utilized once the tenants’ leases are up. However, Steinberg said the SMDC gift stipulates it must be used for workforce development, job creation and job training.
“Since its inception, the role of the incubator was to support startups, promote existing businesses, and create jobs in the community,” said HCC President Barbara Parker. “Likewise, our role in the community is to support job creation and provide workforce training.”
While the donation of a building is great news for HCC, it will be mean the end of SMDC. Steinberg said the organization had properly served its mission by providing more than $18 million in loans to 37 businesses and helped small businesses employ 600 people in the region. He said the downfall had nothing to do with the management or performance of SMDC.
About 80 percent of SMDC’s revenue, which helped operate the incubator building, came from the service fees they received from packaging and servicing Small Business Administration 504 program loans for businesses. When times were good, SMDC had as many as 25 loans in its portfolio, but then loans began to get retired and no new loans were being taken out. With low interest rates being offered after the recession, SMDC services weren’t as in demand as they once were, and Steinberg said the SBA hasn’t changed its loan program to keep up with the current economic climate.
“In the last five years the economy has changed,” Steinberg said. “Unfortunately with the changes in the current financial arena — and even though the incubator space is full — the SBA 504 loan program provided 80 percent of our revenue so we had to make a decision on what to do next.”
As a small corporation, SMDC had a hard time meeting all the SBA requirements, and the organization was encouraged to consolidate with a larger certified development corporation or give up our SBA certification. Since SMDC covered the 10 western counties excluding Asheville, Steinberg said consolidating wouldn’t have made sense.
After much thought, SMDC’s board of directors made the tough decision to decertify its loan program. Not getting the revenue from the loan service fees meant SMDC could no longer financially support the business center, which is unfortunate because that program is going strong.
“The incubator space for the first time in its history is full of good long-term tenants,” Steinberg said.
It hasn’t always been this successful. Steinberg said the building was empty when he was hired as the executive director in 2007 because it was difficult to find the right tenants. At that time the space was geared more toward manufacturing — the idea was to rent space to a start up and incubate them for 36 months until they were ready to graduate into a larger operation that would create jobs.
“Everything hit bottom during the recession, so I talked to my board and they agreed to give long-term leasing to keep the building full and we’ve done just that,” Steinberg said.
The business center has a wide variety of businesses, including Skyrunner Wireless, Austin Medical, Waynesville Soda Jerks, Asheville Honey Company, St. Andrews Square Absolutely Yummy Catering and others.
Tenants pay below market rent based on the square footage of the space they occupy, which is between 200 and 1,800 square feet. They also receive free business counseling with SMDC and HCC. Steinberg said the building is in great shape and the rent from the tenants should be enough to cover utility and maintenance expenses for HCC.
“We made a concerted effort to find out who would best serve this building for job creation and training,” he said. “We’d already built a relationship with HCC and it seemed to be a natural fit for them to take over management and operations.”
Gould said she is excited about the future of HCC and the ability of the Small Business Center to make an even larger impact in the community by taking over operations.
“This is a nod to the college and what we’ve been doing within the local business climate,” she said.