James B. Hunt Jr. Governor

State of North Carolina Office of the Governor

Gov. Hunt Joins Sec. Carlisle, Erskine Bowles and Banking Leaders to Announce Rural Economic Opportunity Fund

July 14, 2000

RALEIGH, N.C. - Gov. Jim Hunt today joined Sec. Rick Carlisle, Rural Prosperity Task Force Chair Erskine Bowles and representatives from the state's banking industry in announcing the formation of the North Carolina Economic Opportunity Fund, financed in part with a $30 million contribution by the state's largest banks. This contribution, combined with expected state and federal funds, will leverage more than $100 million in investment funds for rural companies, making it the nation's largest rural investment fund.

"The banks here today know what we've always known in North Carolina, that the people of the rural parts of our state are not lacking in great ideas or quality businesses, they are only lacking in the money needed to finance those ideas. This Economic Opportunity Fund will be just the shot in the arm that rural North Carolina needs to grow and thrive," said Gov. Hunt. "I want to commend Erskine Bowles, Sec. Carlisle, and the leaders of these financial institutions for making this investment in rural North Carolina's future."

The Economic Opportunity Fund will be partially financed with a $30 million combined contribution from six of the state's largest banks: First Union --$10 million; Bank of America --$5 million; BB&T --$ 5 million; Centura --$3 million; First Citizens --$1.5 million; East Carolina Bank --$500,000 and Wachovia --$5 million.

"The banks represented here today that are putting their money into this venture aren't doing it as an act of charity," said Bowles. "They know we have smart people in rural North Carolina with good business plans and the know-how to carry them out. These banks believe that rural North Carolina is a good investment of their money. And they are right."

The Economic Opportunity Fund will apply for certification as a Small Business Investment Corporation (SBIC), to be licensed by the federal Small Business Administration to invest in small businesses that currently lack the capital they need to expand. Once licensed, the SBIC can leverage two federal dollars for each dollar in non-federal money invested. Thus, an SBIC with $50 million in investment capital can leverage $100 million additional federal money, for a total fund of $150 million.

This week the General Assembly passed legislation (H 1583) authorizing the State Treasurer to invest in the Economic Opportunity Fund. Should the Treasurer elect to invest, that money will be combined with the $30 million bank contribution to leverage additional federal dollars.

In order to expand and grow, small companies in rural North Carolina often require financing that doesn't fit the profile of traditional bank financing and may not generate the kind of returns venture capital funds seek. The Economic Opportunity Fund will seek out small, growing companies that other investors may have overlooked.

"Today's announcement here today represents a partnership between two of North Carolina's greatest assets - our smart small business leaders and our world-renowned financial institutions," said Carlisle. "The Economic Opportunity Fund will help the small businesses that fuel our rural economies to grow strong, creating jobs and improving the lives of our rural families and communities in the process."

Gov. Hunt formed the 25-member Rural Prosperity Task Force last year to examine and recommend ways to help the state's rural economies and families facing plant closings and layoffs, depressed agricultural prices and a changing tobacco industry. Among the Task Force's recommendations was a proposal to create a Rural Economic Opportunity Fund that would invest in small growth businesses in rural North Carolina.

For more information, contact:
Melinda Pierson
(919) 733-3438