A North Carolina HBCU just received a multi-million dollar loan that will help it keep its doors open. But some are concerned that the help, while needed, comes at much too high a cost.
Saint Augustine’s University (SAU) in Raleigh, North Carolina, has struggled with financial issues in recent years. But recently, they have taken some bold steps to get back on track.
In November, the school announced it had cut 50 percent of its workforce in an effort to move towards “financial stability.” They’ve also turned to banks and venture capital firms for help.
Before the start of the 2024-2025 school year, SAU entered an agreement with Durham-based capital provider Gothic Ventures, LLP. The deal would provide the school with up to $30 million in funds to help make repairs to campus buildings damaged by Tropical Storm Debby and pay outstanding student refunds and staff salaries from the previous semester, according to ABC 11 in North Carolina.
On the school’s website, Saint Augustine’s credits Gothic Ventures with providing “crucial support when other lenders declined to engage.” SAU says it is in “constant communication” with the firm to make sure the terms of the agreement are in the school’s best interest.
But experts say this is a predatory loan, and the terms of the deal, which Bloomberg reports include 24 percent interest, a two percent loan management fee, $75,000 in due diligence and documentation fees and a mortgage on campus buildings, are completely unfair.
“I think Saint Augustine’s signed this loan because they felt desperate trying to open their school for the fall of 2024,” said Martin Eakes, Chief Executive Officer of Self-Help Credit Union told ABC 11.
SAU is standing by its decision and is calling on the school community to stand by their side as they try to get things back on track. In a statement on its website, Saint Augustine’s writes”
“The Board of Trustees acknowledges and appreciates the concerns raised by the community regarding our loan agreement with Gothic Ventures. In this pivotal moment, we call on all alumni, faculty, staff, and supporters to stand together as we work toward a stronger future for Saint Augustine’s University. With unity and collaboration, we can overcome challenges and continue to advance the mission of our institution.”
The school says its current financial situation won’t impact student’s scholarships and other forms of financial aid.