A 2023 report from The Kauffman Foundation found that 83% of entrepreneurs don’t have access to capital from traditional sources. Similarly, roughly half of small business owners cite as barriers “not having enough information on available sources of capital” and “not having enough revenue or assets to qualify for a loan.”
To address these challenges and more, the ACA has launched the Arizona Loan Guarantee Program, which provides guarantees to partnering lenders for up to 50% of principal on loans to eligible businesses. The program helps partnering lenders mitigate risk so they can increase capital available to small businesses located across the state. Arizona is currently partnered with three Community Development Financial Institutions (CDFIs) on the loan guarantee program: Prestamos CDFI, Clearinghouse CDFI and Lendistry CDFI.
Borrowers must be an Arizona small business or eligible non-profit using the funds for purposes such as startup costs, working capital, equipment, inventory, construction, renovation or other uses.
In addition, the ACA has established a new Technical Assistance Program, which prepares Arizona small businesses for debt or equity funding and provides financial literacy training. Technical assistance is provided through group or one-on-one assistance depending on the stage of the business.
Funding for the programs comes from the State Small Business Credit Initiative (SSBCI) authorized by the American Rescue Plan Act. Arizona’s programming places specific emphasis on business enterprises owned and controlled by individuals from socially and economically disadvantaged communities and very small businesses where barriers to resources are often the greatest.
“What these programs are about is providing a hand-up to Arizona’s small business owners, especially those located in our most vulnerable communities historically without access to capital,” said Arizona Governor Katie Hobbs. “We’re grateful to our federal partners for making these funds available and look forward to maximizing their impact in Arizona to support as many small businesses as possible.”
“The success of Arizona’s economy is closely linked to the success of our small businesses, which is why supporting entrepreneurs and small business owners serves as one of the ACA’s primary missions,” said Sandra Watson, President and CEO of the Arizona Commerce Authority. “We thank Governor Hobbs and all of our community partners helping us launch these important new tools to support small businesses statewide.”
“Access to capital has long been a challenge for small business owners, especially those in underserved communities,” said Jose Martinez, President of Prestamos CDFI. “We applaud the leadership of Governor Hobbs and the ACA to launch these innovative programs that not only provide financial support, but also empower entrepreneurs with the tools and knowledge they need to thrive. This initiative embodies our commitment to fostering economic growth and inclusivity across Arizona.”
Arizona small businesses that have been operating two or more years and are prepared to apply for a loan can complete the Funding Readiness Checklist, and contact one of three partnering loan institutions for a business loan inquiry. For small businesses who have operated under two years, the ACA has resources and partners to assist, including SCORE Greater Phoenix, which offers no-cost mentors to help small businesses develop and grow, and Prestamos’ Women’s Business Center, which provides training, business assistance and access to capital for women entrepreneurs.
UPCOMING EVENT
The ACA is hosting a Small Business Boot Camp webinar focused on understanding SSBCI for Arizona businesses on May 14. Learn more and register here.
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