Gov. Hobbs visits Tucson to promote new small business loan program

Arizona Gov. Katie Hobbs made a visit to Tucson on Thursday afternoon to tour a transitional living center that received a loan from the state’s Microbusiness Loan Program, which provides loans from $2,000 to $50,000 to qualifying small businesses.

Earnest House, an organization that serves individuals who were recently incarcerated, struggling with substance abuse, or experiencing homelessness, is one of three businesses in Tucson to receive a loan from the fund.

Daniel Howe, director of Earnest House, said that with funds from his small business loan, the center was able to open their Midtown location, which helps residents find secure housing and employment.

“The work they’re doing is really incredible, and I think we need more of it to help folks with reentry and reduce recidivism,” Hobbs said.

The Democratic governor said the loan fund is an opportunity to provide access to capital for small businesses in order to support local entrepreneurs in the state.

Launched in August after being authorized last year by the Legislature, the fund provides capital to Arizona businesses with five or fewer employees.

Local lending partners are responsible for distributing the funds, which total $5 million across the state. Community Investment Corporation and Groundswell Capital are the two nonprofits responsible for distributing the loans in Pima County.

“I think this is a renewed interest in small business and really seeing economic development from the ground up, which I think is really, really important, as small businesses are a driver of job growth and stability,” said Groundswell Capital CEO Dre Thompson.

Thompson said that many traditional sources of capital often see small businesses as a risk, and that the most impactful form of lending for these businesses is relationship-based lending, which relies more on an individual’s reputation and character, rather than traditional metrics like credit history.

“That’s what those of us who are working on the ground know is what’s most impactful,” Thompson said.

Groundswell Capital’s microbusiness loans will have an interest rate anywhere from five to nine percent.

In announcing the program’s launch last month, Arizona officials said there are more than 85,000 microbusinesses in Arizona that employ about 155,000 people. 

“Microbusinesses often face challenges in securing loan funding including limited or no credit history, insufficient collateral, limited business experience, and a lack of financial documentation,” officials said in a news release. The organizations chosen to oversee the lending process “are well-versed in screening and disbursing loans for microbusiness owners that may have no alternative source of funding to grow their business,” they said.