Reinette LeJeune
Small businesses are the lifeblood of communities and a major factor in keeping the economy strong. Arizona has long held itself above the norm as a place for small business entrepreneurs, but this year however the state has lost its foothold on such claims. The U.S. Census Bureau recently released new data that shows Arizona at the bottom of lists for small businesses being approved for loans. For every 744 small business loan applications in Arizona, only one is approved.
“It’s scary because you don’t know,” The Paleta Bar Tempe co-owner Brandon Crespin said. Crespin is considering applying for a loan for his two Tempe popsicle bar locations. “Maybe you get lucky, you get a good interest rate,” he said. “Or you could get approved for only one loan but it has a high interest rate. You just don’t know.”
Thomas Barr, of Local First Arizona, a group that helps small businesses navigate the growth process, says that one of the biggest challenges to loan approval for the state is the small number of community banks. Smaller banks are more likely to offer loans as well as invest in community activity than larger corporate banks. “We have only 12 local banks in the entire state of Arizona,” Barr said. “Those large banks are usually looking for loans of $300,000 or more to finance. So if you’re a small business looking for a patio extension or a piece of equipment, we’re talking $25,000 to $250,000 dollars in a loan, you’re just not going to get that from many of the larger institutions.”
Most relief that small businesses received during the worst periods of the pandemic has run out, and while access to training resources continued, many are saying that the state is using short-term solutions for long-term issues. “If you don’t have the actual dollars in capital to fund your business, then you’re still going to see that gap in growth,” Barr said.
In the last year two new community banks have been opened, Integro Bank and Scottsdale Community Bank, both of which Barr points to as major steps for small business loan opportunities. Business owners like Brandon Crespin, however, remain skeptical about what the state can actually do. “It’s shocking that Arizona is one of the worst,” Crespin said. “And it’s scary for me, because now I’m stuck here with two businesses.”
Small business owners looking for more resources and assistance can check out Local First Arizona’s website: https://localfirstaz.com/local-banking#!map/ord=rnd
