Gov. Hobbs champions new small business loan initiative in Tucson

Arizona Governor Katie Hobbs visited Tucson on Thursday to tour a transitional living center benefiting from the state’s Microbusiness Loan Program. This program offers loans between $2,000 and $50,000 to qualifying small businesses, aiming to stimulate local economies.

Earnest House, an organization that assists individuals recently released from incarceration, those dealing with substance abuse, and the homeless, is among three businesses in Tucson to secure funding. Daniel Howe, the director of Earnest House, highlighted that the loan enabled the center to launch its Midtown location, which aims to provide housing and employment assistance to residents.

“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 remarked during her visit. She emphasized that this loan program is crucial for providing small businesses with necessary capital to flourish.

Launched in August, the fund is a response to the growing need for financial support among small businesses with five or fewer employees. A total of $5 million has been allocated statewide, with local nonprofit organizations, Community Investment Corporation and Groundswell Capital, designated to distribute funds within Pima County.

Dre Thompson, CEO of Groundswell Capital, described the ongoing revitalization of interest in small businesses as vital for economic development. “Small businesses are a driver of job growth and stability,” he stated, noting that traditional funding sources often perceive these businesses as high-risk. Instead, they advocate for relationship-based lending, which assesses an individual’s character rather than solely relying on conventional credit metrics.

Thompson pointed out that Groundswell Capital’s microbusiness loans would feature interest rates ranging from five to nine percent. According to Arizona officials, over 85,000 microbusinesses in the state employ approximately 155,000 individuals. The officials further noted the unique challenges microbusinesses face in securing loans, such as limited credit history and lack of collateral. Recognizing these hurdles, they have selected organizations focused on effectively screening and distributing loans tailored to those in need.