How to Fund Your Business: Lending Programs Available in Flagstaff

The City of Flagstaff Economic Development Department is committed to assisting our local small businesses grow and thrive. Better access to small business lending programs is one way to achieve that objective. Multiple resources are available to small businesses to finance their initial startup costs and future expansion. These include financial resources supported by the U.S. Treasury Department and Arizona Commerce Authority.   

The Small Business Development Center at Coconino Community College specializes in guiding startups and expanding businesses in their operational practices and finding working capital sources. The Moonshot Campus, located at 2225 N. Gemini Dr. in Flagstaff, empowers entrepreneurs that have a business idea and want the tools to make it grow into a profitable enterprise in most science, research or technology-based sectors.

The State Small Business Credit Initiative (SSBCI) is a federal program administered by the U.S. Department of Treasury to strengthen state programs that support private financing of socially and economically disadvantaged businesses (SEDI businesses) and very small businesses (VSBs). The State Small Business Credit Initiative (SSBCI) is designed to provide private capital, usually loans, to small businesses in historically underserved communities. Businesses owned by women and veterans are encouraged to participate.

SSBCI is not a grant program. Instead, Arizona’s SSBCI program is administered through the Arizona Commerce Authority, which contracts with private lenders that specialize in business financing. Some of the business lending institutions are based in Arizona.   

Clearinghouse Community Development Financial Institution is partnered with the Arizona SSBCI to finance projects that improve communities. Small business loan amounts range from $500,000 to $5 million. Loans must be real estate based. In other words, real property must be financed with the loan, such as purchases of properties, structures and building expansions or renovations. Loan terms are typically up to 24 months. Since loans are financed in partnership with the U.S. Treasury, interest rates are based on current Treasury rates, plus a small percentage of the loan’s principal.

Details can be found by Googling:    Arizona Small Business Lending | Clearinghouse CDFI or by visiting the website: www.clearinghousecdfi.com/arizona-small-business-lending.

Another small business lending program is the Arizona Loan Guarantee Program, which provides guarantees to lenders for up to 50% of principal on loans to eligible businesses. Borrowers must be Arizona small businesses or eligible nonprofits that use the loan for an eligible purpose, such as startup costs, working capital, equipment, inventory, construction, renovation or tenant improvements. The property cannot be used for passive real estate investment. Funds are targeted toward active businesses with fewer than 500 employees. Businesses with more than 750 total employees are not eligible for lending through the Arizona Loan Guarantee Program.

Lending partners involved in the Arizona Loan Guarantee program use their own underwriting and loan evaluation criteria and lending decisions are made at the discretion of the lender. A loan guarantee is made to a lender to help mitigate risk. Loans are dependent on each lender’s ability to provide capital. Small business loan amounts range from $500,000 to $5 million. Terms are up to five years. A minimum credit score of 640 is required, with more than two years established in business.

Commercial real estate loans to purchase or refinance an owner-occupied property are available through Lendistry Small Business Lending Company. Using the Small Business Administration 7(a) loan program, established businesses and SBA approved startup franchises can access flexible funding to increase working capital, expand a business, refinance current debt, purchase equipment or inventory, or acquire commercial real estate. Business loan amounts range from up to $5 million. Terms are up to 25 years for real estate and up to 10 years for other business purposes. A minimum credit score of 650 is required, with more than two years established in business.

Details can be found by Googling Lendistry Small Business Lending Company or by visiting the website: Lendistry.com.

A final lending program is Prestamos Community Development Financial Institution, a division of Chicanos Por La Causa. Prestamos provides small business loans and technical support services to businesses in underserved and emerging communities. Loan programs include Micro Loans and Community Advantage Loans with the Small Business Administration. New and existing businesses are eligible. Community Advantage Loans range from $100,000 to $350,000. Other lending programs offered by Prestamos provide loans ranging from $10,000 to $1 million, for startup businesses, supply and inventory purchases, equipment, vehicles, working capital and real estate loans.

Details can be found by Googling Prestamos Small Business Lending or by visiting the website: Prestamoscdfi.org. FBN

By Jeff McCormick

Jeff McCormick is the manager of the City of Flagstaff’s Economic Development Department.