Small businesses in crisis ignored again
23rd Apr 2020
Small businesses are hurting. You know that, we know that. We’ve heard from you that Arizona small businesses were unfairly shut out of the initial round of federally backed loans intended to keep them operating and employees earning a paycheck. As numerous news media reported, too many banks instead loaned money to their favorite customers – long-established big businesses that could have survived without the federal response to the COVID-19 crisis. Small businesses are not in such a fortunate situation.
CPLC Prestamos is a mission-driven division of CPLC. As a Community Development Financial Institution (CDFI) and a Community Development Entity (CDE), Prestamos is an SBA-approved lender with a proven track record for effectiveness and a vital avenue for Arizona small businesses that seek no- or low-interest loans. We applied to the Maricopa County Industrial Development Authority (IDA) for $10 million in capital that, with an average loan of $65,000 each, would have supported up to 154 local businesses. It’s important to note that in most cases, this is money that would be paid back within six months. This is not a giveaway.
Maricopa County IDA’s stated mission is to “create and maintain jobs within Maricopa County and assists residents of the County to achieve a better standard of living and way of life. … We offer private borrowers an opportunity to finance their projects with tax-exempt (below market) interest from private lenders. No government money is involved!” Under the auspices of Maricopa County, the agency should be the perfect conduit to connect capital with commerce, so we followed the process and dutifully applied.
Our $10 million request was the only item on the IDA’s board meeting for April 22. It was a valid request with ample justification. But like a small business going to a big bank, our request was ignored. Our initial ask was scaled down to $3 million by the board before summarily being denied without any real explanation. This is despite the fact the IDA is presently sitting on $24 million that it is not deploying to small business at a time of greatest need. If not now, when?
It’s important to note that in reality, it was not Chicanos Por La Causa or CPLC Prestamos that were turned away by IDA, it again was small businesses. By denying access to emergency capital, small businesses will continue to be hurt, payroll will not be met, food will not get on the table, bills will pile up and the local economy will continue to suffer. The ripple effect of such an arbitrary decision is great.
Again, this is a federally guaranteed program that is supposed to help people NOW. This inaction by IDA is beyond yet another missed opportunity for Arizona to capitalize on federal resources, it is a miscarriage of IDA mission – and worse, it is another unwarranted slap in the face to small businesses that ask for only an equitable chance to survive these difficult times.
Chicanos Por La Causa and CPLC Prestamos will continue to seek dire capital to help these small business, which often are in underserved communities. After all, they not only are our clients, they are our neighbors.
In the meanwhile, we urge the Maricopa County IDA Board of Supervisors to reconvene, Review, and Reconsider their decision to make sure that resources are being allocated to help small businesses during this crisis.