Starting a business is hard. One of the biggest bridges any entrepreneur or small business startup must cross is the one to funding. There are a lot of obstacles when it comes to obtaining the capital needed to get off the ground. There is also a lot of assistance available.
For March’s Community Collaborative panel discussion Jared Shintaku and Randall Gaston from Arizona Financial Credit Union sit down with Arizona Black Chamber CEO Robin Reed and Hispanic Chamber of Arizona CEO Monica Villalobos to talk about which steps to take, in what order, to secure funding.
They also talk about the programs AFCU has to offer small businesses and explain the advantage that comes along with looking for funding locally.
CEO – AZ Hispanic Chamber of Commerce
Director Government Guaranteed Lending – AZ Financial Credit Union
Senior Vice President Commercial Lending – AZ Financial Credit Union
CEO – Black Chamber of Arizona
What we know about Latina business owners is that in a five-year period, when all other businesses only grew 2%, minority-owned businesses grew 60% in Arizona. Hispanic-owned businesses grew 70%. Hispanic women-owned businesses grew 116%. So, women are absolutely on fire. And I think what’s most significant and why we’re saying that is, until 1987 women required a man’s signature on a business loan.
What we’re seeing now is almost this ‘Rosie the Riveter’ phenomena where women are just taking the business world by storm. They’re turning their side hustles, they’re legitimizing their businesses and really contributing a lot to Arizona’s economy.
Good Start, What’s Next
Our chamber works in Arizona, Nevada, and Utah, and frankly across the country. What we have found is that Arizona, from a business license standpoint, is one of the easiest states to start a business in.
But we can always do more, right? The issue isn’t starting the business, it’s scaling the business. We still have a significant gap between minority-owned businesses and non-minority-owned businesses. That really is the biggest challenge that we’re facing right now, helping those businesses scale. I think we have a long way to go.
The first step is the idea. When the individual has the idea, they can come in and meet with a local banker to discuss that idea. We ask questions. We provide them with information that we’re going to need to review the opportunity.
During that meeting, what we’re going to do is we’re going to uncover what the financial institution is going to need to look at the credit. We’ll provide that list to the small business owner or the individual who’s looking to start the business so they can prepare their business plan, [and] their financial projections.
With the SBA program experience is critical. Arizona Financial Credit Union is an SBA preferred lender. We have the knowledge and experience with the program to make decisions on behalf of the SBA.
We’ve got the knowledge and experience to sit down with that small business owner, ask them the questions about that idea that they have so they can put it on paper and they can bring it back to us to review.
We have one recent example of a entrepreneur in the Northern Arizona market who had a great idea to open a pet resort. She had worked with some national and regional lenders that didn’t understand the industry, didn’t understand the market.
She was referred to a local institution that understood the market in Arizona. We were able to work with her to put together a proposal so she can make her dream happen.
It’s important to work with a lender who’s local, who knows the market, who can touch the property, can touch the business, can know more about the industry. With the experience of being a preferred (SBA) lender, we’ve got that knowledge and experience to help them through the whole process.
There are lots of things out there as for people who want to start a business or have a small business that they’ve already started, but don’t know necessarily how to get out and expand and get capital so that they can maybe make that next dream come true.
Inside the SBA is a program called Score. They’ve got business experts that basically sit down with people who are interested in starting a business and go through their business plan and determine, does this make sense? Is it financially viable? Are there good things there?
[There are] women-specific business centers where you can go in as a woman and say, “Okay, this is what I would like to do. What can I do with it?” They do the same program with veterans. They call it Boots to Business. There are lots of avenues for people to go out and find success with what their dreams are.
Issue of Readiness
A lot of the conversation is about access to capital. But access to capital actually begins with capital readiness. So there are great programs like the Dream Builder Program. We are launching our Impact AZ program, which is supplier readiness.
The real key is understanding what it takes to become bankable, and then reaching out to those resources. Our organizations, [and] several other wonderful community organizations are delivering the information, the content, and the knowledge to help these businesses prepare to receive the capital they need to grow.
Before You Start
I agree that we are making progress and I don’t ever want to overlook the progress we’re making because of the distance we still need to travel. I always say, “once you start a business, the first place you should go is to your bank and build a relationship.” What they (AFCU) are sharing is, “take it one step further, go in there before you’ve even started your business.” When you have an idea, they understand that they’ve got to cultivate the next generation of entrepreneurs.
I think we’re doing well cause I’ve never heard of that happening anywhere else. To know that it’s happening here in our own backyard is something that we should be very proud of.