Arizona ranked last nationally for small business loan approvals

PHOENIX (3TV/CBS 5) — Small businesses are the heart of any community and are vital to the economy. But recent data from the US Census Bureau places Arizona at the bottom of the national scale when it comes to small business loan approvals. Of 744 small business loan applications in Arizona, only one is approved.

“It’s scary because you don’t know,” said Paleta Bar Tempe co-owner Brandon Crespin. Crespin is considering applying for a loan for his two Tempe popsicle bar locations. “Maybe you’re lucky you get a good interest rate,” he said. “Or you could get approved for just one loan, but it has a high interest rate. You just don’t know.

Thomas Barr of Local First Arizona, which helps small businesses navigate the growth process, says one of the challenges Arizona faces when it comes to loan approvals is the small number of community banks. He says it’s because these smaller banks are more likely to offer loans and be invested in community activities than larger companies.

“We only have 12 local banks in the entire state of Arizona,” Barr said. “These big banks are typically looking for loans of $300,000 or more to fund. So if you’re a small business looking for a deck extension or equipment we’re talking about a $25,000 to $250,000 loan you just won’t get that from most large institutions.

Barr says any relief small businesses got during the worst of the pandemic has likely run out. And while access to training resources has often continued, it’s more of a short-term solution to a long-term problem. “If you don’t have the actual capital dollars to fund your business, you’re still going to see that growth gap,” he said.

Two new community banks opened last year (Integro Bank and Scottsdale Community Bank), which Barr says is huge for small business lending opportunities. But Crespin is skeptical of what the state can do. “It’s shocking that Arizona is one of the worst,” Crespin said. “And that scares me, because now I’m stuck here with two companies.”

For small business owners looking for more resources and assistance, you can visit Local First Arizona’s website and banking information link.

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