Danny Knee, executive director of the Community Investment Corporation, has worked in the nonprofit sector for more than 20 years and has never seen anything “even remotely close” to the havoc COVID-19 is wreaking on small businesses. CIC has seen a tenfold increase in inquiries from local businesses looking for emergency loans and funding in recent weeks.
In response, the nonprofit-funding CIC is teaming up with the grassroots movement Tucson Helping Tucson to develop a Small Business Emergency Fund, which is offering local businesses access to $10,000 in zero interest loans.
“The average small business has 27 days of cash on hand, and we’re already past that,” Knee said. “So I don’t think we’ve ever seen a crisis of this magnitude.”
The Emergency Fund began with CIC looking to commit $200,000 to local businesses. At the same time, THT was looking to partner with a Tucson-based lender to house and collaborate on local funding. THT is a group of local professionals working to raise funds for affected businesses and artists via a weekly online show that features local performers.
“When it became very apparent that our small businesses were going to be suffering, the idea popped in my head that we’d have a lot of artists out of work and businesses that need help, and we could potentially stimulate the creative class to provide a fundraising mechanism for the business community,” said Tom Heath of The Heath Team at Nova Home Loans.
CIC is offering nonrecourse loans to affected businesses with the hopes of developing a “pay it back to pay it forward” model. Essentially, in the future CIC will encourage the businesses who received a loan to repay what they can, and the money that gets repaid will hopefully create a “revolving fund” for other small business emergency situations.
“The donations that they make to this fund will continue to support small business through the amount that gets paid back, in perpetuity,” Knee said.
For legal reasons, the money CIC is offering has to be in the form of a loan, however they’re not including administrative fees or interest for applying businesses. According to Heath, this is resulting in the funding being “more pledges, than loans.” The partnership has already helped six small businesses, including Five Points Market and Dish for Dosha. On average, Knee says CIC can distribute the loans a week after businesses apply.
“But no matter how much money we raise, we’re not going to be able to necessarily meet the need that’s in the community,” Knee said.
Knee estimates the Emergency Fund will run out of its initial $200,000 in only two to three weeks. Luckily, THT is working to match an additional $200,000 through its community fundraising efforts and business partnerships.
Beyond the Emergency Fund, CIC is offering two additional avenues for local business funding. They are working with Growth Partners Arizona, which is the local hub for Kiva, an online nonprofit that allows individuals to loan funds to entrepreneurs and businesses. CIC is also working with WeFunder, a similar online community funding service for startups and small businesses.
“Basic needs, services and nonprofits are going to be in dire need of money and resources as well. So for those who aren’t sure if they can donate to the cause, they can loan money directly to businesses through Kiva or WeFunder,” Knee said. “So we’d like to direct Tucsonans to actually invest in the local businesses – they lend their money and they make their money back.”
THT is also continuing with their weekly online show and fundraiser. Working with Brink Media, Local First Arizona and the Tucson Metro Chamber, THT’s weekly livestream showcases local musicians, artists and entrepreneurs, all of who get paid for their time. The participating artists are paid from a pool of $25,000 which THT raised in their first week.
“It is incredible the way so many people are giving their time and energy to this effort,” Knee said. “It says a lot about who we are and it says a lot about Tucson.”
According to Heath, during THT’s first online show, a local bartender was so moved by the need for local support, he donated two dollars out of the two dollars and three cents in his bank account.
“I got goosebumps when I saw that; it’s not just the dollars, it’s the fact we’re rallying around the community,” Heath said. “This isn’t about Tucson Helping Tucson fixing the problem, it’s about us taking on a slice of it and making sure people are aware… At the end of the day, figure out the best way you can help, and as a community, we’ll figure out the best way through this.”