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Funds Available for Small Businesses to Go ‘Green’

by Kimber Lanning, Andre Whittington, and Danny Knee

As our country prepares to spend billions of dollars in new funding on environmental efforts, America is sitting on a gold mine in the fight against climate change, and we need to do something about it.

The opportunity lies with small businesses.

Many small-business owners want to be more environmentally friendly — and all are interested in saving money. Implementing simple changes like LED lights to large projects like installing solar panels can make a big difference to both our planet and businesses’ bottom lines.

The size of the opportunity is huge.

In Arizona, nearly 600,000 companies have fewer than 20 employees; nationwide, it’s more than 26 million. That’s 98% of all U.S. firms.

Barriers to Small Businesses Going ‘Green’

But small-business owners are stretched thin.

They often juggle everything from marketing to purchasing to accounting, duties that corporations have whole teams to handle. Adding “Chief Sustainability Officer” to a small-business owner’s “to-do” list can seem daunting.

Another challenge is the capital to carry out “green” projects.

Rarely do small businesses have a few hundred or thousand dollars to spare for sustainability upgrades, even when the investment will save them as much or more money in the long run.

The new environmental tax incentives offered by the Inflation Reduction Act alone may recover the cost of some projects.

And yet, big banks will laugh a small business out the door for seeking a modest loan “just” to conserve water and energy or require burdensome hoops for the business to jump through.

Boot Camp Helps Businesses Create Plan to Save

Thankfully, there is a solution.

Local First Arizona’s Green Business Boot Camp has helped hundreds of local business owners cut their water, energy, waste and transportation usage by 20% or more with simple adjustments, often leading to thousands of dollars in savings.

For example, Green Business Boot Camp graduate Pines Inn & Suites in Cottonwood is installing motion-sensor thermostats to keep air-conditioning costs down when rooms are vacant.

Phoenix restaurant Duck & Decanter is conserving major amounts of water by putting in low-flow toilets and upgraded kitchen equipment.

And Tucson dessert shop Frozen Delight has turned to recyclable packaging.

Photo credit: Kylee Musslewhite with permission from Frozen Delight

Affordable Loans to Finance the ‘Green’ Transition

In addition to education and support from the boot camp, our Green Business Micro-Loans provide the financial runway for small businesses to afford these changes.

With these loans, boot camp graduates in six Arizona counties can get help paying for sustainability improvements at low-interest rates through a short application process.

In Maricopa and Yavapai counties, the newly launched Green Loan Fund, made possible by Growth Partners Arizona and Vitalyst Health Foundation, provides loans to eligible local businesses up to $10,000 at 3% interest, which businesses pay back entirely with savings generated by their sustainability projects, so their cash flow is uninterrupted.

In Pima County, the Green Community Fund, created in partnership with Community Investment Corporation, provides up to $15,000 at 0–5% interest.

And in Graham, Greenlee and Cochise counties, small businesses can receive loans up to $25,000 at 7% interest through Community Investment Corporation for “green” as well as other projects.

More Funding Needed for Small Businesses to Meet Climate Goals

One of the best things about these micro-loans is how easy they are to obtain.

Whereas traditional banks may require years of financial statements, credit scores and collateral to extend credit, these funds rely on “character-based” lending.

A free energy and water audit conducted by Local First plus an explanation of how the money will be used, the anticipated savings and the local business’ support in the community is all that is asked.

Kevin Ticer, owner of Custom Upholstery Services in Safford, said applying was a snap. “It was easy to go through the micro-loan process,” he said. “After a couple of meetings with the loan committee, I was approved and able to invest in the equipment and remodeling that I needed.”

But loan programs like these need more funding to fully power the shifts small businesses must make in the coming years.

If we don’t invest to help local entrepreneurs become more sustainable, it will cost us all eventually.

Recognizing the motherlode that small businesses hold to achieve progress toward climate goals is the first step for our society. Obtaining more funding — whether from government, private foundations or donors — is our next responsibility.

Kimber Lanning is the CEO of Local First Arizona. Andre Whittington is the executive director of Growth Partners Arizona. Danny Knee is the executive director of Community Investment Corporation.

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