New Tucson program offers unsecured small business loans

The Tucson-based Community investment company and Boot Tucsonhas partnered with national community-based economic development group Common Future to offer a total of $500,000 in alternative loans.

Launched this week, the Success Through Alternative Capital (STAC) program aims to help businesses without sufficient collateral or assets to qualify for traditional loans.

Interested companies should contact the Community Investment Corporation online at cictucson.org/stac.

California-based Common Future is investing $250,000 in the pilot program through its internal investment unit, the Community Credit Lab, while CIC is matching $250,000 of its own funds. Startup Tucson provides business and entrepreneurial training to support local business owners accessing STAC funding.

The program uses revenue-based financing, which allows small businesses to leverage future revenue into an advance of financial capital, with payments that vary based on how well a business performs and its gross revenue.

The STAC program is expected to fund 25 local businesses over the next year, CIC said.

Payments are higher when businesses generate more revenue and lower when they generate less revenue — a particularly useful arrangement for seasonal businesses, CIC said.

The program will use Downan online income-based loan platform, to streamline application, qualification and disbursal activities and to automate income-based repayments, CIC said.

CIC chief executive Danny Knee said the economy is working well for those who have assets to pledge as loan security.

“However, the over-reliance on asset-based lending without complementary alternatives makes it nearly impossible for many small businesses, and especially those run by entrepreneurs of color, to obtain the financial capital they need to grow and succeed, Knee said.

Liz Pocock, CEO of Startup Tucson, said the program is an effort to make the local economy more inclusive.

“We believe that income-based financing is one way to support new entrepreneurs, including entrepreneurs of color,” Pocock said in prepared remarks.