Can a business apply directly to ACA for a loan through the AZLGP?
No, the guarantee provides coverage for loans made by enrolled lenders and loans are not available directly from ACA through this program.
When will lender contact information be available?
Lender contact information is now available. Currently, ACA has partnered with three Community Development Financial Institutions (CDFIs): Clearinghouse CDFI, Lendistry CDFI and Prestamos CDFI.
What kind of information will I need to provide to apply for a loan?
Each lender will use their own established application and underwriting processes for loans. Please discuss the requirements with the lender that you choose, and they will outline what is needed.
What kind of businesses may be eligible for support from the AZLGP?
Borrowers need to be Arizona businesses with fewer than 750 employees that benefit the state and its residents. Borrowers include state-designated charitable, religious, or other non-profit or philanthropic institutions; government-owned corporations; consumer and marketing cooperatives; and faith-based organizations, provided the loan is for a "business purpose" as defined by SSBCI 2.0 guidelines. Borrowers may also include sole proprietors, independent contractors, worker cooperatives, and other employee-owned entities, as well as Tribal enterprises, provided that all applicable program requirements are satisfied.
What types of businesses are prohibited from enrolling in the AZLGP?
If any principal of the business has been convicted of a sex offense against a minor. That business is not eligible for this program.
Other prohibited business types include:
- A business engaged in speculative activities that profit from fluctuations in price, such as wildcatting for oil and dealing in commodities futures, unless those activities are incidental to the regular activities of the business and part of a legitimate risk management strategy to guard against price fluctuations related to the regular activities of the business or through the normal course of trade;
- A business that earns more than half of its annual net revenue from lending activities, unless the business is (1) a CDFI that is not a depository institution or a bank holding company, or (2) a Tribal enterprise lender that is not a depository institution or a bank holding company;
- A business engaged in pyramid sales, where a participant's primary incentive is based on the sales made by an ever-increasing number of participants;
- A business engaged in activities that are prohibited by federal law or, if permitted by federal law, applicable law in the jurisdiction where the business is located or conducted (this includes businesses that make, sell, service, or distribute products or services used in connection with illegal activity, unless such use can be shown to be completely outside of the business's intended market); this category of businesses includes direct and indirect marijuana or other THC-related businesses;
- A business deriving more than one-third of gross annual revenue from legal gambling activities.
- A business principally engaged in acquiring or holding passive investments in real estate, the purchase of securities, or lobbying activities would not be using the funds for a “business purpose” as defined by SSBCI 2.0 guidelines and, therefore not be eligible for this program.
Do AZLGP eligible borrowers have to create jobs to qualify for a loan?
No, there are no job creation requirements for guaranteed loans. However, the number of existing employees will be requested during application.
What are acceptable uses of loan proceeds under the AZLGP?
Allowable loan uses include startup costs; working capital; franchise fees; and acquisition of equipment, inventory, or in the purchase, construction, renovation, or tenant improvements of an eligible place of business that is not for passive real estate investment purposes, and the purchase of any tangible or intangible assets except goodwill. All use of funds are intended to benefit Arizona businesses and residents.
What are acceptable uses of loan proceeds under the AZLGP?
Allowable loan uses include startup costs; working capital; franchise fees; and acquisition of equipment, inventory, or in the purchase, construction, renovation, or tenant improvements of an eligible place of business that is not for passive real estate investment purposes, and the purchase of any tangible or intangible assets except goodwill. All use of funds are intended to benefit Arizona businesses and residents.
Can loan proceeds from the AZLGP be used for building renovation or build-out costs?
Funding may be used to support commercial real estate transactions for owner-occupied spaces or leasehold improvements. Enrolled loans may not be used for passive real estate.
Can AZLGP loan proceeds be used for business startup costs?
Yes, the funds can be used for some business startup costs like purchasing equipment or working capital; however, funds may not be used for goodwill related to business acquisitions.
What will the rate, term, and/or collateral requirements be for loans in the AZLGP?
The rate, term, and collateral requirements will be set by each individual lender's policies.