Young Tucson biz owners of color fund their ideas with $10k, zero-interest community loans

Black, Indigenous and other businesses owners of color in Tucson won a small interest-free loan from local nonprofit Community Investment Corporation for as much as $10,000. Recipients of new loan said they plan on using their businesses to help Tucson communities and that the loan will get them through the precarious stages of start-up and cover losses from the pandemic.

The 16 business owners who received the money are the inaugural class of recipients of the loans, which was put together by the CIC, a Tucson nonprofit specialized in generating investments for local communities.

The BIPOC loan program came from “CIC staff wanting to do something actionable, wanting to do something tangible in the wake of the murder of George Floyd in the summer of 2020,” spokeswoman Jennie Grabel said.

According to the CIC, 85 percent of entrepreneurs start their business with money from friends and families, but this creates racial inequity in entrepreneurship as white families have, on average, five times the wealth of Hispanic families and 10 times the wealth that Black families do.

The amount of family wealth for Indigenous families hasn’t been tracked since 2000, Grabel said, but at that time the disparity was greater than that for Black families.

An eight-person committee put together by the CIC selected the recipients. That committee also consisted of members who self-identify as BIPOC and who, Grabel said, act as leaders in their own communities. They included employees from local businesses, agencies and organizations such as Tucson Electric Power, the Pima County Attorney’s Office, the Tucson Urban League, Casino del Sol and Blax Friday.

Business owners and recipients of the BIPOC loan Bali Bock and Reginald Kennedy said that it's a small loan, but critical for getting their businesses through the challenging initial stages of starting a businesses as both are in their first years as business owners.

Bock owns Awareness Ranch, a farm based on growing with aquaponics, a resource-efficient cultivation method. Kennedy owns FRAQTALS, a print shop that uses and sells a textile printing machine that Kennedy invented to save small-scale screen printers time.

The BIPOC loan is going to “help us tremendously,” Kennedy said, especially as a young entrepreneur of color. Kennedy is Black with dreadlocks, coming from Oakland and the son of a Black Panther member in his dad. He said the loan signals that there's a helpful understanding of what the challenges are for entrepreneurs of color.

“There’s not a lot of funding out there for people like myself, especially focusing on people of color and that understands the different situations and obstacles that were up against to get funding,” he said. “It was a really big thing. It helps narrow the field of people that are qualified for it. Plus, I have a really good idea that I’ve invested a lot of money in and that’s ready to go to market, so this funding for people of color is just right on time.”

Kennedy said he’s expecting to use his $10,000 loan from the CIC for marketing and promotion. He’s already spent his own money on a video promoting the machine and showing it in use, and he wants to produce one more video. He also has three machines ready to sell, but he said he wants to take a third of the loan to manufacture a few more machines.

Bock, who received $5,000 from the BIPOC loan, started Awareness Ranch with his brother, Guru Das Bock, and their friend, Hunter Brown, with the idea of supporting a form of agriculture that can save water but still work in the desert climate of Southern Arizona. They settled on aquaponics, which puts living fish and their ecosystem underneath plants and their roots to recycle water and eliminate soil.

Bock and his brother bought their five-acre farm in May of last year and have spent more than a year building their aquaponic farm. Using lava rocks as a base for plants, they started growing spinach, cucumbers, mint and three different types of basil.

In aquaponics, fish and plants have a consistent source of nutrients without the use of synthetic fertilizer, according to the Department of Agriculture. Very few inputs besides fish food are used, and most aquaponic systems recycle greater than 98 percent of their water daily, according to a 2016 report by the USDA’s Hydroponic and Aquaponic Task Force. Bock said their farm uses about 90 percent less water than traditional agriculture.

Getting financing to start the business in its first year was really tough, not only because they were starting their business in the middle of the pandemic, but also because aquaponics isn’t well-known, Bock said.

“The largest challenge was just trying to drum up support beyond just our community of friends and family,” he said. “It's a challenge trying to educate people for them to understand what this type of system is — what our intention is — because it’s such an unusual and peculiar type of agriculture.”

They did get an initial loan from the USDA that helps new farmers and were placed in a program aimed specifically at helping women and minority farmers before they were awarded the CIC’s BIPOC loan because Bock and his brother are Asian-American.

Metal and lumber prices were high when he and his co-owners started constructing the infrastructure last year, Bock said. They couldn’t afford to develop their farm for a time and had to pause, but the USDA loan helped them keep the farm alive. Now in the first month of their second year, Bock said they’re in a position to expand with the financing from the BIPOC loan.

They’re about to finish expanding their base garden, the space where most of their growing happens, from 400 square-feet to more than 1,100 square-feet. They’re also about to fulfill their first contract to a retail grocery store, Food Conspiracy Co-op, which has Guru Das Bock as one of their board members.

They also plan to increase the variety of their produce to include collard greens, kale, lettuces, bok choy, wheat grass, micrograins and turmeric. Once the farm is producing enough to sustain itself, Bock and his co-owners want to use the farm as a community education center that hosts workshops about alternative styles of farming and living.

“We meet a lot of people through our personal lives and now through our business who are interested in these things,” Bock said. “We recognize they can teach us as well, and they can teach other members of the community. So we’d like to have this site not just as a proprietary site for us, we’d like to develop it to be open to other community members who have things to teach.”

Awareness Ranch has already hosted a handful of informal workshops about adobe building, rainwater harvesting, composting, vermiculture (composting with worms) and aquaponics, but Bock said they want to offer more, including a platform for what others can teach.

“This fund is not only good for that reason of helping to provide a financial resource, we’re also very invested in the idea of connecting to our community,” Bock said. There’s a lot of the population that doesn’t get served by certain companies, by certain organizations, by certain governments. We’re under the impression that if you go smaller and have things more centralized to a small community, things can become more effective.”

Like Bock, Kennedy also wants to use his facility as a community center. He wants to offer the community access to his apparel-making machines at a small membership price. The equipment available for use would include sewing, embroidery and vinyl machines, a couple of computer stations and a line of FRAQTALS.

“It’s something I wish I had coming into this industry,” he said. “Where I wouldn’t have to spring thousands of dollars on the machinery and that I actually have a space that actually has everything I need to fulfill my vision and my designs and my dreams.”

The BIPOC loan will also create some momentum to get FRAQTALS going, Kennedy said, by helping him establish his business with sales that can set the foundation for bigger fundraising.

“$10,000 doesn’t get us the whole way, but it definitely gets us to where we can produce a track record of sales,” he said. Once he has that track record of sales, he said he can launch crowd-funding campaigns and show how other businesses are using the machine.

There was a total of $100,000 available for these loans that the CIC collected in their Community Managed Loan Fund, and the committee was directed to develop new qualifications for who gets loans.

CIC tasked their committee with establishing and defining the loan’s underwriting criteria, its application details and the process for approval along with determining which applicants are approved. The goal was to avoid “traditional economic structures and capital access mechanisms” because they limit access to financial support for BIPOC individuals, families and entrepreneurs when starting businesses, according to CIC officials.

The loans came with a zero-percent interest rate in the first 5 years of each entrepreneur’s formalized ownership of the business, and the loans will come from a “revolving loan fund” put together with money from interest and principal payments from existing loans underwritten by the CIC.

The revolving loan fund also means the pool of money supporting it will be “self-replenishing.” Loan payments will go towards funding the loans in the future, but CIC officials said that a nominal interest rate may be applied to offset administrative costs.

The CIC is also actively fundraising to increase how much they distribute in 2021 by at least $100,000. They aim to have $1 million in the fund within three years.