Latest / Let's Talk Small Biz Finance with CIC Tucson / Expanding Economic Opportunity in AZ with Mary Foote and Danny Knee | Let's Talk Small Biz Finance
Transcript
- Danny Knee - CIC: Hey everyone, and welcome to another episode of Community Investment Corporation's Let's Talk Small Business Finance Podcast. I'm Danny Nee, the Executive Director of Community Investment Corporation, and also the host for today's episode. Today we are incredibly fortunate to have one of our pre-eminent state leaders and practitioners of economic and workforce development joining us. Mary Foote is the director of the Arizona Office of Economic Opportunity. She is an economic development professional with extensive experience in workforce development. Development finance, foreign direct investment, and site selection. She was previously vice president of strategy with the Greater Phoenix Economic Council and CEO of Pipeline Arizona, a career pathways nonprofit organization. Prior to being appointed the director of OEO, Mary served as the director of the Greater Arizona Development Authority, supporting communities statewide with access to financial solutions. She was also named 40 under 40 by the Phoenix Business Journal. Thanks so much. much for taking the time out of your busy schedule to sit down with us today, Mary. Mary Foote: Thank you so much for having me. I'm excited to be here. Danny Knee - CIC: Well, this is really a great opportunity. We're so honored to have you. and one of the things that we like to do is to not only talk about the partnerships that CIC has with some of our great state agencies, organizations, but also to learn more about sometimes people don't know the full breadth of the work that some of these agencies do. So if we can kick off the the podcast what is OEO? And OEO is what we're going to use as the acronym, Office of Economic Opportunity. What is OEO responsible for and what role does it play in shaping Arizona's economy that people may not realize? Mary Foote: So the Office of Economic Opportunity, Our goal really is to strengthen Arizona's workforce. But we touch on many parts of the state's economy. So we oversee the Governor's Workforce Arizona Council. So we set strategy and policy for the workforce development goals of the state. We also do all of the workforce evaluation. So when you hear what the job numbers are, the unemployment numbers, we house the state demographer, so anything about population and demographic. So we're really trying to set strategy, evaluate strategy, and then inform strategy, right? So it kind of goes around in this circular way that really feeds itself. We also statutorily we house the Arizona Finance Authority and the Greater Arizona Development Authority, which provide solutions for access to capital. We additionally have the micro business lending program, which we're so pleased CIC is a part of. re yep, absolutely. Danny Knee - CIC: Woop woo. Mary Foote: and that's to provide access to capital for micro businesses, businesses that have five or fewer employees that really struggle with that access to capital issue. So focused in a lot of different parts, but really trying to improve the state's workforce and contribute to a stronger economy. Danny Knee - CIC: That is awesome. And you're talking our language with access to capital, something that we're very passionate about. You know, one thing that you talked about is the program that we partner on, and it's really supporting micro businesses. Now, Arizona has more than 85,000 micro businesses, again with five or fewer employees, employing more than a hundred and fifty thousand Arizonans. So part of the answer might be in the question, but why is it important that the state is supporting business this small with a targeted lending? program. Mary Foote: Yeah, I mean, I think part of it is the numbers that you mentioned. Microbusinesses make up an enormous part of the economy. So if we're focused on improving the state of the economy in upward mobility, we have to be looking at Arizona's microbusinesses. They traditionally have not had strong access to capital, right? A lot of the traditional banking institutions don't have the time to spend with microbusinesses to not only understand. Their business, but to you know take the risk in providing them capital support. We really appreciate through the microbusiness lending program that these businesses help drive the economy, but they may also need some technical assistance and support to help be economic engines for themselves, for their families, and for the state. And so one of the great parts of this program is also the fact that institutions like yours and under another. other lenders in the program are able to help some of these businesses that might not be ready day one for a loan but can continue to support them prior to getting access to capital and then afterwards. Danny Knee - CIC: it's great because we're we're fans of banks. We understand banks are highly regulated. we're not here to to bash banks. they of course though they work in a marketplace where they often are profit-driven and so as you mentioned it can be very hard for a bank to take the time when the when the administrative costs of originating a loan and servicing a loan are not covered by the interest that's going to be made On these sort of small loans. And so we obviously love the fact that the OEO has recognized this and is helping us solve this issue. We do think that there's a lot of economic power that gets sidelined because people don't yet qualify and you know can't get a loan in the traditional sense. And certainly that's who we work with in funding like what the OEO is providing. This program is really helping with that. So the state has made a very intentional effort to partner with CDFI, so those are community development finance institutions for those who don't know that acronym, and community lenders like CIC, Native Community Capital, Growth Partners, Arizona, and others. So why do you think, and we've talked a little bit about it, but why was it important to build the program through local organizations instead of relying solely on this? traditional lender model or sometimes I just say it's the it's the marketplace and and relying Mary Foote: Mm-hmm. Danny Knee - CIC: on that solely. Mary Foote: I think for a couple of reasons. One we mentioned, right, it's this is not a place in the economy or within the area of business where it makes sense for traditional banks and lenders to be a part of this. we also don't really want the state to be deeply involved in lending to microcapital. Certainly that's a consideration. We do have an infrastructure to do that, but really we want to empower the CDFIs that exist. Arizona historically has not had as strong Of a CDFI market, and that's because they haven't shared as much in support for access to capital as in some other states. We really want to empower the CDFIs that we have within the state to make them stronger. We also know that CDFIs are already doing lending, right? So by doing a three-to-one match, we're able to say, you're already doing this lending. How can we supplement that, multiply it, create you know, greater economy? Of scale by allowing you to lend more dollars with the dollars that you already have. That makes you feel like you have an added sense of security, some share in the risk that you're taking by lending to smaller businesses. Additionally, CDFIs have a greater familiarity with the technical assistance required to support these businesses. You know, I might be really great at operating a food truck or a T-shirt printing office, or you know, one of the many types of businesses that you all have been able to support in partnership with the state in this program. But that doesn't mean I have all of the knowledge of other things like cash flow statements, saving, tax risks, etc. And so it's really important to empower institutions that are already lending in these communities, know their communities as well, right? So we have Lenders that are operating across the state. This isn't just in Maricopa and Pima counties. We have people that are getting support statewide. And so, in addition to wanting to work with trusted CDFIs that understand how to provide technical assistance, they also understand where in their community to reach people to provide this support. Danny Knee - CIC: That is awesome. By the way, if you need a job when you're done with this, you're obviously really qualified for exactly what we're looking for. You understand Mary Foote: Ha ha ha Danny Knee - CIC: what we run into constantly. So I just I you know just want you to keep that in mind. it is one of these things where what what we say occasionally is that every single person that has ever come to get a loan from us has been in need of some technical assistance. And I would even argue that even the best business owners that there are, there are Still things to be learned and still things that they can get help from mentors. So again, we are really appreciative as a partner to understand and to know that you know how important it is to have this type of technical assistance. We do a lot of partnering, like shout-out to Startup Tucson, YWCA, Southern Arizona for being a partner in a lot of the work that we do with that. So thank you. I mean, again, really appreciate that. So, one thing at CIC, when we start a new program, we not only believe that's a chance to fill in an important service gap. That's often what we do is we look, say, because nonprofits are, I think, are doing a lot of great things. I'm a big fan of nonprofits. But sometimes there are still these gaps that we have in service. And but so we don't just see it as a way to fill a gap, but also as a learning opportunity. We know that we are gonna need to learn from the feedback that we get and adjust our approach to Mac. maximize impact so anytime we start something up. So what have you and the OEO learned so far from the micro business lending program? Are there surprises or stories from entrepreneurs or communities that have changed how you might think about supporting Arizona's smallest businesses? Mary Foote: Yeah, I think for us, the need has been overwhelming. So I think for us really understanding that we are filling a need that's in communities across the state. So I think I've really been surprised by where we've been able to meet needs and how great of a need that there is. I also think that, you know, we w we do this in workforce as well, right? So you know, having a small business is a job. So we also consider it that it's serving the overall workforce needs that we as an agency in a state are trying to address. And one of those needs, whether you're going to work on a construction site or whether you're going Operate your small business, you have housing needs, you have transportation needs, you have child care needs. and so I think also understanding the child care element, which has been an enormous focus for our governor and this administration, is how are we thinking about where child care affects all parts of the state, including the economy and people's ability to get business done and go and have jobs and contribute to the economy. So I think that's one of the reasons. We are working through the Bright Futures campaign of Governor Hobbes' administration to ensure that we can also provide direct support to micro businesses that operate childcare facilities. So learning that yes, access to capital is an issue. Yes, these small businesses need technical assistance. But how can we also use this program to address some of the larger issues we've learned about that affect, you know, everybody? who's employed, which is child care. Danny Knee - CIC: Absolutely. I'm unabashedly a fan of universal childcare. If we could I understand there are expenses to it, but like if we could figure that out because I do, I I think it allows more people to really fully participate in the economy. and so again, very appreciative and we're we are a partner in the Bright Futures program with the state of Arizona with the Office of Economic Opportunity. So this is about our halfway point. and so Mary Foote: Okay. Danny Knee - CIC: I try to stop and do Little bit of fun to get you know know you a little better. I do something called this or that, and in this case it's this, that, or that. there may be a third Mary Foote: Okay. Danny Knee - CIC: choice. and and part of the reason we actually do it is it's sort of like a metaphor. too often, I think too many decisions are either just this or that, and there isn't enough nuance. And so either this is a way to purge us of that need to just have it be so, you know, one or the other kind of binary, or it's just that idea. Of as you answer the question, we see that there is nuance and it's hard, but these are just kind of fun stuff. So, beach vacation, mountain vacation, or urban vacation, like you know, Europe and cultural kind of stuff. Mary Foote: I mean, I do love culture. when I was doing I used to do economic development consulting, so I would work with other countries on how they can attract more businesses. And as a result of that, Danny Knee - CIC: Ha ha Mary Foote: I had the opportunity to do so Danny Knee - CIC: Mm. Mary Foote: much travel. we had clients all over the world, and it was a fantastic experience that I really enjoyed doing. In my early and mid-30s. Now that I'm a little bit older, I just want to sit on a porch in the woods, surrounded by trees, drinking a cup of tea, reading a book. Danny Knee - CIC: how about chicken wings, chicken fingers, or cauliflower wings? I'm throwing in that third one 'cause my wife's a vegetarian and right next to me here. So there you go. Mary Foote: Yeah, I I'm gonna have to say probably chicken fingers. my parents Danny Knee - CIC: Cap. Mary Foote: are older and they are southern and growing up there were just very certain there were certain kind of things that they drilled into me as like what's ladylike and what isn't and I think I've been successfully able to shed 90% it but part of the 10% is I'm very uncomfortable eating chicken wings in public because Danny Knee - CIC: Yeah. Mary Foote: it was just not it was not something I was Danny Knee - CIC: Sure. Mary Foote: able to do. So I but I love a chicken tender. Danny Knee - CIC: Yeah, if your parents saw me eat chicken wings, they would know that they were right. Mary Foote: Ha ha ha ha Danny Knee - CIC: They know they would know that they are very good parents and what it is that they that they taught you. So I completely understand Mary Foote: Yeah. Danny Knee - CIC: that. Okay, last one. plan it or roll with it? Mary Foote: I'm a I am a plan it person. I wish, I wish I was a roll with it person. And I guess I'm I thought maybe as I got older and I had a better infrastructure set up for myself, which I do feel like I've got a strong infrastructure. nothing's gonna go wrong. I planned major parts of my life that that would allow me to roll with it more, and it is not. I love, love a plan. Danny Knee - CIC: Totally understandable. I I'm Mary Foote: Ha ha Danny Knee - CIC: probably a roll with a guy, but I I do definitely appreciate it. and somebody in your position. I I think a lot of people listening would would be like, Yeah, we want plan it. We don't we won't we don't want the guys just winging it over there all the time. So yeah. Mary Foote: No no, yeah. Danny Knee - CIC: Totally. Okay. So let's get back to bright futures. Thanks for playing that and doing that with us. And so Mary, how critical is the need for child care in Arizona right now? Mary Foote: Yeah, so we know that as many as twenty-five percent of Arizona children need child care but don't have access. And we expect that to grow by twenty percent over the next 10 years. As we've talked about, you know, we don't have a huge supply of child care facilities, which we're hoping to grow through the microbusiness program and some of the other investments that Governor Hobbes' administration is making through the Fright Futures program. But really, child care costs should not exceed more than 7% of a family's income. So we want to understand what are the investments we can make through the microbusiness lending program, through providing scholarships for. those who are interested in going into childcare education, not only for schooling, but also for childcare themselves. So really it's a holistic approach to thinking about where are all the areas we can think about supporting childcare so that we can expect the needs of today and tomorrow. Danny Knee - CIC: if you were to give like just the quick elevator pitch for bright futures. I you know it's one this is one of the problems when I know about it because we're working on it. I forget that not everybody knows what Bright Futures is coming out of Governor Hobbes office. So you know what is if you're gonna give a quick elevator pitch on what Bright Futures is, what is what is the effort? What's the initiative? Mary Foote: Yeah, so Bright Futures is Really starts with an understanding from the Hobbes administration that childcare is a critical piece of economic progress for families and the overall economy itself. And so it's really taking a critical look at every initiative that exists through the state and where childcare can be supported, right? So it's not just for example, Office of Economic Opportunity has a program called Build It AZ, which provides funding for registered apprenticeship programs so that we can get more skilled workers. Well, part of what we fund isn't just work booths, right? We also fund access to child care for people going through registered apprenticeship programs. So micro business, we're not just thinking about how do we provide access to capital to micro businesses. It is important for that, but it is also how do we also create a greater emphasis? on childcare facilities and getting access to capital for childcare facilities. So it's a holistic approach to thinking about childcare through everything we're able to do as a government and thinking about the resources that we have access to, making sure childcare is a part of that. Danny Knee - CIC: Awesome. And again, I I do think the approach is you know, is novel. and one of the things that people should also know, because we work often with the technical assistance providers, the people who are helping out, that not only does this help people with their business the business side thing, but the quality of the childcare facilities, like it can be about investing, you know, to have a better space. and I think the quality of childcare also goes up. So you you have multiple things that are are positives that are are happening kind of at the same time through through the approach. Okay, so last question for you here. don't want to take up we know you got stuff you gotta get to you know we gotta save the world and that takes a little bit extra time. Mary Foote: Ha ha ha Danny Knee - CIC: So if we were sitting here five years from now, what would success look like? How would Arizona know that these investments in micro businesses and childcare have truly paid off? Mary Foote: I think we would know by people's ability to access childcare, right? So we would have right now we have a hundred and fifty thousand micro businesses in the state. We would have more than that, right? We would have hopefully 200,000 micro businesses. And that would occur not only because of greater access to capital for people being able to get things that they need. And and most of the loans, you know, most of the Loans that microbusinesses need are not $50,000, $100,000 loans. Oftentimes, you know, the majority of the lending that you all are doing is less than $10,000. So I think it would be a greater number of microbusinesses, not just because of access to capital, but because they know that their families are safe and secure while they're able to grow their businesses, provide for their families, and also provide additional services and products. to their communities through the businesses themselves. Danny Knee - CIC: That is awesome. Well, thank you so much for taking the time. It is really a privilege to be able to talk with you today. obviously, love the work that you and the Office of Economic Opportunity are doing. so just really want to say thank you and and encourage you and the governor and everybody to keep up the great work. Mary Foote: Thank you. Danny Knee - CIC: Thanks everyone, and we'll see you next time on our podcast. Take care.