By Marina DeWit, Region 9 Advocate
Over 400,000 new businesses start up each year in the United States. While facing multiple challenges, there are many support mechanisms available to small businesses to help them stay on the road to success. It is highly beneficial to have suggestions and advice from other business professionals and even better to have a small business-friendly environment within the community that nurtures business growth through a prolonged commitment. One small city in Arizona invested in creating a business incubator to help develop ideas, grow the economy, and create jobs.
The city of San Luis in Yuma County is located in the Southwest corner of Arizona and has been a busy U.S. port of entry since the 1930s. Incorporated only 40 years ago with less than 2,000 people and a total area of 26.5 miles, it is the fourth fastest growing city in Arizona with the population exceeding 35,000 in 2018. Most of the city land is federally or state-owned with only 19 percent privately owned, making it difficult and slow to progress with “leapfrog development.” There is a post office in the middle of the city where residents go to get their mail since there is no postal delivery service available. San Luis has no property tax and relies heavily on sales tax for funding the local budget. Many small shops and dining spots are spread throughout the city. They hope to attract some of the more than eight million people that are processed at the border on an annual basis. For most, it’s a daily commute to work on U.S. farmland while living in Mexico. The city has been impacted by the political changes that affect the border security process. At times, it may take two to four hours to cross into the United States. Border closures drastically reduce the amount of people coming from Mexico to shop in the San Luis Walmart or spend their money at local restaurants and stores, thus reducing city tax income.
According to the City of San Luis officials, people from Mexico liked having their money in U.S. banks 25 years ago. After many banks closed in the area and along the border regions due to burdensome banking regulations, businesses from Mexico are no longer able to get loans to operate their companies in Arizona. There are very few traditional bank funds available for new businesses to start and develop their ideas, and the lengthy loan process is overwhelming. The city’s income projections are on the decline even though the population is growing.
In an effort to grow the local economy, the city’s economic developers constructed a 20,000-square-foot facility in the San Luis Industrial Park. The ‘City of San Luis Business Incubator’ has seven suites ranging from 1,400 to 4,200 square feet designed for start-ups and expanding businesses focused on light industrial activities. This business incubator offers a five-year business support program for companies in the United States and Mexico. The program offers low rental-rates starting at $0.39 per square foot, high speed internet service, on-site training programs, networking opportunities, and more. In order to qualify for the admission to the incubator, a business has to be new or expanding, have potential for growth and expansion, ensure job creation, and be of light industrial use. The Sun Luis Business Incubator advisory board decides if the business will be allowed to move in after evaluating the applicant’s resume, personal credit report, business plan, and more.
DNK Plumbing Supply is one of the companies that started developing in the City of San Luis Business Incubator in 2016, originally in the smallest suite. With the help of an SBA loan and the city’s support, they have already grown to be one of the main suppliers of commercial and residential plumbing products in the area. Recently, this company relocated to the biggest suite available in the city’s incubator. Having a professional storefront for customers and an industrial space in the back of the suite for easy truck access makes the space highly efficient for this use. The business owner is grateful for the opportunity to grow his company in an environment that is beneficial for his family, employees, the city, residents, and other businesses that need his products and services.
Having a city-supported business incubator has been a novel way that San Luis encourages small businesses to start up and grow. By showing the city’s strong commitment towards growing small businesses, San Luis has helped the local economy and is inspiring a culture of entrepreneurship among the residents.
Marina DeWit serves as the Region 9 Advocate for the SBA Office of Advocacy, representing small businesses in Arizona, California, Nevada, Hawaii, and the Pacific Islands of Guam, American Samoa, Commonwealth of the Northern Mariana Islands, and Trust Territories. DeWit works with small business owners, state and local governments, and small business associations to bring the voice of Region 9 to Washington DC. She can be reached at Marina.DeWit@sba.gov.