More than 60 percent of jobs in the United States are in businesses that employ five or fewer employees.

Alejandro Martinez, community development officer for PPEP Microbusiness, offers business advice and technical assistance to clients and often a loan. Photo / Denise Holley

“They are the engine of the U.S. economy,” said John David Arnold, who founded Practical Portable Education Preparation (PPEP) in 1967. “Even in the hardest of times, small businesses will stay and stabilize the economy.”

Since 1985, PPEP Microbusiness and Housing Development Corp. offices in Douglas, Nogales and San Luis have made $22.5 million in loans to small businesses, Arnold said. But just as important, they offer technical assistance that can make or break a fledgling business.

“We are here to help small businesses make it through the tough economic times by providing loans and training,” Alejandro Martinez, PPEP’s community development officer, told the Nogales International. “We’re considered sort of a bank for the poor.”

PPEP makes micro-loans from $500 to $35,000 at 9 percent to 11 percent interest, and currently has about 40 small businesses as clients, Martinez said. He lives in Rio Rico and divides his time between PPEP offices in Tucson and Nogales.

PPEP offers business planning courses and an online QuickBooks course to help small businesses keep track of their finances, Martinez said. “We’re the only nonprofit that offers training via Webinar.”

If a business owner still keeps receipts in a shoebox and tallies sales by hand, Martinez can show him or her “there’s an easier way to do it,” he said.

As the recession deepens, even layoffs can create opportunity, Martinez said. The employer may offer to contract with the laid-off employee to do the same work part time.

“They come in to get help setting up as a business,” Martinez said. This works well for bookkeepers and office cleaners, who can contract with several customers.

One PPEP specialty is nurturing budding businesses.

“Small businesses are creating 80 percent of the jobs,” Martinez said. But because brand-new businesses have a high failure rate, “we provide the loan and the counseling and training to make sure they stay afloat.”

Rather than base the loan on credit scores, “we’re more flexible,” Martinez said. But a borrower must put up equipment or vehicles as collateral and repay the loan within five years.

Martinez puts aspiring business owners through a planning course for a “reality check,” he said. “There will be cases when we talk people out of their idea.” But some modify their plans and proceed.

Out of 40 current clients, about 10 are start-ups and 30 are existing businesses, Martinez said. They range from produce and restaurants to industrial welding supplies.

One client is a taxi driver who takes out a loan to survive the slack summer season, Martinez said. When winter visitors arrive and people go Christmas shopping, his business picks up and he can repay the loan.

“If we didn’t do that for him, he probably wouldn’t be in business anymore,” Martinez said.

Graphic artist Jose Luis Toledo took PPEP’s business planning course and got a matching grant in 2008 to buy digital cameras and laptop computers.

“We have to survive,” said Toledo, who works in a hillside studio in Nogales.

Until last year, “he was still developing film,” Martinez said. “I’m sure that saved him a lot of time.”

PPEP is also helping Yesteryear in Patagonia, which offers Amish carriage rides, Arnold said.

PPEP gets most of its income from the federal Small Business Administration (SBA), which funds microbusiness lenders in small towns and rural areas across the country, Martinez said.

Over the years, SBA has squeezed the amount of money for technical assistance from 25 cents of each dollar to about 10 cents, Arnold said. Lenders must come up with matching funds (donations from foundations and religious organizations) and even fund their own loan loss reserve fund.

“Why do banks get billions in bailout money?” Arnold asked.

Big companies get tax breaks, but small start-up companies often get rejected when they ask for a loan, Arnold said. “A lot of dreams of microbusinesses die in the parking lots of banks.”

At PPEP, those dreams may have a chance. Arnold encouraged small business owners or hopefuls to call (520) 287-7442 and meet with Martinez on Tuesday or Thursday at the Nogales office, 555 N. Gold Hill Drive.