Equipment Funding Remains An Issue With Hispanic Small Business Owners
Raising capital or securing traditional funding is the biggest hurdle for Hispanic Entrepreneurs. The continued livelihood of any business is contingent on access to equipment financing to maintain day-to-day operations and continued growth.
Obstacles To Growth For Hispanic Entrepreneurs
Funding remains an issue for those who want to start something of their own. Language barriers can cause impediments which may make applying for loans nearly impossible. Ingenuity, determination and hard work may not be enough to sustain latino businesses if they don’t have the proper equipment to acquire new projects and expand their company.
Proven Track Record
According to the U.S. Small Business Administration (SBA), the number of Hispanic Entrepreneurs has grown 34% in the last 10 years. There are an estimated 4.65 million Hispanic-owned businesses in the U.S., making them the fastest-growing segment of U.S. small businesses. Overall population, there are nearly 61 million Hispanics in the U.S., according to 2019 U.S. Census data. In pre-pandemic times, Hispanic-owned employer businesses generated nearly $500 billion in annual revenue and employed 3.4 million people. Multifaceted growth across states and industries including construction, finance and insurance, transportation, and real estate is evident in recent years.
Over the past two-years, Latino-owned firms grew revenue at an average of 25 percent per year while white-owned businesses grew revenue at 19 percent. Hispanic business revenue growth should be an influential statistic in helping them gain access to capital, but they continue to be stymied. Perhaps traditional banks perceive Hispanic owners as “not bankable” since they’re not “properly” capitalized and rely on their own cash flow to grow.
The SBA Office of Advocacy found in a 2020 research analysis that businesses owned by Hispanics were more likely than those owned by whites to have their loan application denied outright.
Hispanic Entrepreneurs Seek Alternative Funding Sources
Lacking funding from traditional sources, Hispanic Entrepreneurs are turning elsewhere. Latino entrepreneurs are more likely to take on personal financial risk to operate and grow their firms relative to white business owners, who rely more on financing options that do not entail the use of personal assets for collateral. Latino entrepreneurs more often to rely on personal or business lines of credit, personal/family savings, or business credit cards.
Driven by inequity, Hispanics have been more likely to seek and receive funding from sources that expose them to more personal financial risk via higher rates and unfavorable terms. Latinos are starting businesses at a faster rate than the national average across almost all industries, but without equitable access to small business loans, some of these entrepreneurs end up having to close shop because they didn’t have the same level of access as other segments of the population. However, there are resources available if one knows where to look. For example, the credit bureau Equifax offers credit reports in Spanish by postal mail or online. Credit reports are an important financial tool for the success of any business owner. Without the ability to read and understand the reports in Spanish, some consumers have no idea they have mistakes on the report or may have had their identity stolen. Consumers can request one free credit report per week, free of charge, instead of having access to only one report each year.
There are also Federal Contracting Programs that serve disadvantaged businesses.
- 8(a) Business Development Program
- HUBZone Program
- Women-owned Small Business (WOSB) Federal Contracting Program
Other SBA Resources
We’re committed to helping Spanish-speaking entrepreneurs understand, better protect, and grow their financial well-being. With greater access to credit, Commercial Capital Company provides a variety of flexible equipment lease finance options for for all kinds of small business owners throughout the midwest and beyond.
We have a Spanish speaking finance professionals ready for consultation. Click “Apply Online” and get started today.