Latinos are the fastest growing ethnic group in the U.S. and also have experienced the most significant growth among small businesses. In fact, Latino-owned companies comprise 3 million U.S. businesses, and that figure doubles every five years. These companies generate an estimated $500 billion in sales annually. Demographers are predicting that by 2020, there will be about 12 million Latino-owned businesses.
While the number of businesses owned by Latinos continues to rise, the challenges in securing capital have not shrunk. This week, former SBA Chief Hector Barreto, now the chairman of The Latino Coalition, met with me at Biz2Credit’s offices in New York to discuss how to increase the flow of capital to entrepreneurs in his community. He also said during an interview on the FOX Business Network that a primary challenge is the fact that many Latino businesses are young and don't have a tradition of access to credit markets. Fortunately, there are resources to help:
"Capital is the oxygen that small businesses need to grow. Small businesses often have the "know how," to succeed but don't have the "know who," Barreto explained. "They may have applied to the bank for a loan, not been approved, and had a bad experience. You can't stop after one try; capital is a driver of small businesses. Being able to access startup dollars is important not just to get started, but also to grow in the long-term."
The process of applying for loans can be intimidating, not only for Hispanics, but for other ethnic groups, and everyone else, for that matter. Language and culture barriers can be an issue. Fortunately, help is available.
Hector Barreto's former agency, the SBA, addresses what he calls the Four C's: capital ,counseling, capacity building and contacts. Further, the agency has a wealth of information on its website, including links to Minority Business Development Centers (MBDCs) that can connect Latinos with training courses and one-on-one assistance, Small Business Development Centers (Centros de Desarrollo Empresarial) that provide advice, training and networking opportunities, and the 8(a) Business Development Program, which offers socially and economically disadvantaged individuals a wide range of assistance.
Lastly, The Latino Coalition, along with the U.S. Chamber of Commerce, will host America's Small Business Summit 2013, "Small Business. Big Impact," from Monday, April 29 - Wednesday, May 1, 2013, in Washington, D.C. at the Omni Shoreham Hotel. I am proud to be invited as one of the more than 40 speakers and panelists on key issues important to small business such as: financing, risk management, procurement opportunities, legal reform, healthcare, immigration and international trade. More information can be found at http://www.thelatinocoalition.com/event.php?id=51.
It is essential that Latino-owned businesses have all the resources to succeed. The rise of small businesses is the best route for members of any ethnic group to increase their employment possibilities. As long as there are active programs to assist small business owners in funding, they should continue to thrive.
Rohit Arora is co-founder and CEO of Biz2Credit, an online resource that connects 1.6 million small business owners with 1,100+ lenders, credit rating agencies and service providers such as CPAs and attorneys via its Internet platform. Since 2007, Biz2Credit has secured $800 million in startup funding, small business loans and business lines of credit for entrepreneurs across the U.S.