Hispanic In Business
Hispanic In Business
The Hispanic population is the fastest growing demographic
group in the United States - and the group's business sector is
matching this pace. Recent statistics from the U.S. Hispanic
Chamber of Commerce reveal that nearly 3 million Latino-owned
companies now pump almost $400 billion annually into the
Even so, many of these entrepreneurs have yet to realize that
a network of support services - once full of gaps - has begun to
strengthen and tighten. This section offers a summary of all the
help that's out there, from financial services, procurement
opportunities and mentor programs to trade associations, social
networks and publications.
Financial Services: SBA Loans
A hefty check with no strings attached is every business
owner's dream. But according to the U.S. Small Business
Administration, it's time to wake up. Outright grants for
launching a company are virtually nonexistent at the government
level, except for a few in highly specialized areas -- and none
exist for start-ups.
The best bet for Hispanic entrepreneurs is to borrow capital.
While some banks offer programs specifically geared to the
Latino business owner, the easiest to obtain are U.S. Small
Business Administration loans. A word of caution, though -
minority-owned businesses don't receive special consideration in
loan approvals, although the SBA does actively court
participation from Hispanic and other minority populations.
In addition, the federal government does not lend money
directly to small businesses. Rather, it offers lender
guaranties, a sort of safety net that encourages private banks
and lending institutions to approve applications.
Here are several SBA programs for business owners who may
have problems obtaining traditional loans:
Non-government lenders, which include the majority of U.S.
banks and some non-bank lenders, issue 7(a) loans.
Available on a guaranty basis and structured on SBA
requirements, this program requires that applicants be both
eligible and creditworthy. For instance, applicant
businesses must: meet SBA size standards, be for-profit,
lack business or personal resources to come up with
financing and be able to demonstrate repayment.
In cooperation with Certified Development Companies, the
504 Program, a financing tool for community economic
development, offers small businesses long-term, fixed-rate
financing for major fixed assets, such as buildings and
land. Typically, a 504 project includes a private-sector
loan secured with a senior lien covering up to 50% of the
project cost, a loan secured with a junior lien from the
CDC covering up to 40% of the cost and a contribution of a
minimum 10% equity from the applying small business.
This program, which recently received additional funding
through the Recovery Act, works with commercial lenders to
provide loans in amounts too small (up to $35,000) to be of
interest to larger loan programs. Borrowed money can
purchase inventory, supplies, furniture, machinery, etc.,
but cannot go toward real estate or to pay existing debts.
The loans are delivered through specially-designated
non-profit intermediary lenders, which provide technical
assistance to applicants.
Because SBA loans come through non-government sources,
business owners must visit their local participating banks or
lending institution to apply.
Go to www.sba.gov/localresources/district/or/financing/OR_ORPLPCLP.html
for a list of SBA lenders. The Small Business Administration
provides its site in both English and Spanish.
Financial Services: Additional Loan Programs
In addition to SBA-guaranty programs, some national and
regional banks offer loan services specifically to Hispanic and
other minority entrepreneurs.
The United States Hispanic Chamber of Commerce (www.ushcc.com) works
with a number of banks to create loan programs. One is aimed at
lending more than $1 billion over the next five years to small
businesses in high-growth Hispanic markets across the United
Another loan program provides a full range of Latino business
services available in many areas of the country. The goals are
to build partnerships with national and local organizations,
recognize the Hispanic community's entrepreneurial achievements,
and provide financial tools for growing solid businesses.
Others banks also offer various loan arrangements to minority
entrepreneurs, as well as to any business owner in low- and
moderate-income communities. These programs typically cover real
estate, equipment and working capital. One such loan is through
a Minority and Women Prequalification Program, which includes
SBA pre-approval as well as technical assistance in the
application process. To qualify, firms must earn less than $25
million annually. Loans (up to $25,000) can go toward working
capital, inventory, equipment and real estate expansion.
For additional guidance on small-business loans, visit
Business.gov at http://search.business.gov/startLoans.html.
Before applying for any type of loan, it's important to
understand that lending institutions will ask for certain
prerequisites before they'll write a check:
- Ability to Repay. Banks look at business cash
flow and collateral, so start-up owners should put together
a loan package detailing a projected repayment plan.
- Credit History. Check your personal credit
rating well before applying for a loan. Errors take up to
four weeks to rectify, so make sure it is correct and up to
date. For help in interpreting or evaluating your credit
report, consult an accountant or banker you can
- Equity. Even start-up business owners usually
must invest some personal funds into the company. The
amount depends upon the type of loan.
- Collateral. These are those personal and
business assets that can be sold to repay a loan. Most loan
programs, including microloans, mandate at least some
- Experience. Entrepreneurs lacking experience in
their new businesses should not apply for loans unless they
plan to take on partners or staff familiar with the field.
In addition, the owner should take time to work in the
discipline first, as well as enroll in related
Paperwork requirements vary, but the U.S. Minority Business
Development Agency (www.mbda.gov) advises would-be borrowers to gather
the following documents:
- Loan application. This requires at minimum
business and personal information, the requested amount,
purpose and banking information (checking account).
- Signed copies of business and personal Income
tax returns for past three years. The lender will confirm
with the IRS the returns' accuracy.
- Company financial statements for the past three
- Personal financial statement.
- Business plan and projections (typically
required for start-up businesses, term loans or other
- Listing of accounts receivable and payable
agings (for asset-based loans).
Financial Services: Investor/Venture Capital
Although finding investor backing can be a tough way to go,
alternatives for smaller businesses, including Hispanic-owned,
do exist. Keep in mind, though, equity investments are rather
high risk, so investors invariably seek a high return on
investment. As always, the friendliest place to start is the
Small Business Administration.
The SBIC, or Small Business Investment Company,
guarantees privately owned and managed investment funds,
licensed and regulated by SBA, to make equity and debt
investments in qualifying small businesses. As with loans, the
SBA does not use the SBIC Program to invest directly, but works
through intermediary financial institutions.
SBIC primarily helps companies with real growth potential
with equity-type arrangements that allow partial ownership and
profit-sharing. SBICs finance small firms by providing straight
loans and/or equity-type investments which often give them
partial ownership of those businesses in the hope of sharing in
the companies' profits as they develop. To qualify, a company
may not have a net worth greater than $18 million, with an
average after-tax net income for the prior two years no greater
than $6 million. For more information about SBIC, go to http://www.sba.gov/aboutsba/sbaprograms/inv/index.html.
The Community Development Venture Capital Alliance
(www.cdvca.org), a non-profit organization promoting
the use of venture capital tools to advance local economies,
invests in businesses in distressed areas nationwide. Their
programs cover a variety of industries, from seed to expansion.
CDVCA plays a key part in supporting its member funds and
providing entrepreneurial training programs, consulting services
and much more.
Pacific Community Ventures (www.pacificcommunityventures.org), also a nonprofit
organization, provides resources and capital to businesses with
the potential to bring significant economic gains to low and
moderate income communities. Affiliated with several for-profit
investment funds, PVC offers entrepreneurs access to numerous
business development resources through various programs and
Besides non-profit and government programs, scores of
commercial companies invest in minority-owned businesses. The
National Association of Investment Companies (NAIC), the
financial industry association for private equity firms
investing in an ethnically diverse marketplace, provides a
directory of partner companies. Since the NAIC's emphasis is on
emerging markets, a good number of member farms target the
Hispanic business community. Visit www.naicvc.com for
a directory of participating investors.
Financial Services: Getting Through the Process
When it comes to money matters, new entrepreneurs (no matter
their ethic background) often find themselves treading water in
a sea of paperwork. Some banks and lenders, such as Bank of
America, do offer support services for Hispanics and other
minorities applying for financial services, but the broadest
resources lie elsewhere.
Chief among these is the Small Business Development Center. A
collaboration of the private sector, education community, and
federal, state and local government, the SBDC offers one-stop
help to small-business owners. Entrepreneurs nationwide can
visit local branches for application assistance, counseling,
goal setting and dozens of other services. Go to www.sba.gov/aboutsba/sbaprograms/sbdc/index.html
for program information, as well as for a list of branch
Local community colleges, due to their mission, likewise
provide extensive opportunities for small-business building. The
National Association for Community College
Entrepreneurship fosters entrepreneurial training and
education practices at community colleges nationwide. A list of
participating colleges is available on the NACCE Web site,
Mentoring: Why and How
Many successful Hispanic entrepreneurs - or indeed,
entrepreneurs in general - acknowledge that others have helped
them along the way. For this reason, a seasoned business owner
may feel the urge to return the favor. Becoming a
mentor allows a more experienced individual to
share expertise, wisdom and guidance with younger people in a
similar profession or line of work. In turn, mentors can benefit
from a protégé's fresh ideas, and also take pride
in their professional accomplishments.
For Hispanic protégés, who may face language
and cultural barriers, this brand of guidance is invaluable, and
relationships can last for years. Usually, professional mentor
duties vary according to the line of work, though fundamentally,
- Provides support by listening to a
protégé's needs and concerns.
- Guides protégés through problems and
- Helps protégés establish personal and
- Provides professional opportunities, when
- Commits sufficient time to the relationship.
Given the heavy responsibility, entrepreneurs aiming to
mentor should have the following qualifications:
- Ability to communicate work ethic and management style
to a protégé.
- In-depth knowledge of their chosen fields.
- Willingness to share professional knowledge and
- An overall positive attitude.
- Dedication to the relationship.
- Passion for their professions.
- A high degree of respect from colleagues, employees and
While numerous mentor relationships grow out of academic
experiences (e.g. meeting a potential protégé in a
class or workshop), there are other ways to get started. Possibilities exist in area chambers of commerce - many of whom
sponsor mentor programs - professional organizations and even in
online social networking groups.
Some universities arrange relationships for business
students, for instance, with community entrepreneurs. Others can
evolve from "career days" where business people set up booths at
local high schools. In the Hispanic community, several
organizations sponsor mentorship programs as part of their
missions. The most notable include:
- HISPA (www.hispa.org) provides onsite student support
services in an effort to reduce the dropout rates of
Hispanic students, beginning in middle school. With a
national network of role models and resources, the
organization encourages Hispanic professionals to visit
schools, where they can share educational and career
experiences. The goal is to inspire youngsters to achieve a
higher level of academic performance - and to take pride in
what they have accomplished.
- The ASPIRA Association is the only national
Hispanic non-profit organization dedicated solely to
developing educational and leadership potential of young
Hispanics. Operating at the grass roots level, ASPIRA
provides programs that encourage students to stay in
school, prepare them to reach educational goals, develop
leadership skills and serve the community. The group
currently assists more than 85,000 students each year
through school clubs and after-school education and
guidance programs. To learn how to get involved, visit
Back to top