How to Get a Business Loan as a Hispanic Small Business Owner
In the United States, they suggest that once the pandemic is over, recovery and economic growth falls largely on Latinos. But success does not come from nowhere, you have to use several tools to develop the business. That's why in Hispanic Entrepreneurs we explain to you How To Get A Business Loan As A Hispanic Small Business Owner.
As we know, Hispanic-owned businesses are an important part of the small business arena. According to a study by Stanford University, in the last 10 years the number of Hispanic entrepreneurs grew 34%. These companies contribute at least 500.000 million dollars to boost the US economy relative to annual sales.
With this growth it is necessary for entrepreneurs to have access to capital, many consider that the process is tedious and difficult. It is for this reason that organizations that support Latino entrepreneurship make efforts to improve conditions. As well as increasing the financial inclusion of Hispanics.
How to Get a Business Loan as a Hispanic Small Business Owner
In order to expand and strengthen their businesses, Hispanics must turn to tools such as business loans. Borrowing is worth it to sell abroad, increase working capital, capital inputs, improve cash flow, etc.
Regardless of the type of loan or program that is chosen to finance the business, the necessary paperwork must be prepared. The first thing is to develop a business plan to explain the financial forecast. That is, a report of what is needed to start, consolidate the business or launch a product or service. After noting the costs, you have to add 25% to cover operating expenses.
It is also essential to have proof of ownership, residence and identity, personal and commercial tax returns, lease data, among other requirements. This can be tricky, so it is advisable to keep in touch with a loan officer to verify that the correct steps are being followed.
Aside from the paperwork, the bottom line is that the business runs and the credit score is high. This will indicate to the lender that the applicant can return the money awarded. When the plan is drawn up; They proceed to seek financing in banks, aid programs or organizations. Traditional lenders like Bank of America have a wide range of financial products and services to fund Hispanic small businesses.
On the other hand, there are other organizations that use government resources and others that support Hispanics with loans and grants. If the business is starting or the credit history is bad it is better to go to the SBA (Small Business Administration).
They can opt for a microloan that is generally $ 50 or less. These can be paid off in 6 years and the interest rate is lower than that of a credit card. Another alternative is Accion.org, this is a California non-profit group that funds Hispanic small businesses. In addition, it provides resources to low-income business owners.
If you need more than a microloan, you need to prepare a financial statement. It is important to do this before starting your search for other financing options to show profit, loss, income and a balance sheet.
Hispanic-owned business loan options
The CDFI are private financial institutions dedicated to providing loans to small businesses in disadvantaged communities. Many of these work with Hispanic startups. One is the Accion Opportunity Fund that grants between $ 5 and $ 100 with rates of 5.99% and more. It requires 12 months with the business, 20% ownership and 50 in sales.
Another is CDC Small Business Finance that operates in California, Nevada and Arizona, lends between 20 and 250 thousand for 5 to 10 years. Grameen America is a microlender that uses the peer-to-peer lending model. It gives between 2000 and 6000 with rates of 15 to 18%. It focuses primarily on women entrepreneurs who live on the federal poverty line.
For its part, the Latino Economic Development Corporation (Latino Economic Development Corporation has 3 types of loans. Loans between 500 and 250 thousand for 5 to 10 years from 6.5% interest. Beneficiaries must present bank accounts, tax return, guarantee and cancel an amount for the request.
Meanwhile, the National Association of Latino Community Asset Builders (NALCAB) has 50 lenders who finance Latino businesses. It also gives technical assistance. Capital Plus Financial, run by Hispanic Americans, plays this role, as well as many others.
Regarding grants as a source of funding, you can consider Candid.org that encompasses non-federal programs. Meanwhile, grants and federal loans are requested through Grants.gov.
NASE, the National Association of Self Employed Workers, has growth grants of up to $ 4000 for its members. The United States Hispanic Chamber of Commerce delivers them through their local chambers. They range from $ 5 to $ 15. The key is to analyze what you need and go to the right place to provide adequate financial assistance.
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