There are two clear realities when it comes to Latino-owned businesses. The first is that they have maintained a good growth rate; the second is that financing for Hispanic businesses remains a challenge. This is confirmed by the recent QuickBooks survey.
Securing the necessary capital to start a business has always been the main challenge. Even now, the Latino community stands out as the minority with the most businesses in the country. In Hispanic Entrepreneurs, we will delve deeper into this topic.
There are a variety of loans available for starting a business in the USA , including for minorities. However, several studies have highlighted how difficult it is for Hispanics to access these loans.
Even in the face of problems of access to economic aid, this community has an important presence in the country's economy. They not only stand out as a workforce, but as employers, owning around 6% of the companies in the country.
Hispanic-owned businesses continue to grow
In its analysis, QuickBooks quotes the Census Bureau to indicate that there are about 331,000 Hispanic-owned businesses in the United States. And he also points out that the number continues to increase.
This trend has continued in recent years. We've previously discussed similar studies on our blog that highlight the growth of Hispanic businesses.
A report by Forbes magazine indicated in 2020 that the Hispanic population was the group with the most entrepreneurship compared to other minorities. However, it also indicated that it was the one with the most problems with financing.
So the problems in obtaining business loans in this community persist, according to the QuickBooks survey.
Financing Hispanic Businesses: The Challenge Of Our Entrepreneurs
Obtaining the financing to start and boost their businesses continues to be an obstacle for Hispanic entrepreneurs.
Of the total of those surveyed in the study, 62% say that obtaining financing is a challenge. And of these, 19% rate it as "extremely challenging." The difference compared to other owners is important, since only 47% said that financing is a challenge.
For Hispanics, this situation is not new. Despite the funding organizations and programs that have been created, they still face obstacles in overcoming this difficulty. And it is a situation that is repeated both in banking institutions and in public programs.
An example of this is access to financial aid during the Covid-19 pandemic, to which the study also refers.
Like other businesses, Hispanic owners had to find ways to overcome the most difficult period. To survive, they had to adapt to the new reality. The public sector contributed with federal business aid.
But here Hispanics say that they also encountered obstacles to access it. According to QuickBooks, a large number of loan applications were rejected for Hispanics.
Aside from financing, access to banking instruments such as business accounts and credit cards is also an obstacle. Only 51% of those surveyed indicate that they have a bank account and 25% have a credit card.
Main source of financing
Faced with the difficulty of financing Hispanic businesses, the owners manage to obtain the capital they need.
The main source of financing for Hispanic homeowners is their own savings. This is stated by 95% of those surveyed. This practice has also been maintained over the years.
The financial support of family and friends also continues to be essential to start their businesses. This is confirmed by 62% of Hispanic owners.
What drives Hispanics to open their own business? According to QuickBooks, the main reason is to generate additional income from your work.
Hispanics are not afraid to start their own businesses, especially when it comes to providing for their families. However, the path they face is not easy due to a lack of financial support.
Where to get financing?
Given this reality, Hispanics often wonder how to finance a business in the United States . While business owners emphasize the difficulties in accessing financing, the truth is that government loans for small businesses are available , as well as loans from private organizations.
Chambers of commerce offer advice and resources that help to better understand the processes. In addition, through these organizations you can also find out what financial aid is available.
Among the organizations that can be used to obtain financing we find:
- Small Business Administration (SBA). It has several initiatives that Hispanic companies can access.
- Grants.gov. Through this website you can find out about all available federal funding programs.
- Opportunity Fund. It is a non-profit organization that offers loans to business owners who belong to minority groups.
Finding financing for Hispanic businesses remains a challenge. Despite this, this community continues with its business initiatives and opening up space in the United States economy.
