Latino Small Business Funding

The Stanford School of Business 2017 survey of U.S. Latino Business Owners validated that Latino-owned businesses comprise a significant -- and growing -- percentage of U.S. small businesses. The growth rate of Latino owned businesses in the United States, has outpaced the business growth rate of all other non-Latino owners. Latino-owned business growth has increased 87 percent between 2007 and 2017, which represents nearly half of all minority-owned firms, with estimates ranging between a total of 4.4 million to 5.3 million businesses by the end of 2019.

In 2015, the gross domestic product (GDP) produced by all Latinos in the United States was $2.13 trillion. In 2012, the study calculated an additional $1.38 trillion would be added to the U.S. GDP if Latino-owned businesses managed to close the opportunity gap ( i.e. the difference between the average annual revenues of Latino vs non-Latino owned businesses). However, supplemental census data shows that the number of Latino owned businesses has continued to rise, which indicates that the opportunity gap has grown. In today's dollars, that is about $70 billion more, or an increase from $1.38 to $1.46 trillion.

Interestingly, the growth comes despite the fact that Latino businesses have the lowest rate of financial institution based loans among all business owners. More than 70 percent of Latino entrepreneurs use "internal" funds, such as personal savings or loans from family and friends, to start their businesses. On average only approximately 12 percent of Latino-owned businesses secured bank loans to open their business compared to 18.4 for white-, 15.3 percent Asian-, and 14.2 percent for black-owned businesses. When seeking additional sources of funds to grow their business, many Latino-owners either avoid taking on debt or are unable to meet the requirements to get a business loan, destroying their dream of expansion.

In order to overcome the financial barriers, Latino business owners disproportionately rely on their credit cards and other financial methods to increase cash flow, including some that come with high-interest rates but require less collateral. Latino-owners who do secure a business loan are more likely to be required than non-Latino business owners to use personal guarantees such as cash, real estate, and other assets to secure the loan.

National banks provide the least funding to Latino-owned businesses compared to all other external funding sources. In fact, National banks' funding levels rank just slightly above that of the SBA. Currently, Latino-owners have the lowest number of government-backed loans, compared to all other non-Latino owners, however, the vast majority say they would like to have one. The Stanford School of Business 2017 survey determined that on average, Latino-owners have low credit scores, limited credit histories, limited collateral, and lack funding preparation, which hurts their chances of getting a business loan.

All in all...starting and owning a small business has many challenges, finding adequate capital to either start or operate a business is the largest challenge for the majority of all small business owners. However, many minority owners tend to face greater barriers than others.

The SBA is one of the best sources for small business funding and one of the most difficult to obtain. Additionally, the process is long...months not, days or weeks, the paperwork is overwhelming and a good credit rating is required. And, some of their loans require collateral and/or a personal guarantee. However, in the end, if you do not qualify there are other options.

These options take less paperwork, usually one application, and documentation supporting three months of income and/or cash flow. The approval time is minimal...days not, weeks or months. Can these options be more expensive? Yes! However, financing like managing a business is a step by step process. If at first you cannot qualify for an SBA loan or other more traditional loan, obtaining a short-term high-interest loan is an option that gives you time to fund your business, while learning ways to improve your credit score. Once your score improves you will be able to refinance your high increase loan with a new lower-cost SBA loan.

Get your roadmap to guide you through the options of financing your business TODAY! Secure the alternative funding you need NOW! Find Drew Cashmere on Linkedin or Call 786-544-2700

Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Apply: CLICK HERE

 At South Florida Funding Group: WE FUND THE IMPOSSIBLE, EVEN CANNABIS!