According to the U.S. Census Bureau, Hispanics are now "the most rapidly growing segment of the country’s economy. According to the U.S. Hispanic Chamber of Commerce, Latino-owned businesses have grown 31.6% since 2012, more than double the growth of all American businesses." While Asian Americans are the highest-income, best-educated and fastest-growing racial group in the United States, Hispanic businesses are outpacing them, with "4.4 million Latino-owned businesses in the United States generating $700 billion to the American economy every year, according to a study by the U.S. Hispanic Chamber of Commerce." Recall that Asian Americans own and operate more than 2 million small businesses. These are healthy numbers, with implications for the availability of loan and business financing for Blacks: while there is plenty of opportunity to go around, lending resources are limited. (Does this mean I am suggesting that we build a wall? Of course not. I am suggesting exactly the opposite: collaboration.) We have described this in Thriving As a Minority-Owned Business in Corporate America: Building a Pathway to Success for Minority Entrepreneurs.
As with Asian Americans, higher levels of community capital sources are a factor. The language barrier plays a role here too, which has always made members of these distinct, self sufficient groups reluctant to seek capital outside a small, tight knit community. And, again, as with Asian owned banks in the US, Hispanic banks are much larger than their African American counterparts. Thirty four (34) Hispanic American banks hold $104 billion in assets. Black banks hold a relatively paltry $5 billion in assets. Launching a Hispanic American-owned business is, as with Asian businesses, relatively easier.
And as with Asian Americans, there is a significant percentage of the Hispanic population comprised of recent or new "immigrants who have few options for joining the labor market. Factors include poor or no credit, access to the appropriate financial products and services, lack of education and familiarity with U.S. financial systems, and lack of access to capital." Hispanics are different in that they are more likely to face doubt about their citizenship status, however.
For Hispanic American citizens (not immigrant) looking to start a business or to obtain business funding, your banking options are going to be limited., so we don't suggest you start with a bank, or a credit union. We provide more detail below.
We outline the sources and tactics we recommend below.
Request more informationHispanic banks are one of the sources you should consider if you are Hispanic. Hispanic immigrants are going to have a much harder time seeking business capital from any source, however. Targeted, community-based sources are best, and we suggest you try microfinance and other newer sources.
Thirty four (34) Hispanic American banks hold $104 billion in assets. This is second to Asian banks, so it makes sense to look at these institutions. As with Asian Banks, remember, there is no monolithic group. Banks founded by Mexicans will be different than banks founded by El Salvadorians, so, be sure to match your specific ethnic background to the bank you are seeking.
There are a number of microcredit platforms focused on Hispanics: "ACCION is a microfinance organization that supports Hispanic businesses. Opportunity Fund is a nonprofit organization similar to Accion. The owners of Camino Financial launched their lending business specifically to help Hispanic entrepreneurs, after their mother struggled with financing for her chain of Mexican restaurants."
According to the NCUA, in 2019, 104 Hispanic credit unions held $14 billion in assets, making Hispanic focused credit unions are another natural option. "Credit union business loans and credit union short-term loans work just like business loans from a bank. It’s generally no easier to get business loans from a credit union than a bank."
Crowdfunding, raising money on line in small dollar amounts, remains a viable option we think for Hispanic businesses just starting out. As with the Asian community, there are some cultural factors that impact this option, but we still think that for Hispanic immigrants with a good idea and no credit or other resources, this may be a way to raise initial funding. There are a number of platforms: "DreamFunded Latino is implementing a Rev Share program where the investors invest for a return and startup receives the capital." For more, see The JOBS Act: Crowdfunding Guide to Small Businesses and Startups 2nd Editionn.
Hispanic Business Financing Options are plentiful, but, as with options for Asian and for Black businesses, not all are created equal. More suggestions are below.
Given that it costs virtually nothing to start and run a donations-based crowdfunding campaign, we think this is the place to start. In addition, the exposure and hard work required have added benefits. We suggest imby.org and GoFundMe to start, followed by, at some distance, Indiegogo. If you have product or hardware based business, Kickstarter is the obvious consideration. For Asian firms, equity crowdfunding under the JOBS Act is also a possibility.
"The owners of Camino Financial launched their lending business specifically to help Hispanic entrepreneurs, after their mother struggled with financing for her chain of Mexican restaurants. Camino Financial works with small business owners who have a credit score of at least 550, that have been operating for at least nine months, and that generate sales of at least $30,000 per year. If you meet those requirements, you can get funding in as little as two business days."
These tools were made to benefit outsiders, like many Hispanic-owned businesses. But, if you are a new immigrant, they are likely to be less helpful. As we have noted elsewhere, this financing option is incredibly complicated. If you are a tech-focused firm founded by an Hispanic US citizen, we would suggest you consider this option.
"The Latino Coalition is a membership organization that provides helpful resources for Latino business owners. They do a lot of advocacy, lobby all levels of government on policies that will help Latino-owned businesses thrive. They also arrange networking events, which can lead to funding if you make the right connections, plus discounted business goods and services."
Eligibility factors vary depending upon the type of business financing you are looking for, but there are a few factors which you should keep in mind. If you are going to a financial institution, a personal credit score of at least 650. According to one source, in 2010, "the average FICO (credit agency) score in America is 728 for a homebuyer" and the average Hispanic-white homebuyer FICO score was 701," compared to an average score of 677 for Black homebuyers. What this implies is that financial institutions will be marginally more willing to provide small business loans to Hispanic Americans, but you will still have issues. This is why we recommend targeted community-based sources as the first stop for Hispanic American US citizens. This includes credit unions. Note that, for new Hispanic immigrants, the recommendation is different.
For most online small business loans, you need to be in business for at least a year.
$50,000 to $150,000
You will need to specify how you plan to use the money. Some financing types limit how you can spend the approved funds: equipment financing loans require you use the funds to purchase equipment.
If you have a question about Hispanic Business lending, see the FAQ page.
While Hispanic Americans have higher than average credit scores, we think online lending options are good when they are tied to local, targeted lending sources. As with all sources, we suggest evaluating these sources carefully. They may work, but it is a case-by-case determination.
Take a look at our page on credit cards. For a group with higher than average credit scores, like Hispanics, any type of lending from regulated financial institutions becomes more viable. This includes credit cards. The cost of this financing is elevated, however, which means you must have a solid idea of the revenue your business expects to generate so that you can repay what are likely to be very expensive short term loans.
Other financing options and resources including grants, pitch contests and awards. We would not count on any these. The demand for these resources far outstrips the supply, so your chances are minimal.
Some of these are "Shark Tank" like competitions.
See minoritybank.com, creativeinvest.com, diversityfund.net, moneytoday.info and hr41.info
If you need personalized information, focused on your specific situation, all you need to do is provide details below.
