Although Latino-owned small businesses are increasing in number, many are having trouble getting approved for a small business loan. Leader of The Latino Coalition, Hector Barreto, recently told Fox Business that as many as 3 million small businesses in the United States are currently owned by Latinos. In addition, those businesses pull in an average of $500 billion in annual sales. Despite the growth of Latino-based businesses, however, many Latino small business owners lack access to proper funding.
Barriers to securing small business funding
Even though they are a fast-growing segment of American small businesses, Latino-owned enterprises routinely encounter more difficulties when securing financing. According to a Michigan State University study conducted by the school’s Julian Samora Research Institute, there are several reasons why Latino business owners lack access to financing as opposed to owners of other ethnicities. Language barriers are one of the most pressing challenges Latino business owners face, especially among the foreign-born who speak English as a second language. Lack of access to education that would provide business training and experience to help them develop their company is another obstacle some Latinos face. Low-income Latinos who lack wealth may also have lower credit ratings, which presents another hurdle to obtaining approval for funding.
Research also indicates that minority business owners are sometimes perceived as being less likely to be successful due to race-related biases. Findings also showed many Latino entrepreneurs begin their business when they are young, which may lead to age discrimination and further exacerbate misconceptions.
Michigan State researchers also predicted the U.S. Latino population to triple by 2050 and constitute a full third of the domestic population; as such, the rise in Latino-owned small businesses is likely to increase as well. Examining alternative options available may help Latinos increase their profits and continue expanding the U.S. economy.
Proper financing critical component of long-term success
Although minorities sometimes face greater difficulties when getting their small business going, there are still options available to them. Pursuing funding or an equipment lease from an alternative lender may help Latino small business owners acquire the resources needed to grow their enterprise.
Having enough funding to finance the day-to-day operations of a business is critical to a company’s success. Small business owners who are seeking financing for equipment and other tools key to long-term success can contact National Funding to apply for a small business loan or merchant cash advance.