Increasing Number of Hispanic Entrepreneurs Seeking Small Business Loans
As reported in a recent article from Bloomberg Businessweek, the number of Hispanic owned businesses has doubled to 3.2 million since 2002. In addition to this, Hector Barreto, former SBA chief, stated that he believes Hispanic women are starting business at the triple the rate of other demographics. One of the most pressing questions surrounding the growth of the demographic is how these entrepreneurs will be able to obtain financing for their small businesses, which, according to Barreto is “the air that small businesses breathe when they’re starting and growing.” Fox News Latino has put out an article warning of the dangers of using small business credit cards to finance, which don’t have the same consumer protections that personal credit cards do. This means that the interest on existing debt can be raised arbitrarily, potentially restricting continued business growth in the face of an expanding burden of debt. Many small business owners are unable to obtain traditional loans because of stricter requirements in the wake of the recession. Many banks focus on lending larger amounts to more developed businesses, leaving newer businesses and smaller established businesses in a grey area where they may not be able to find the amounts of capital they need to expand. At the moment, the SBA’s operations have been largely suspended by the government shutdown, further obstructing access to business financing for business owners across the country who would have used SBA backing to secure loans from traditional banks. Alternative providers of expansion capital have become increasingly important as different demographics develop stronger presences in the small business sector, with more forgiving requirements that can propel small businesses forward through a relationship-centric approach to funding.
The growth of Hispanic entrepreneurship can be seen as a sign that more and more Americans in general believe that creating their own small business is a more sure route to gainful employment than waiting to be hired themselves. More small business success means more job growth and more circulation of income within American communities, so the success of this rapidly growing demographic of business owners is of crucial importance to the recovery of the economy at large.
Photo Credit to Cliff on Flickr