Hispanics represent the fastest-growing demographic among entrepreneurs in the U.S. and the most rapidly growing economy segment. This is due to their high entrepreneurial spirit, which has seen them contribute billions to the U.S. economy annually. According to Claritas, Hispanic-owned businesses make up 14% of the roughly 33 million businesses in the U.S. For context, that's about 4.65 million Hispanic-owned businesses.
Research by the Stanford Graduate School of Business found Latino-owned businesses saw a 34% growth rate outpacing 1% overall growth among all business owners. While there was a 6% decline in white-owned businesses. Within the same period, there was a massive growth in self-employed Latinos or entrepreneurs more than any other demographic. The stats are backed by research from the Kaufman Indicator of Entrepreneurship. For each month through 2019, 44 out of every 10,000 Latino adults became entrepreneurs compared to 31 for Asian adults, 29 for Caucasians, and 24 for African American adults. These trends are poised to become more glaring with growth in population among the Hispanic community; the U.S. Census Bureau projects an increase from 19% (62.3 million) in 2020 to 28% (roughly 111 million) by 2060.
However, securing funding remains the primary challenge preventing most Hispanic adults from kick-starting their entrepreneurial journey despite the overall positive trend. To encourage the trend, the government (and private organizations) funds various small business loans and grants to help Hispanic and other minority business owners. This article provides fourteen funding options available for Hispanic businesses.
14 Funding Options Available for Hispanic-Owned Businesses
Sourcing for funds to start up or scale up business operations can be difficult for minority businesses. We've detailed fourteen easily accessible funding options that small Hispanic business owners can leverage in light of this.
Accion is a non-profit financial institution that offers financial support to Hispanic and other minority-owned businesses. Accion currently operates in three locations in the U.S. and supports businesses across forty-one states. They offer loans ranging from $5,000 to $100,000 with an interest rate as low as 5.99%. To be eligible, you must have been in the business for at least 12 months and have generated a minimum of $50,000 in annual sales. The Accion website can be accessed both in English and Spanish language.
Grant.gov is a U.S. government organization that offers the largest repository of federal government grants. Grant.gov offers a wide range of grant opportunities to all types of businesses, including Hispanic-owned businesses. Small business owners can research and apply for grants on the website. Knowing your eligibility status is important before you apply since different organizations have different criteria. However, businesses in the science and technology sectors have better odds of finding grant opportunities on grant.gov because most government policy initiatives favor them.
U.S. Small Business Administration
The Small Business Administration (SBA) is a U.S. federal agency that helps Hispanic and other minority-owned businesses get funds through the SBA Lender Match. SBA doesn't directly offer loans to small businesses but has a program where approved borrowers can help small business owners with loans. Hispanic-owned businesses can obtain loans either through Microloans or Community Advantage Loans. Microloans can range from $13,000 to $50,000 . The interest rate is low to encourage small businesses start-up. The eligibility to get a microloan is based on the credit requirements of the lender. In contrast, the Community Advantage loans provide up to $250,000, and interest rates range from 7-9%. Both aim to meet the financial needs of business owners in underserved communities.
Opportunity Fund is a lending arm of Accion that provides financial support to small businesses owned by low-income immigrants and minorities. As a non-profit organization, Opportunity fund also partners with the SBA to facilitate loans for Hispanic and other minority businesses. The organization also has coaching and mentoring available.
Camino Financial is a financial firm based in Los Angeles that was launched specifically to assist Hispanic entrepreneurs in accessing low-cost loans. According to the co-founders, Sean Salas and Kenny Salas, the idea behind this initiative was to help other Hispanic business owners like their mother. She experienced difficulty in financing her Mexican restaurant business. Accessing a loan requires a prequalifying application that is free and independent of your credit score. Having at least a 9-month old business with $30,000 annual sales is the basic requirement. You can get up to $400,000. The monthly interest rate ranges from 1% to 2.5%, with a 24 to 60 months repayment period. You can access resources in both English and Spanish languages.
National Association for the Self-Employed (NASE)
Small business owners can receive small business grants through the National Association for the Self-Employed (NASE). This trade association supports small businesses and entrepreneurs. NASE does not specifically target Hispanic business owners but all self-employed businesses that need funds to grow. You need to be a registered member of the NASE for at least three months and have a strong business plan to be eligible to get a monthly grant of up to $4,000. Members enjoy discounts on business expenses in addition to loans and other resources that facilitate business growth. You can apply on the NASE website if eligible.
Community Development Financial Institutions (CDFI) Fund
The Community Development Financial Institutions play a vital role in ensuring that the most distressed communities receive financial support to help small businesses grow. It is a part of the U.S. Treasury that has been funding underserved communities to generate economic growth. To apply for the CDFI grant, you need to first apply for a CDFI certification award. Once certified, you can then apply for a technical assistance grant. Other CDFI programs you can apply for include healthy food financing initiatives and financial assistance awards in the forms of equity investments, grants, credit union shares, etc.
Amber Grant for Women
The WomensNet founded the Amber Grant for Women in 1998 in memory of Amber Wigdahl, a young lady of 19 who died before realizing her business dreams. It aims to support women entrepreneurs especially considering the many challenges Hispanic women face in developing their small businesses. The grant ranges from $10,000 up to $25,000 and is offered to twelve qualified female business owners annually. The key qualifying criteria is a well-detailed business plan or idea. The application fee is $15.
U.S. Hispanic Chamber of Commerce
Hispanic business owners seeking financing can also contact the U.S. Hispanic Chamber of Commerce for assistance. The USHCC, as the largest Hispanic business organization in the U.S., has promoted the economic growth of over 4.7 million Hispanic-owned businesses to its full potential. The USHCC, in partnership with Wells Fargo, an American multinational financial services company, provides multiple grants ranging from $5,000 to $15,000 to qualified locals.
Digtalundivided is a non-profit New Jersey-based organization dedicated to helping Latino entrepreneurs improve the economic growth of the Latino community. With the Digtalundivided's BIG program, African American and Hispanic women entrepreneurs whose businesses have struggled during the coronavirus pandemic or are ready to penetrate the market are offered the opportunity to access grants. You must have passed the business idea stage to become eligible to apply for any of their loan programs. The application is free and is carried out online.
Scores is a governmental organization that the SBA partly funds to help Hispanic and other small businesses secure a loan to grow their operations. The website is available in English and Spanish. Hispanic or Latino business owners can leverage the business workshops and access mentors when researching financing opportunities. You can also apply for the Economic Injury Disaster Loan (EIDL) to get up to $500,000 and interest rates of 2.75 to 3.75%.
United State Department of Agriculture (USDA) Grant
Hispanic and Latino small business owners living in rural areas can leverage grants offered by the United States Department of Agriculture to expand their business. Applications can be made at the USDA's local or state offices, where applicants can access the full process. Only small business owners with less than 50 employees and annual gross revenue of $1M or less can apply for the grant. Eligible applicants can only know the amount they can be granted once they complete the process.
Small Business Innovation Research and Technology Transfer
The Small Business Innovation Research and Technology Transfer (SBIR and STTR) programs enable small businesses to receive incentives and grants to explore their innovation and commercialization potentials. These grants come from five different U.S. federal government agencies. Hispanic and other minority businesses can receive up to $1.15 million. Mostly the grant is for highly innovative science and tech-based businesses located in the U.S. with less than 500 workers.
Minority Business Development Agency (MBDA)
The MBDA is a sector under the U.S. Department of Commerce that promotes the growth of U.S. minority businesses. Minority business owners can seek business experts at MBDA business centers to assist them to penetrate new markets, access loans, grants, and compete for contracts. The business centers are located in areas that have minority populations, making it easier for minority business owners to check the necessary documents needed when seeking financing.
Stay on Top of Your Business Finances With Skynova
Most minority businesses find it hard to secure funds to scale up. Various government and private institutions are now helping to ease that burden. However, while trying to secure funds, there is also a need to pay proper attention to your business finances. Skynova's accounting software will enable you to stay on top of your business finances by helping you keep track of all your business finances through automated transaction records, cash flow management, invoice generation, and accurate financial records keeping.
Notice to the Reader
The content in this article is a general guide and may not apply to your specific situation. Hispanic small business owners should consult with a professional for advice on financial matters.