Hispanic-owned businesses are rising sharply in the U.S. Learn about small business loans, grants and other funding opportunities for Latinos.
Growing Financing Opportunities
As the Hispanic population in the U.S. increases, entrepreneurial opportunities for Spanish speakers are expanding as well. Between 2012 and 2017, the number of Hispanic-owned businesses in the U.S. rose 31.6%, more than doubling the 13.8% average for all companies, according to the United States Hispanic Chamber of Commerce (USHCC).
Hispanic business owners are also improving their revenue and credit scores, making it easier to obtain financing, according to a September 2018 study by lending business Biz2Credit. The average annual revenue of Latino-owned businesses in the U.S. rose 26.5% to $327,189 in 2017-2018 from $258,702 in 2016-2017. Average credit scores rose from 592 in 2017 to 594 in 2018. In a 12-month period, credit applications rose 22% and 27% of business owners in the category were approved for funding.
Fueling this credit availability is an expanding network of financing resources supporting Hispanic business owners. Here are some of the leading resources available, including general financing sources as well as ones specifically geared toward Hispanic business owners.
Small Business Loans for Hispanics
Loans represent one of the most important sources of financing for small businesses. With a loan, you borrow money to run your business and you repay what you borrow plus interest according to a rate and schedule agreed upon with your lender.
An agency of the federal government, the Small Business Administration (SBA) doesn’t directly extend financing to small businesses, but facilitates loans to entrepreneurs by backing a network of approved lenders who meet set guidelines. SBA guarantees reduce risk to approved lenders, enabling them to extend loans at more favorable rates to small businesses.
The SBA offers a variety of loan programs. Some of the programs Hispanic entrepreneurs might consider include:
7(a) Loans, which extend financing of up to $5 million at rates which can’t exceed maximums set by the SBA
7(a) Small Loans, which are similar to 7(a) loans but offer a maximum amount of $350,000
Community Advantage loans, which are 7(a) loans of up to $250,000 for small business and entrepreneurs in underserved communities
Microloans, a program that provides loans of up to $50,000
A nonprofit lender created to support businesses owned by women and minorities, Opportunity Fund partners with the SBA to facilitate loans so entrepreneurs can create jobs, strengthen communities and promote upward mobility. Opportunity Fund loan programs include:
Accion runs the largest nonprofit lending network in the U.S. to further its mission of extending economic opportunity to all. Accion provides minority-owned businesses with:
Term loans from $300 to $250,000
Fixed annual percentage rates ranging from 7% to 34%
Flexible credit requirements
You can apply for an Accion loan through a 15-minute online application, in person or by calling. In addition to loans, Accion provides small business owners with access to business experts, special events, networking and opportunities from its partners. Accion also provides assistance from loan experts and local marketing insights.
Camino Financial provides loans to promote its mission of empowering small businesses to catalyze economic growth in low-to-moderate income communities.
The online finance company’s loans feature:
Amounts of up to $400,000
Terms from 24 to 60 months
Monthly interest rates from 1% to 2.5%
Filling out an online prequalifying application is free and doesn’t affect your credit score. The prequalifying process typically is completed within 24 hours.
In addition to loans, Camino Financial provides business owners with resources, including tips on business funding, accounting and marketing.
Nonprofit organization Kiva uses crowdfunding to provide loans to entrepreneurs to further its mission of expanding financial access to underserved communities.
When a prospective borrower applies for a loan:
The application goes through an underwriting and approval process.
If approved, the loan gets crowdfunded by Kiva’s community in $25 increments, which are disbursed to the borrower, until the fundraising is complete.
The borrower then begins repayments on the loan, which gets returned to the original lender.
Lenders can use repayments to fund new loans or donate money, or they can withdraw their money.
Kiva extends loans up to $10,000 with no interest. You can prequalify and apply for a loan online. You can then invite family and friends to fund you for 15 days to prove your creditworthiness before starting a 30-day fundraising cycle. You have up to 36 months to repay your loan.
Hispanic Small Business Grants
Grants for Hispanic-owned businesses are another crucial financing resource. Unlike loans, grants don’t have to be paid back.
To obtain a grant, you first need to do research to find grants you’re eligible for and then submit an application.
Grants.gov, managed by the U.S. Department of Health and Human Services, provides a centralized platform for grant seekers to find and apply for grants from federal agencies. Data on the site encompasses more than 1,000 grant programs involving more than $500 billion in annual awards.
The site includes:
Information about how to research and apply for grants
A search tool for finding grants by keyword and other criteria
A portal for submitting and tracking grant applications
Businesses in industries that are supported by government policy initiatives, such as science and technology, tend to have the best odds of finding grant opportunities on Grants.gov.
The National Association for the Self-Employed (NASE), a trade association supporting entrepreneurs and small businesses, provides offerings and benefits to its members, including monthly NASE Growth Grants of up to $4,000.
To apply, you must:
Be a member in good standing for at least 3 months before applying (annual members can apply immediately)
Demonstrate a business need that could be met by the grant
Explain in detail how you would use the grant money
Show how the grant would help you expand your business
Submit supporting documentation, such as a business plan or resume
In addition to grants, NASE provides members with other resources, such as a digital newsletter, discounts on business expenses and access to consultants with expertise in areas such as tax planning.
Small Business Loans and Grants for Hispanic Women
Hispanic business owners who are women have additional opportunities for potential funding:
The Association of Women’s Business Centers is a nonprofit organization that supports a network of more than 100 women’s business centers in the U.S. These centers help women succeed in business by offering:
Training
Mentoring
Business development
Financing opportunities
Some women’s business centers provide financing directly. Others assist women business owners in locating financing sources. The association’s website provides a link to help you locate a women’s business center near you.
The Amber Grants program, sponsored by WomensNet since 1998, awards a grant of $2,000 every month and a grant of $25,0000 annually to women entrepreneurs in honor of Amber Wigdahl, who died at the age of 19 before fulfilling her business dreams.
To apply for a grant, you must fill out a form that:
Describes your business
Tells what you would do if you won a $2,000 monthly grant or a $25,000 annual grant
You must pay a $15 application fee when submitting the form. Applications for monthly awards are due by the end of each month.
Other Resources for Hispanic-Owned Businesses
In addition to organizations that directly disburse financing or facilitate financing, Hispanic business owners have many other resources available to help them achieve their financing goals. Here are some of the most important ones:
USA.gov is the U.S. federal government’s official online guide to information and services. It includes a page with links to help you locate and apply for government grants and loans.
SCORE is the largest U.S. network of volunteer business mentors, with 300 chapters and 10,000 volunteers. SCORE mentors can help you develop a business plan and research financing opportunities. SCORE’s website includes resources to help you write a business plan and develop a financing plan.
Under the U.S. Department of Commerce, the Minority Business Development Agency (MBDA) promotes the growth of minority-owned businesses. To advance its mission, the MBDA supports a network of MDBA Business Centers around the country which provide entrepreneurs with access to expert assistance on securing financing and other business essentials. The MDBA’s website provides a search tool to help you find a Business Center near you, as well as a checklist of essential documents you will need to seek financing.
The USHCC promotes Hispanic businesses in the U.S. by serving as the umbrella for more than 200 local chapters. Many of these chapters work with local lenders to facilitate loans to Hispanic business owners. Becoming a member gives you access to the local chapters.
The Latino Coalition works with policymakers and stakeholders to promote the success of Hispanic businesses. They organize networking events that can be useful for connecting with financing resources. The organization’s website includes a link with news on upcoming events.
Explore Opportunities to Build Your Business
Financing opportunities for Hispanic business owners are abundant. These are just a few of the top resources available. If you’re seeking financing for your business, be sure to check out our small business loans, lines of credit and merchant cash advances.
Roy Rasmussen
Contributing Writer for Fast Capital 360
Roy is a respected, published author on topics including business coaching, small business management and business automation as well as an expert business plan writer and strategist.
