Today more than one million small businesses owners in the United States face both a wide range of opportunities and a unique set of challenges.
A recent TD Bank survey of 128 Hispanic small business owners throughout the United States identified management confidence and how funds are allocated as the top two challenges among this group. There are many factors driving these sentiments, such as being responsible for managing a business and not knowing the best resources to utilize.
Access to capital is another important area of concern. The United States Hispanic Chamber of Commerce (USHCC) announced a partnership with Small Business Community Capital (SBCC). The partnership is a capital initiative to invest in small businesses throughout the U.S., thus allowing Hispanic small business owners easier access to capital. Other organizations, such as the Greater Philadelphia Hispanic Chamber of Commerce have previously stated that the language barriers and lack of financial education were also contributing factors.
As such, lenders have begun recognizing the need for greater credit access. The Federal Reserve Bank of New York's 2015 Small Business Credit Survey shows that 38 percent of small business owners received all of the financing they applied for in 2014, and 45 percent received all of the financing they applied for in 2015. Furthermore, 81 percent of applicants received at least some form of financing in 2015, compared to 65 percent the year prior. Lastly, applying for financing, loans and lines of credit were the most sought-after products (89 percent).
A softening credit market is particularly good news for Hispanic-owned small businesses seeking financing: TD Bank's data shows that 19 percent of the Hispanic population uses a credit card that is solely for business use, in comparison to the 24 percent of non-Hispanic small business owners that use a credit card to solely fund their business ventures. With that in mind, 57 percent of Hispanic small business owners use a credit card that serves for both business and personal use; whereas the 53 percent of non-Hispanic small business owners use credit cards for personal and business use. This increase demonstrates the need for Hispanic small business owners to have access to capital that is not tied to personal finances.
To capitalize on these opportunities, Hispanic small businesses should not only speak with a trusted, established lender, but also carefully examine the public resources available to them to help inform their strategies and decisions:
1) Minority Business Development Agency (MDBA): Aims to connect minority small business owners to the appropriate resources to help them succeed. The organization offers access to financial literacy programs, one-on-one courses, and various training programs. Under the MDBA's Business Education portion of the website, they provide a section titled, "Financing Your Business". This section provides articles and free training resources for small business owners.
2) Small Business Development Center (SBDC): Serves a regionally focused branch of the U.S. Small Business Association (SBA). Offers, at no cost, full-time professional consultants who provide guidance on how to start and grow your business. The SBDC places a particular emphasis on consulting and training services to women, veterans, people with special needs, and minority clients. The SBA's website is also available in the Spanish language to accommodate non-English speakers (click here for more information).
3) 8(a) Business Development Program: The program is offered by the Small Business Association (SBA) to help small, disadvantaged businesses gain access to resources to compete in the marketplace. Businesses must apply to be considered; it is free to apply for the program, but business owners must provide accurate financial statements from the past three years. Upon enrollment, participants will receive support from the SBA regional offices on business plans, annual reviews, and various systematic evaluations.
4) Operation HOPE Small Business Empowerment Program: The program aims to support entrepreneurs and small business owners in low-income areas to establish their businesses through various training and financial counseling courses. With partnerships throughout 25 direct lenders nationwide, Operation HOPE Small Business Empowerment Program allows minority business-owners to have easier access to securing loans, along with training, business services and resources. The website can also be translated in Spanish for non-English speakers (click here for more information).
While there is no question that starting a small business can be challenging, the available resources and opportunities have furthered the efforts of thousands of small businesses today. As our country's economy continues improving, so too should the opportunities for Hispanic small business owners to pursue their passions and continue our city's strong entrepreneurial culture.