Small business loans and funding programs for Hispanics

6
October 2022

Starting and growing a business takes work for everyone. The stakes are high, and comfort is low, but the reward is to be your very own boss. It can be challenging for a Hispanic business owner. There are cultural, language, and even statistical barriers to getting through.

Despite being the fastest-growing demographic among entrepreneurs in the United States, Hispanic-owned businesses need help accessing capital. As a result of this lack of funding, numerous organizations and government agencies have assisted Hispanic and minority business owners with loans, grants, and other financing options.

However, with the rise of alternative business financing, small business owners now have more options to consider. The key is knowing where to look. This article will explain some challenges Hispanic business owners must understand and small business loans for Hispanics, among other business funding alternatives.

How do I get access to business funding?

Acquiring business capital will depend on your finances and the ability to navigate the processes and business funding requirements. Traditional funding options such as term loans, SBA loans, credit cards, and credit lines are usually challenging. Statistically, Hispanic business owners have a harder time than the general population acquiring business financing. 

For example, a Stanford Business Study showed that in 2019, Latinos applied for financing: "28% of Latino business owners end up with funding, vs. 48% of general populous business owners". Despite the language barriers and the funding gaps, Latino entrepreneurs have started small businesses at a higher rate than any other demographic.

We are not discussing the challenges the Hispanic business owners faced to discourage you. On the contrary, we believe every entrepreneur should have the same possibilities and access to fast working capital. In the following sections, we will review small business loan options for Hispanic entrepreneurs.

Five small business loans for Hispanics

Hispanic and Latino entrepreneurs generate jobs, revenue growth, and national cultural diversity. Their importance in our national economy is underrated, and they have undergone many challenges on their way to success. The following funding resources can facilitate access to business loans and other funding programs for Hispanic business owners:

SBA programs and micro-loans

Hispanic-owned small businesses were awarded more than $2.7 billion in funding from the SBA this 2021. There are multiple financial resources aimed at boosting business growth nationwide. If your business qualifies for an SBA-guaranteed loan, it could receive competitive terms and lower down payments. Let's get a grasp on some available options:

  • 504 Loan Program: If you strictly need funds to purchase land or equipment for your business, this program works with certified development companies (CDC) to guarantee up to 40% of the asset's value. You'll need to provide a personal guarantee and meet other 504 Loan eligibility requirements.

  • Microloan Program: This funding opportunity wants to help entrepreneurs grow and start their businesses by providing modest loans of up to $35,000. Funding comes directly from the SBA and is administered through local and non-profit intermediaries.

  • The SBA 8(a) Program: This program limits at least 5% of its contract to businesses that qualify as economically disadvantaged.

Community Development Financial Institutions (CDFI)

CDFI-certified entities provide financial aid and service to communities with trouble accessing funds or generating low income. In addition, their nationwide network offers a wide variety of opportunities for Hispanic-owned businesses and entrepreneurs to grow their businesses.

The first step to qualify for this working capital, network, and mentoring opportunities is to get a CDFI Certification that meets several requirements, among them being a financing entity with a primary mission of promoting community development. You can check more details at the official CDFI site.

Other official and privately-owned Minority-owned business certifications can give you access to federal aid and private grants! If you're curious about the options and eligibility requirements, you can find more information in our Minority-owned business certification guide.

Merchant Cash Advances

If you're looking for a funding alternative based on your business's potential and success and doesn't require a perfect credit score, then a Merchant Cash Advance (or MCA for short) could be a great choice.

An MCA is an advance on your anticipated future revenue and is paid back with an automated withdrawal from your business account. The amount is typically a set percentage of income based on a set time and depends on the success of your business, facilitating the repayment period through slow business cycles.

One Park Financials' funding programs are ideal for eager entrepreneurs with poor credit scores but excellent performing businesses. You can check if you pre-qualify for one of our fast-working capital programs if your company has been open for at least three months and generates a monthly income of $7,500.

Invoice factoring

Another alternative funding option for Hispanic entrepreneurs is selling unpaid invoices (or receivables) to a third-party factoring company. Through invoice factoring, the factoring company collects payment directly from your customers.

Eligibility requirements vary depending on the factoring company, but funding payments typically take place in two parts. The business receives the first part of the funding when you reach an agreement. You receive the second part when the company collects payment from its clients. To get a step-by-step guide on this process, check out how invoice factoring works.

Grant resources

Unlike other funding options, a grant doesn't require repayment, but you often must go through a challenging selection process to stand out from the rest of the candidates. Below are the best options aimed at Hispanic business owners and Minority-owned businesses. While we do not work with business grants, we encourage you to try. Here are four different grant programs you could apply to:

  • Candid.org is one of the most popular non-federal grant finders looking for corporate, community-sponsored, and private grants.

  • Business Consortium Fund is for businesses has been officially certified as a minority under the National Minority Supplier Development Council. You can obtain grants through this strategic support network.

  • Hispanic Chamber of Commerce is an entity that offers mentorships, workshops, and grant opportunities from up to $5,000-$15,000 from their affiliated local chambers.

  • The National Association for the Self-employed: If you qualify as a member of a NASE, you can get up to $4,000 in grant opportunities.

  • Powering Up LatinX Business: Offers $5,000 in grants and coaching support to 500 eligible Latin-owned small businesses in Texas, New York, and California.

The Hispanic community doesn't fall behind in being at the forefront of entrepreneurship in the US. This powerful force owns 4.4 million businesses nationwide and generates $700 billion in revenue annually

Whatever funding option works for your business, don't be afraid to step out of your comfort zone to search for the fast working capital you deserve!

At One Park Financial, we are committed to helping Hispanic business owners fulfill their business goals. The first step is filling out our online form. Once you pre-qualify, we will connect you with a financing expert with whom you can assess the needs of your business and determine the best financing options for your venture. One Park Financial will work with its financial partners to get you an offer. Dare to finance your dreams today!

Disclaimer: The content of this post has been prepared for informational purposes only. It is not intended to provide and should not be relied on for tax, legal, or accounting advice. Consult with your tax, legal, and accounting advisor before engaging in any transaction.