Vallarta grocery story in Canoga Park. The grocery chain, started in 1985, now employs 8,000 people and is
opening stores at a rate of three per year. (Photo: Wikimedia Commons)
The Small Business Administration (SBA) recently announced it is teaming up with the U.S. Hispanic Chamber of Commerce (USHCC) to launch a pilot program in eight states, California being one of them, to connect Hispanic entrepreneurs to local lenders.
“An economy built to last includes boosting entrepreneurship opportunities in Hispanic American communities,” said SBA Administrator Karen Mills in a statement. “Combining our resources with the U.S. Hispanic Chamber of Commerce will spur new business growth, drive competitiveness and innovation, and strengthen our economic recovery and growth.”
The partnership will launch programs designed to increase access to capital for Hispanic small businesses and provide owners and entrepreneurs counseling to help grow their business and create more jobs. The SBA also hopes to increase the Hispanic business community’s awareness of and participation in other SBA programs like the 8(a) program and the Women-Owned Small Program.
According the U.S. Census, Hispanic-owned small businesses are the fastest growing segment of that sector, growing nearly twice the rate of the national average. In California, Hispanic-owned businesses now account for nearly 17 percent of all businesses.
“The Hispanic-owned business sector is absolutely vital to the California economy,” said Mark Martinez, President of the California Hispanic Chamber of Commerce. “But if you limit their opportunity for growth by not being able to access capital, you limit the opportunity to grow the California economy.”
Financial capital has been increasingly hard to come by since the beginning of the economic downturn four years ago, disproportionately impacting Hispanic entrepreneurs. According to Martinez, Hispanic small business owners tend to use their home as collateral for startup capital. The steep drop in property values has made securing funding to either start or maintain a business even more challenging.
Access to working capital can mean the difference between success and failure of a new business. Maintaining or expanding an operation is heavily dependent upon a flexible flow of cash.
“The fast growing Latino population is a growing force in California business,” said Glenda Humiston, Action Team Leader for the Access to Capital Signature Initiative of the California Economic Summit. “Helping Latino owned businesses succeed is critical if California is going to rebound and thrive economically. This program is an excellent example of how government can potentially help these private businesses develop and prosper.”
Although the credit market remains tight in California, this new program should prove vital to the future of the California economy by removing barriers and promoting of awareness around access to capital for the booming Hispanic business community.