I recently discussed the state of entrepreneurship with former SBA Chief Hector Barreto, who led the agency from 2001 to 2006 and is now the chairman of The Latino Coalition.
"Capital is the oxygen that small businesses need to grow," said Barreto, who believes that many young Latino entrepreneurs don't have much experience with how the banking system works. "The process can be daunting, and sometimes it takes numerous attempts to secure funding. Being able to access capital is of critical importance for the long-term growth of any company."
I have heard firsthand that the process of applying for small-business loans can be very intimidating for Latinos and other ethnic groups. Language skills and culture barriers come into play. Fortunately, the SBA provides a number of resources that can help, including links to Minority Business Development Centers, Small Business Development Centers (Centros de Desarrollo Empresarial) and the agency's 8(a) Business Development Program, which helps socially and economically disadvantaged individuals through a wide range of assistance programs. This information is available in both English and Spanish.
The good news is that increasing percentages of the Latino population are native-born, have grown up speaking English, and may not face some of the language and cultural hurdles that hinder their parents and grandparents. Small-business ownership is a stepping stone for the advancement of any ethnic group. As their numbers and experience increase, lenders would be wise—and indeed will profit from—making funding decisions that help fuel Latino entrepreneurship.
—By Rohit Arora, CEO of Biz2Credit, a small-business lending marketplace that publishes the Small Business Lending Index, followed by the SBA and the President's Council of Economic Advisors