Big Dreams: The Triumphs and Challenges of Hispanic Small Businesses

Celebrated annually from September 15th to October 15th, Hispanic Heritage Month is a time to recognize and honor the profound impact of the Hispanic community in the United States. It's a month of festivities, cultural exhibitions, and a chance to reflect on the struggles and successes of the Hispanic business community and how we can better support its growth.

 

While we celebrate, let's shed light on the unique challenges and opportunities that small Hispanic businesses face, which are often at the heart of preserving and promoting this vibrant community.

 

Hispanic Small Businesses: A Cornerstone of the Community

 

Small businesses are the lifeblood of any community, and the Hispanic community is no exception. Hispanic entrepreneurs have long played a pivotal role in the economic development of the United States. 

 

According to the U.S. Small Business Administration (SBA), Hispanic businesses significantly contribute to the nation's economy. "America's more than five million Latino-owned small businesses create jobs, deliver over $800 billion to our economy every year, and add to our nation's global competitiveness—and they could do even more if we invested in them equitably," said SBA Administrator Isabella Casillas Guzman.

 

Jaime di Paulo, President & CEO of the Illinois Hispanic Chamber of Commerce (IHCC), the leading Hispanic business networking, advocacy, and development organization in the Midwest, has been working hard in that direction, bringing resources and networking opportunities to the Hispanic small business community.

 

Since 2019, the IHCC has boosted its support for small businesses in obtaining financial resources by 315%, resulting in a cumulative sum of $88.1 million awarded in contracts, business loans, grants, and more up to now. di Paulo says the secret to the IHCC's success is aiding Hispanic business owners in carefully defining needs and aligning with the right partners.

 

"Not every bank is suited for every business. For example, for new businesses, one of the biggest challenges with lending specifically is meeting the more traditional lending guidelines and criteria. And so, you have to find alternative ways to help. Understanding the client and the business need is step one in directing them to the right banking partner."

 

"That's why I truly appreciate the partnership with Old National; they are true partners of the Latino community. Because they are a mid-sized bank, they have more products to serve small businesses than the larger banks, so leveraging this relationship has been key in ensuring the success of smaller Hispanic firms."

A Small Business Success Story

Hispanic businesses encompass various industries, from restaurants and grocery stores to tech startups and service companies, such as the one founded by Jorge Pacheco, Apache Service and Supply Company. After many years of struggle, Apache Service and Supply Company today is an example of a small business success story. 

 

A defining moment for Pacheco was winning the contract to clean Barack Obama's 50th birthday party, an accomplishment he calls a "feather in his cap" due to the quality standards, high security, and background checks required. The company has now ballooned from a team of 15 to 500 employees throughout Chicago.

 

"I've been in business for 20 years, and I can honestly say that it's only been within the last six to seven years that I've finally been able to feel like I'm not behind the ball. I'm finally in the positive. I have cash flow and a solid reputation."'

 

Pacheco credits some of his recent success to working with financial institutions like Old National to grow his business. 

"Once I secured capital, I was able to scale my business, invest in equipment and people, and bid on larger, more profitable projects. Without capital, those things would have remained just dreams."

 

The Challenges Facing Small Hispanic Businesses

 

Hispanic business owners face unique challenges from other small businesses and identifying them can be an excellent first step towards overcoming them. 

 

Access to Capital: Many business owners cite access to capital as their number one challenge. As Pacheco notes, "Without access to capital, all your other plans are just dreams." Businesses may struggle to secure loans or funding due to a lack of collateral, credit history, or language barriers. According to the Latino Business Action Network (LBAN), the odds of loan approval from national banks are 60% lower for Latino-owned businesses, and they receive less than 2% of the available Venture Capital funding in the U.S. Some financial institutions are taking on the access to capital challenge head on. For example, Old National Bank launched the Empowerment Small Business Loan Program designed for minority-and-women-owned small businesses that may not normally qualify under traditional underwriting guidelines get access to capital.

 

This lack of access can make it difficult for small businesses to compete with larger companies, invest in marketing to acquire customers, hire staff, or implement technological advancements that could improve efficiency.

 

Workforce Issues:  A lack of access to capital can exacerbate other issues like hiring. When it comes to hiring qualified workers, 48% of business owners survey by LBAN report having issues attracting new employees. Businesses will find it hard to grow without the right talent. 

 

Regulatory Burdens: Navigating the complex web of local, state, and federal regulations can be overwhelming for any small business owner. Compliance costs, administrative burdens, and regulatory changes can pose significant challenges. A potential language barrier can further complicate the issue. 

 

Addressing the Challenges and Promoting Equitable Growth

 

Hispanic business owners play a crucial role in the American economy, and their potential for growth and success knows no bounds. Action is essential to navigate the challenges that come their way and propel their businesses to new heights. In this section, we'll explore a range of proactive steps Hispanic entrepreneurs can take to drive personal success and contribute to the Hispanic community during Hispanic Heritage Month and beyond.

 

Securing Capital: Business owners can begin by working with a local organization or bank to secure funding. For example, Old National offers SBA loans (Small Business Administration), which can be a lower barrier to entry for a loan. Make sure to work with a community financial advisor, whether that be someone from a local chamber of commerce or a community banker. 

 

Business Education: Accessible and affordable business education programs can empower Hispanic entrepreneurs with the skills and knowledge needed to succeed. Organizations like the Hispanic Association of Small Business and LBAN offer tailored educational programs for Hispanic and Latino business owners, covering business management, regulations, marketing, hiring, and financial planning. 

 

Community Advocacy: Hispanic business owners and their supporters can invest in the growth of the Hispanic community by supporting other Hispanic businesses. Consider working with Hispanic suppliers and collaborating with other Hispanic business owners and special interest organizations like HASB, LBAN, or local organizations.  

 

Hispanic Heritage Month is a time to celebrate the diverse and vibrant culture of the Hispanic community in the United States. It's also a moment to recognize the significant contributions of Hispanic small businesses to the nation's economy and cultural tapestry. 

 

With the proper support, resources, and determination, Hispanic business owners can overcome challenges and pave the way for a brighter future for themselves and their communities.

 

Connect with an Old National Small Business Banker for more insights to help your business grow.  Or, click here to learn more about the Empower Small Business Loan Program.