Karen Mills, chief administrator with the Small Business Administration, said on Tuesday that a new pilot program by the SBA and the U.S. Hispanic Chamber of Commerce will help connect local lenders with Hispanic business owners.
Combining resources will generate new opportunities for Hispanic entrepreneurs, as well as "drive competitiveness and innovation, and strengthen our economic recovery and growth," Mills said in a statement.
Latinos can visit offices in Texas, Tennessee, Pennsylvania, Florida, California, Ohio, and Utah, to obtain financial and business counseling under the new program.
Hispanic-owned businesses launch at twice the rate of the national average, yet these enterprises tend to remain small and have fewer people on their payrolls, partly because it's hard for them to obtain commercial bank loans.
"Latino businesses are looking to build something that will grow and grow. They want to have something to leave behind to generations," said Roberto Barragan, president and CEO of the Valley Economic Development Center in Van Nuys, Calif.
Barragan, who spoke to a group of business leaders, bankers, and economists at the U.S. Hispanic Chamber of Commerce in Los Angeles on Monday, said many Hispanic business owners are frustrated that while financial capital is available to middle and large firms, it is still difficult for small enterprises to access loans.
Part of the reason is the lingering effects of the Great Recession. Many banks have switched from collateral lending to cash-flow lending, an approach that considers sales receipts and profits from the past three to four years. "Most businesses' cash flow is still down," Barragan noted.
"Banks can't lend in this post-financial crisis," he added.
Getting access to capital can mean the difference between only a handful of workers -- or 50. For areas with high unemployment rates, such as Los Angeles where the jobless rate is 12 percent, the current practice "just doesn't do the job," Barragan said.
Mills said the SBA has provided Latino businesses with an estimated $4.4 billion in SBA-backed loans since 2009, of which $1 billion were secured in 2012 alone.
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