business

Despite Latinx Business Boom, Hispanic Entrepreneurs Face Challenges in Funding and Support

When it came to setting up his flagship retail location featuring clothing designs inspired by his Hispanic upbringing, artist Tony Peralta was happy to set up in New York City's neighborhood of Inwood.

"Washington Heights and Inwood is a place where if you're Dominican, and you live outside of here, if you live in Jersey, or you live in Queens, it's where you come to get that culture that's familiar to you back home," he explained.

The second-generation Dominican-American — the first child born in the U.S. to immigrant parents — explained the world in upper Manhattan is unlike any other place in New York. For one thing, it's become an enclave for Hispanics to run their own businesses and provide opportunities for their fellow Latinx people.

"A lot of people that work in restaurants up here might have a really hard time just going down south of 96th Street to get a job because they don't speak the language, right?" he said. "Or they might not have a degree or whatever it is, right? So up here, it's just like, we kind of take care of our own."

Across town in the South Bronx, Oaxacan restaurant La Morena focuses on giving back. Whether it's dedicating their space and resources to making soups and other dishes for local food pantries or promoting FAMALAM, an organization focused on donating fresh produce and accessible literature to marginalized peoples, community liaison Yajaira Saavedra said it's important to help their fellow residents. 

"As undocumented people, we know what it is to be marginalized or left out," Saavedra said. "So, therefore, we're taking a step back and saying, hold those state laws. We don't need any organizations. We don't need no white savior. We're going to help us." 

Growing Number of Hispanic Entrepreneurs

Over the last decade, the number of Hispanic business owners increased 34 percent compared to 1 percent for all other owners, according to research from Stanford University, citing IPUMS. But they face additional challenges that other groups may not have to consider.

Immigration status and language barriers can cause extra wrinkles. It means things like applying for loans becomes virtually impossible, especially for undocumented families like Saavedra's. Even though her family's restaurant — which has been recognized by the Michelin Guide as a Bib Gourmand establishment — has paid taxes for more than a decade, they found it difficult to get aid during the pandemic.

"You're seen as a second-class citizen and treated as such, so we had all odds against us," Saavedra said. "It was also the fact that this is one of the poorest boroughs. Also, you have all this segregated racism that it's against us historically."

Part of the reason her mother Natalia Méndez started the establishment was to ensure employment opportunities for themselves, as well as other Hispanic people. 
"It is very difficult to start a business, especially if we are undocumented, but the main reason is because we can tell everyone, like our family or undocumented people, that we can work, period," she said. "And, luckily we have work every day."

Challenges for Hispanic Business Owners

Funding remains an issue for those who want to start something of their own. About 51 percent of Latinos receive business loans versus 77 percent of their white counterparts, according to the Stanford study. One out of five Hispanics that applied for national bank loans for over $100,000 were able to secure them, compared to 50 percent of white-owned businesses.

"I have first-hand seen examples of small business owners, Spanish-speaking recent immigrants — incredibly hardworking, talented people," said CrediVerso.com CEO Carlos Hernández. "But they didn't know how to access small business loans and had no way to find information about small business loans and ended up having to close shop because they didn't have that same level of access to take it for granted in the general community here in the U.S."

Hernández's fintech startup is focused on helping Hispanic people with financial products, from getting credit cards to small business loans. About 43 million people in the United States, or 13 percent of the population, speak Spanish as a first language, according to Babbel.

"We are the first and only place where you can get a credit check in Spanish in the country, which, in 2021, if you can still believe that's the case, it kind of just speaks to how financial institutions have approached this population historically," he said. 
After the interview, credit bureau Equifax announced it will offer credit reports in Spanish.

Part of the issue is cultural, he points out. Many Latinx immigrants aren't used to trusting banks.

"Folks who move here from countries with less than perfect records of political and economic stability have big trust issues with where they keep their money, what it means to take out a loan, whether they should trust financial institutions," Hernández said.

But it is important for Hispanic businesses to succeed if America truly is the place where dreams come true for people who are willing to work for it.

"I think Hispanics, Latinos, we're the ones that [are] still upholding the concept of the American dream, right?" Peralta said. "I can only speak from our experience. So I can't talk about other immigrants, right? But I see that what we do is just like folks really come here, and they work really hard, and they do all the jobs that other folks don't want to do." 
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