Summary
This spotlight on an NCRC member's work is part of the Just Economy Solutions Hub. See more at NCRC.org/solutions!
NCRC seeks to explore the impact of small business and technical assistance education models supporting the growth of businesses owned by people of color. With support from Block, Inc., NCRC identified small business education models in the areas of entrepreneurship incubation among women owners of color; community capital resource navigation for Hispanic immigrants, and market access through procurement for Black-owned businesses.
The output of this work can be found at the Just Economy Solutions Hub which has been designed to share tools, resources and promising practices that can strengthen entrepreneurial ecosystems.
Helping Rural Hispanic Entrepreneurs Navigate Tailored Capital Resources for Growth
The Record Growth of Hispanic Entrepreneurs
Latino-owned businesses (LOBs) are the fastest growing segment of the US business population and are becoming a major economic engine, according to the Annual State of Latino Entrepreneurship report. In recent years, LOBs have outpaced the growth rates of both White-owned businesses (WOBs) and US businesses in general, as measured by both number of businesses and amount of revenue. Between 2007 and 2019 for example, the number of LOBs grew by 34% while WOBs experienced a 7% drop. In this same time period, the combined annual payroll of LOBs grew over twice as fast as that of White-owned businesses. More recently, the percentage of Latino-owned businesses reporting business-to-business sales almost doubled from 20% in 2020 to 38% in 2022. Overall, almost one-quarter of LOBs surveyed said they are doing better than before the pandemic, compared with less than one-fifth of White-owned businesses.
Capital Readiness through Capital Resource Navigation
With one in every three Latino-owned businesses seeking financing in 2022, access to capital is a critical component to ensuring new businesses thrive and existing businesses continue to grow. Communities and resource providers are championing access-to-capital models that make it easier for these businesses to find and acquire the money they need to grow, including the enhancement of existing “hub and spoke” resource models.
According to the Small Business Administration (SBA), the Hub and Spoke approach features a lead non-profit – a “hub” – at the center of a network of “spoke” organizations that deploy trusted messengers to work with businesses in targeted communities. These networks combine the business development expertise of the central hub organization with the community credibility of the partner organization spokes to better connect business owners in targeted communities with critical services and assistance programs.
In 2022, the United States Hispanic Chamber of Commerce was awarded one of eight SBA Community Navigator Pilot Programs, which is modeled upon a hub and spoke approach. The El Paso Hispanic Chamber of Commerce (EPHCC) is one of five partners tasked with providing technical assistance to businesses within their service area. Leveraging existing programs and resources and working in partnership with the SBA, EPHCC will provide businesses with the necessary tools to achieve their goals, financial packaging assistance, technical assistance to contractors regarding small business certifications, marketing and outreach information, virtual trainings and business referrals, including mobile business consulting and training on the road to meet with businesses across their service area.
El Paso Hispanic Chamber Community Navigators Program
Guided by its core pillars of data, engagement and relationship building, the mission of the El Paso Hispanic Chamber of Commerce (EPHCC) is a pre-eminent resource for business and the leading advocate in supporting the growth of the El Paso Border Metroplex. Its Community Navigators Pilot Program is providing greater opportunities to connect businesses to the resources needed to thrive.
Addressing the Challenge:
Challenges to small business access to capital are complex and systemic in nature. The pandemic has only brought these structural barriers to light, causing stakeholders to reassess how it is supporting and financing underserved small businesses. There are demographic and socio-economic differences in how small businesses access credit and Hispanics are no strangers to barriers to access.
There is a lack of relationship with traditional banks for Hispanic entrepreneurs. One survey conducted by the US Office of Economic Development found that out of 1,500 respondents, only 11% had a relationship with a traditional bank. Cultural and language barriers are preventing Hispanic entrepreneurs from accessing debt capital. As many as 84% of small businesses in the city need financial service resources translated.
There is also limited and often under-resourced rural infrastructure to respond to the needs of Hispanic entrepreneurs. There is a particular lack of service providers for Latino-immigrant entrepreneurs, who experience the greatest disparities in wealth and therefore are among the communities who can least afford to be hindered from the promise of wealth-building through entrepreneurship. Access to funding, to talent and to digital connection plague rural communities in places where investment is similarly limited.
It also is well documented the challenges facing Hispanic-owned businesses when applying for federal, state and local funding as well as private financing. The Stanford Latino Entrepreneurship Report notes that LOBs are 50% more likely to request financing. Yet LOBs have lower approval rates for loans, despite exhibiting stronger business metrics than WOBs. The Federal Reserve’s Small Business Credit Survey reveals stark disparities year-to-year of capital access and financial health for Latino entrepreneurs, noting 64% of Latino owners using personal funds to mitigate financial hardship and Hispanic borrowers less likely to receive pandemic-related financial assistance. These businesses tap into their own savings accounts and friends and family networks to start their businesses.
Program Overview:
The El Paso Hispanic Chamber of Commerce has several programs that have provided pandemic relief services for minority, women and veteran-owned Hispanic businesses; conducted virtual and in-person training; and business consultations that support business and job growth goals.
Championing Programmatic Innovation:
- Partner with SBA/MBDA via Regional “Hub and Spoke” Models
The offerings of The El Paso Hispanic Chamber of Commerce have been amplified with a recent $5 million investment awarded to the United States Hispanic Chamber – the “hub” institution of which the El Paso Hispanic Chamber is one of five spokes. The SBA Community Navigator Pilot Program has allocated this funding to help community groups and small business resource providers like the Hispanic Chamber to provide free services to help underserved communities navigate the SBA loan application process, find grant opportunities, receive bilingual technical assistance and understand the SBA’s programs and services. - Inclusive Engagement and Culturally-Sensitive Technical Assistance
The SBA Community Navigator Pilot Program has allocated this funding to help community groups and small business resource providers like the Hispanic Chamber to provide free services to help underserved communities navigate the SBA loan application process, find grant opportunities, receive bilingual technical assistance and guidance, training and understand the SBA’s programs and services.
- Outreaching Technology to Digital Deserts in Rural Areas
To accommodate businesses challenged in navigating the pandemic, the Hispanic Chamber has brokered partnerships with local and regional technology companies such as AT&T to extend technology services to businesses in deep rural areas of the region. These partnerships are providing necessary technology training and products to businesses as they navigate e-commerce. The Hispanic Chamber hopes to also utilize their headquarters location as a digital training hub, easily accessible to Latino entrepreneurs seeking flexibility in business education.
Achieving Wealth-Building Impact:
The Chamber prides itself on its ability to not only bring in a host of different small business clients to train and support business growth but also seek out those entrepreneurs who are unaware that these resources and support exist. The organization is helping to drive impact in the following areas:
- EPHCC’s Navigator Pilot Program has supported 2,058 businesses in capital readiness, grant and business development education, reporting over 12,406 counseling hours in the past 2 years. It has provided training to almost 8,000 small minority-, women- and Veteran-owned businesses. The Navigator staff has helped businesses submit more than $78 million in total financing requests.
Since 2003, the Hispanic Chamber has engaged and served 82,818 clients with business advisory and education and training services. It has helped connect clients to more than $1.8 billion in financing and more than $3.4 billion in contracting opportunities. It has served 42,210 start-up businesses which have created or retained more than 130,900 jobs in their community through EPHCC’s direct technical assistance.
Joshua Devine was NCRC’s Director of Racial Economic Equity.
Public domain photo via US Department of Agriculture.
