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Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. SHARE: FG trade/Getty Images September 01, 2022 Melissa Brock Mariah Ackary is a personal finance editor who joined the Bankrate team in 2019, excited by the opportunity to help people make good financial decisions. Send your questions to Bankrate logo

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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Small businesses have taken a hit over the last few years—from the pandemic to supply chain complications to inflation—and Latino-owned businesses were no exception. Still, up to 4 million Latino workers in the U.S. are considering starting new businesses, according to a June 2022 by QuickBooks. If you fall into this camp, read the personal experience and practical advice of business owners in this guide to starting a business as a Latino entrepreneur.

Starting a business from scratch

Claudia Ramos, a graphic designer and illustrator from Los Angeles, dreams of turning her side business, , into a full-time gig. Her dreams are specific: She’d like to see her work and that of other Latina artists sold in her very own shop. Ramos, who was born in El Salvador, currently works for Hasbro as a fashion graphic designer by day and (after her seven-year-old daughter goes to bed) on her side business by night. In 2013, the company where Ramos worked, American Greetings, closed its L.A. office. It was a turning point for her as she considered her next steps. “I thought, ‘Oh, my gosh. What am I going to do?’” she said. Ramos quickly realized that she could rely on her creativity, something she’d capitalized on since she was a young girl. Ramos began challenging herself. “A friend asked me to illustrate a save-the-date postcard for her wedding, and I said, ‘OK…’” Soon after, Ramos’ designs were featured in a wedding magazine, and she opened her Etsy shop. “It all started using my own money,” she says. “It’s all been out of my own pocket. I’ve never reached out for anyone to sponsor me or reached out to a bank for a loan.” Ramos’ entrepreneurial spirit is common among the Latino population in the U.S. Latinos, who comprise 19 percent of the U.S. population according to the U.S. Census Bureau, are starting businesses at a faster rate than all other demographic groups, a 2021 by Stanford University found. Over the last decade, the number of Latino-owned businesses grew 44 percent compared to 4 percent for all other business owners.

The importance of Latino entrepreneurs

Though they face constraints, Latino entrepreneurs make important contributions to the economy, generating in 2019 alone. Their companies also account for 6 percent of all U.S. businesses. In total, the number of Latino business owners has grown 34 percent since 2000, while revenues . On a larger scale, Latino people are to start a business than other ethnic groups. In 2018, about 0.51 percent of Hispanics started a business. Just 0.33 percent of Asian people, 0.29 percent of white people and 0.24 percent of Black people did over the same period. Younger Latinos are also making an impact. According to the , 5 percent of DACA recipients under 25 have started a small business, and 8 percent of Dreamers over 25 are entrepreneurs and employers.

Financial challenges as a Latino entrepreneur

“I feel like I’m not making a lot, but I feel like I have to learn more marketing strategies,” Ramos said, noting that social media—Instagram in particular—has changed since she first started her business in 2013. “A lot of people don’t see you on Instagram unless you have 5,000 followers. It’s all about numbers. I’ve been giving out giveaways, and I haven’t been selling that much.” There are a few concrete reasons why most Latino-owned businesses remain small, and Mary Vazquez, community advocate for Point West Credit Union in Portland, Oregon, has seen them all: Collateral required: Requiring borrowers to provide collateral, such as a home or a car, is a common lending practice. However, the Stanford Business Survey found that Latinos are required to offer more collateral than white business owners, despite both groups having good credit scores on average. Lack of awareness of funding sources: Many Latinos tend to resist seeking outside funding, including venture capital or angel investors. The Small Business Administration offers loans and grants, but statistics show that Latino entrepreneurs apply for these at lower rates than they do national bank loans. Lack of traditional identification: Banks do not often offer products or services to people with Individual Taxpayer Identification Numbers (ITINs), which are tax-processing numbers issued by the Internal Revenue Service for those who do not have a Social Security number. Language barriers: Low literacy and English proficiency can be a root cause of Latinos not accessing banks or other financial institutions. Lack of bank services: Often, banks or other financial institutions lack services to help Latino entrepreneurs, including linguistically appropriate services. Foreign-born entrepreneurs are also more likely to be denied bank loans. Fear and mistrust of the government and established institutions: Culturally, community and family are important to this demographic, and it’s an easier leap for many Latinos to borrow from family or friends before approaching financial institutions for funding. The solutions to many of these financial barriers start with accessible financial education. “They need to find a personal coach that can assist them with any of their questions without them feeling like they’ll be rejected or a bother to those institutions,” Vazquez said of the Latinos in her Portland community. “We see those stories every day.” In 2007, Vazquez was the only Spanish-speaking teller at Point West, but today, almost half the staff at Point West is bilingual and bicultural. She recalls a client, Sara Rodriguez, who felt comfortable with Vazquez because of her Spanish-speaking ability. Vazquez suggested Rodriguez open a business using the credit union’s help. A stay-at-home mom of four, Rodriguez had no credit and no Social Security number. She did have an ITIN, so Point West issued Rodriguez a $500 loan to pay for permits and ingredients to start her tamale cart, Sara’s Tamales. Over time, Rodriguez received two additional microloans from Point West. Vazquez points to Rodriguez’s story as a victory and says other credit unions should follow suit. “We actually renovated our website and it’s bilingual, in Spanish and English. Thirty percent of our staff members speak Spanish. Our call center is Spanish-speaking, and we’re one of the few, if not the only one in Oregon, who does ITINs,” she said.

Funding your business as a Latino entrepreneur

Next year, Claudia Ramos plans to attend the #WeAllGrow Latina summit to help her answer questions about what’s been elusive in the success of her business. “[The business owners at the conference] have the same goals: To grow and help each other. With what’s going on politically, it’s what we have to do to help each other,” Ramos said. “It’s part of our culture, too. To start my own little shop, I would feel more comfortable going to my family. Family is always there for you.” She recalls a time when her cousin needed help funding a surgery, and she and her family members all chipped in to help. It’s the same with starting a business,” Ramos explained. “You lean on family and friends before the bank.” Vazquez, whose own family is from Mexico, agrees. “Many times, I’ve seen personally and professionally how the Latino community is always asking friends and family questions about finances. If they have an idea for a business, they always ask a family member or a friend; they never really ask professionals,” she said. “They’re scared of being rejected, or they feel they don’t have the right to explore other options.” She says that it can be a frightening prospect, particularly for those from another country, to dive into the complex process of obtaining funding.

Considering your funding options

While asking family and friends is often a more appealing option for Latino entrepreneurs, taking the risk of getting funding from a financial institution can help set up your business for success. A list of pros and cons for various funding options is listed below. Note that regardless of legal status, Latinos can use the business name and number (EIN) to access business credit without having to disclose immigration status.

Business loans

This type of loan is specifically intended for a business purpose. Banks, credit unions, and microloan programs can all be business loan options. Pros: usually have lower interest rates, and using a business loan rather than a personal loan separates personal and business finances. Cons: You must qualify for any type of business loan, and requirements vary. Most business loans require a high credit score.

Crowdfunding

You can set up an online campaign through a site like to raise money from a variety of people. Pros: Crowdfunding is low risk, and you can tap into a larger audience via social media. Cons: Marketing is imperative; you have to deliver what you’ve promised to backers and there is often a crowdfunding platform fee.

Angel investors

Individual financial backers who provide private capital for small or large businesses are known as angel investors. Pros: The money provided isn’t a loan; angel investors typically have lots of experience in your business of choice (they’re often established entrepreneurs themselves). Cons: Any equity you build will partially go to your angel investors, who expect to make money and help make business decisions.

Venture capitalists VCs

Venture capitalism refers to a person or firm that invests in small companies using money pooled from investment companies, large corporations and pension funds. Pros: Venture capital can help your business grow quickly, offer business expertise and provide support with legal and tax matters, among other areas. Cons: VCs expect to make money and often intend to make decisions about your business.

Small-business grants

Small-business grants can be money given to a person, business or corporation from federal, state, county or local governments or private businesses or corporations. Pros: Grants do not need to be repaid and are easy to find online. Cons: Paperwork is time-consuming, there is tough competition, eligibility is strict and there are also specific rules you have to follow.

Specialty lenders

Friends and family are some examples of specialty lenders. Pros: Friends and family trust you and care about your success. Cons: You could lose money and jeopardize a valuable relationship. Always be sure to document the family member or friend’s role in the business.

Credit cards

A could be a great way to boost the buying power of a business. A credit card gives business owners access to a revolving line of credit to withdraw cash and make purchases—as long as it’s used wisely. Plus, you can earn rewards like just for using the card. Some tips for using business credit cards include setting spending limits, watching for any strange transactions and being careful with large expenditures. Also, keep in mind that interest rates are often higher for credit cards than many other sources of funding, including business loans. Pros: It’s easier and more convenient to qualify for a credit card, you can earn rewards and you can build credit. Credit cards also give you a financial cushion when accounts receivables are behind. Cons: Credit cards have higher (and fluctuating) interest rates, and business cards offer less protection compared to consumer credit cards.

Credit unions and business loans

One demographic-specific option is to access a Latino credit union such as Point West in Portland. Latino credit unions allow applicants to provide foreign identification, offer English and Spanish materials, financial education services and are able to focus on serving local Latino communities. “You don’t have to have a Social Security number to bank or get a loan with us. That’s the promise we’ve made to our community,” said Vasquez. “Everyone who comes to our door receives the same service or rates. It’s based on your credit.” Many Latino credit unions offer the same promise. Here’s a complete guide to Latino credit unions across the U.S.: State Latino credit unions Arizona MariSol Federal Credit Union Vantage West Credit Union California Community First Credit Union Kern Federal Credit Union Kinecta Federal Credit Union Santa Cruz Community Credit Union SCE Federal Credit Union Self-Help Federal Credit Union Travis Credit Union Colorado Fitzsimons Credit Union Partner Colorado Credit Union Connecticut Members Credit Union Nutmeg State Financial Credit Union Florida JetStream Federal Credit Union Manatee Community Federal Credit Union Self-Help Federal Credit Union Suncoast Credit Union Idaho Idaho Central Credit Union Illinois Illiana Financial Credit Union Self-Help Federal Credit Union Indiana Financial Center First Credit Union Notre Dame Federal Credit Union Iowa Ascentra Credit Union Community 1st Credit Union Des Moines Metro Credit Union Kansas Azura Credit Union Massachusetts Metro Credit Union Michigan Community Promise Federal Credit Union Missouri Holy Rosary Credit Union New Jersey 1st Bergen Federal Credit Union New Mexico Guadalupe Credit Union Rio Grande Credit Union New York Brooklyn Cooperative Genesee Co-op Federal Credit Union Lower East Side People’s Federal Credit Union Neighborhood Trust Federal Credit Union North Carolina Latino Community Credit Union Ohio Nueva Esperanza Community Credit Union Oklahoma Weokie Credit Union True Sky Credit Union Oregon Point West Credit Union Texas Amarillo Credit Union Beacon Federal Credit Union Border Federal Credit Union Caprock Federal Credit Union Coastal Community Federal Credit Union Community Resource Credit Union DATCU Credit Union EECU First Central Credit Union FirstLight Federal Credit Union GECU Generations Federal Credit Union La Joya Area Federal Credit Union Neighborhood Credit Union North East Texas Credit Union One Source Federal Credit Union People’s Trust Federal Credit Union Randolph-Brooks Federal Credit Union Resource One Credit Union River City Federal Credit Union Security First Credit Union Security Service Federal Credit Union Shared Resources Credit Union Shell Federal Credit Union Southwest 66 Credit Union Space City Credit Union TexasAlliance Credit Union Unity One Federal Credit Union Velocity Credit Union Utah City Center Credit Union Washington Lower Valley Credit Union Seattle Metropolitan Credit Union Wisconsin Marine Credit Union

Latino and minority business grants

Latino and minority business grants are another way to fund a business, and a local Hispanic Chamber of Commerce is one place to start. For example, the Hispanic Chamber of Commerce of Metropolitan St. Louis showcases a list of grants on its website. Business owners can also research grants online using the following links:

Dreams for the future

Ramos never stops thinking about her someday shop. “That’s my dream and I’m going to keep working hard to get to that point. In my situation, I’m the breadwinner. I’m the only one who’s making money right now. I don’t have the luxury to concentrate on doing this full-time.” According to Vazquez, Latinos have more opportunities in business than ever before. Vazquez will tell anyone that the door to Point West is always open, and Vazquez herself can often be found greeting anyone who comes through the credit union’s entrance. “Even if you aren’t a citizen, you’re all welcome to come here,” she said.

Other resources

: Empowers the Hispanic community to realize its fullest potential and impact the world through STEM awareness, access, support and professional development. : The United States Hispanic Chamber of Commerce (USHCC) actively promotes the economic growth, development and interests of Hispanic-owned businesses. The USHCC advocates on behalf of 260 major American corporations and serves as the umbrella organization for more than 200 local chambers and business associations nationwide. : Prospanica offers annual career and professional development conferences and connects thousands of Hispanics to graduate programs, subject matter experts, corporations and each other. : In addition to offering networking and professional leadership development opportunities, ALPFA aspires to be the business partner of choice for companies seeking to hire and develop Latino talent. : Dreamers Ventures is a platform and multicity tour that brings knowledge, capital and access to opportunities to America’s fastest-growing entrepreneurial segment to turn their dreams into reality.

Resources for Latinas

: An investment resource specifically for women, Ellevest offers goal-based planning and saving, plus additional female-first advising services, including one-on-one career coaching and financial strategy. : Dynamic summits, career advice and mentoring, educational programs and access to supportive and influential networks drive the Latinas Think Big Network. : LULAC is a part of the Women’s Empowerment (WE) Initiative designed to train, motivate and inspire women—especially those of Hispanic descent—to build their own businesses or enhance their existing ones. : #WeAllGrow Latina connects a community with opportunities for growth. A network of digital influencers, hyperlocal events and an annual summit propel growth through brand partnerships and community development. SHARE: Melissa Brock Mariah Ackary is a personal finance editor who joined the Bankrate team in 2019, excited by the opportunity to help people make good financial decisions. Send your questions to

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