The following article is courtesy of Camino Financial.
The Latino population in the United States surpasses 60.6 million people, according to U.S. Census Bureau figures, which makes them a fundamental part of the economic engine that drives the country. There are currently about 4.65 million Latino-owned small businesses, according to The Hispanic Small Business Report.
The Stanford Graduate School of Business confirms that the number of Latino entrepreneurship has grown faster (34%) than that of other U.S. populations. All of these great numbers are possible despite the obstacles Latinos face in obtaining financing.
According to the 2017 Small Business Credit Study, 45% of Latinos denied credit were because of bad credit history and 37% because of low credit scores. Faced with this scenario, Latino business owners are opting for financing alternatives such as ITINloans (loans without a social security number) to obtain the capital needed to establish their businesses and achieve their financial and personal goals.
Tips what every Latino should know
Latinos are characterized by their warmth and solidarity, especially towards their family and community. This allows them to more accessible sources of financing from friends and family. They are also savers; it is enough to mention that 70% of Latino entrepreneurs in the United States are financed with personal savings. This practice is natural, especially if we consider that only 20% of the Latinos who applied for commercial loans in banking institutions were successful.
To have their own business is the dream of many Latinos who want to enhance and promote their culture. It also makes them feel closer to home, and that effort is evident in quality and service. Don’t let the lack of capital limit this dream. Take into account these recommendations to access financing through your ITIN number.
Apply for an ITIN number
In case the resolution of your immigration status is in process, it is necessary to apply for an ITIN number (Individual Taxpayer Identification Number) to apply for ITINloans. This number will make it easier to open bank accounts, pay taxes, and of course, generate a credit history and access financial products.
Make a business plan
To achieve the entrepreneurial dream, it is necessary to plan. Write down on paper the resources you have, the purpose of your business, as well as the description of your operation and management processes. To facilitate this task, use the Business Model Canvas, a simple format that will help you organize all your ideas and assignments to start a business. This document can open doors to alternative sources of financing with financial institutions since its correct preparation provides certainty to lenders.
Register your business name
Registering your business name with the state and local administrations is a task that will give formality to your project. This will benefit you in opening bank accounts, hiring employees, and mainly, it will make you eligible to be part of a supply chain with retail chains. On the sba.gov website, you can find assistance in registering your company with the proper authorities.
Apply for alternative financing to friends and family loans.
If you don’t have personal savings, loans from friends and family, or capital from an investor, you can seek financing from institutions such as Camino Financial. On their website, you will find financial products such as ITIN loans, with few requirements and personalized advice.
Separate your personal finances from your business
The first step to a successful business is to make it profitable. To achieve this, you must manage it independently from your personal finances. Especially at the beginning, it is a difficult task to accomplish; however, achieving this discipline is a sacrifice that is worth it to make your business grow.
Our recommendation is to use different bank accounts, in one you keep the financial control of the company and in the other one, you deposit your salary and profits. With this simple action, you will avoid spending money that is not yet useful.
Latinos are not afraid of hard work; they can work long hours under the sun. Focus this effort on a business of your own where you generate jobs and contribute to the growth of your community.
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