By Nadine Ono.
It is said time and time again that small businesses are the backbone of the U.S. economy, evidenced by the fact that nearly half of the nation’s private sector workforce is employed by small businesses. Since 2009, many have had trouble accessing capital, but that is starting to change, thanks to some innovative programs. One of those was created when a small business center, a newspaper and a bank partnered up to help Latino business owners in Los Angeles.
Right now, Latinos own more than 700,000 businesses in California, including 200,000 in L.A. County alone, according to a 2013 study from the California Hispanic Chambers of Commerce and the Haas School of Business of UC Berkeley.
That’s why the Los Angeles Small Business Development Center (SBDC) Network just launched a new program, “Avanza tu Negocio” (“Advance your Business”), which will help Latino-owned businesses in East Los Angeles and the South San Gabriel Valley gain access to capital in the form on bank loans. The one-year initiative is jointly funded by a grant from the Governor’s Office of Business and Economic Development (GO-Biz), focusing on capital infusion and a one-to-one matching grant from the Federal government.
Small businesses in the two designated areas of the city will be able to work with counselors to package themselves so that they can get small business loans to help them grow their business. The goal is to help at least 35 businesses receive a minimum of $2 million in new loans.
“You’re dealing with a community that may not fully understand the world of banking, a group that is more accustomed to handling all cash and may not be accustomed to using lines of credit,” said Jesse Torres, regional director of the Los Angeles SBDC explaining why East Los Angeles was chosen.
This may be the first time some of these business owners, many of whom have had their businesses for years or generations, are getting a traditional small business loan, said Ted Hiatt, Operations Manager for the LA SBDC.
“Our goal is to get them to, specifically for the capital infusion, think differently, operate differently, so that they’re not just going to hard money lenders to get capital when they need it. A lot of them are paying 25, even 35 percent interest on a loan and we want to get them out of that practice.”
Lowering the interest rate will mean that more money that can be reinvested into the business, creating more jobs in the region.
SBDC is partnering with La Opinion and Pan American Bank, which one of the oldest business institutions in East Los Angeles. Pan American Bank has offered office space as well as training and seminars for participants.
For La Opinion, partnering with the SBDC made sense according to Damián Mazzotta, General Manager, West impreMedia, LLC (La Opinion’s parent company).
“In our mission statement, we want to better serve our Hispanic community more than ever. The best way to do that is by providing the tools that will help our people to move forward in their lives,” said Mazzotta, adding that SBDC is the right partner “to achieve the goal to help and leverage the Hispanic small business.”
La Opinion will begin its outreach to target audiences beginning next month through advertising, earned media opportunities and events.
The initiative also is a good example of one of the goals of the California Economic Summit’s just-released “Roadmap to Shared Prosperity,” which advocates for providing small businesses and entrepreneurs with the tools to grow jobs in changing markets by connecting them with investors and lenders.
Torres hopes that this one-year program will continue and expand throughout the region: “We feel that if you can do good work in places like East LA and South San Gabriel Valley, you can then use that model to do good work in other major pockets of Latino communities where there’s just desperate need for this kind of support.”