The two founded Camino Financial, an online lending web site that helps connect small business owners who are first-time borrowers or who are having a hard time getting a loan connect with banks and other lenders.
These types of stories are common among Latino entrepreneurs.
Often, a lack of credit history or sufficient collateral to secure a loan keeps Latino businesses from getting the funding they need.
According to a recent survey from Stanford University released late last year, only 6% of Latino-owned businesses had used commercial loans. And less than 1% had received venture capital funding, the researchers noted.
But Salas said his mother’s circumstances, and that of many Latinos, goes beyond access to financing.
“Capital is not what closed my mother’s business,” Salas said. “It was a combination of lack of resources, ‘know how’ and affordable capital to grow the business sustainably.”
Community banks used to lead the way in lending to small business, but many of them closed since the Great Recession, said Salas. “Traditional banks… aren’t incentivized to lend to Hispanic business owners.”
This has forced many Latino business owners to turn to predatory lenders, which can charge interest rates of as high as 80%, he said.
Through Camino Financial, Salas and his brother not only want to help Latino entrepreneurs qualify for more affordable loans, but offer them advice and ongoing credit monitoring to help sustain their business.
Here’s how it works: Camino doesn’t finance the loans itself. Rather it pre-qualifies borrowers through its website then connects them with one of its 14 lending partners and takes a commission of 2.5% of the resulting loan’s principal.
“The commission is 100% paid by our lending partners, and in most cases, our services come at no additional cost to the borrower,” Salas said.
Since many Latino business owners often have little to no credit history, Camino Financial looks at multiple sources of information to determine their….
To read full article: http://money.cnn.com/2016/03/16/smallbusiness/camino-financial-latino-business/index.html?sr=fbmoney031616camino-financial-latino-business0924PMStoryLink&linkId=22361222