Photo credit: California-Mexico Studies Center
No sector promises to turn early-stage financing into GDP growth like Latino-owned businesses (LOBs).
They’re called LOBs for short, but they’re working on a fastball. Latino entrepreneurs are starting small businesses faster than the rest of the startup population and becoming a bigger part of the total U.S. market every day. Estimates are that they will make up 29 percent of the U.S. population by 2050, up from 17 percent today.
According to a study the Stanford Graduate School of Business, if those businesses grew as fast as the U.S. average, they could add $1.4 trillion to the U.S. economy.
That’s a tough number to imagine, but here’s some sense of scale: It’s 40 percent more in one year than Microsoft has made since it was founded in 1975. It’s more than the GDP of every country in the world below the top ten. Bottom line: It would add almost eight percent to the $18 trillion U.S. economy.
Getting LOBs up to speed won’t be easy: they are either not growing or growing slowly. But nonprofit accelerators are doing all they can to accelerate opportunities, funding LOBs before they’re eligible for conventional financing and helping others figure out how to qualify for commercial loans right away.
One of the largest of those nonprofits, Accion, is funded in part by U.S. government grants and by JPMorgan Chase & Co. Banks and the U.S. Department of Treasury are not charities, so they support nonprofits like Accion because they know today’s startups will be tomorrow’s job creators, depositors, taxpayers, and, most important, the foundation for a stronger national economy, which lifts all boats.
A Few Success Stories
Like every other startup sector, the biggest challenge for most LOBs is access to capital. When Latino entrepreneurs start a business, 70 percent of their funding comes from personal savings, according to the Stanford study, while just six percent comes from commercial loans.
Ana Bermudez is a case in point. She used all of her savings and retirement accounts to start TAGit, an app that allows you to buy the clothing featured on your favorite TV shows. At the point when most people turn to “family and friends financing,” Ana needed an alternative, and she turned to Accion for help.
Accion actually started in Venezuela, and it now has operations in more than 30 countries. Their guidance to entrepreneurs on how to navigate the small-business environment begins with advice on micro-finance and how to get a loan. In Ana’s case, Accion managed to get her funding from the Eva Longoria Foundation.
“Had it not been for Accion, I probably would have had to go back to work, which is a big no-no for entrepreneurs,” says Bermudez. ‘It paints a negative picture with investors”
To read the full story, please visit: https://www.jpmorganchase.com/corporate/news/stories/latino-owned-businesses.htm
