They are not on the most expensive avenues or the tallest towers, but they are crucial to the American economy and jobs. Beyond the multinationals, the S&P 500 companies and the large chains, there is an important network of small and medium-sized companies and start-ups that keep the wheels of the economy turning. At the origin of many of them are Latinos, who are currently creating companies at a higher rate than other communities, although inequality remains latent. Latinos already make up 20% of the population, but they only own 6.9% of the businesses. According to figures from the Latino Business Initiative (LEI) at Stanford University, there are 4.7 million Latino businesses of different sizes in the United States, which contribute $800 billion to the economy annually. Of them, 463,000 businesses with the capacity to generate employment employ 3.5 million people. It is an important number, but taking into account that there are some 160 million workers throughout the country, the story of Latino business in the United States is just beginning. The economic contribution of these businesses could – and should – be greater, if it were not due to limited access to financing, the vulnerability of its liquidity and less access to opportunities to contract its services. An inequality that Mari Borrero, first executive of American Abatement & Demo (AAD), the demolition company she founded in 2017 with her husband, has experienced firsthand. The company, based in Washington State, employs formerly incarcerated people and has sales of $3 million and 14 employees. It has not been easy. Before becoming a businesswoman, Borrero ran a hospice and was a teacher, so she had to learn to navigate an unfamiliar system and build relationships with banks and credit unions: “It's a giant puzzle that you have to understand while managing a business,” he explains while holding his pink construction helmet. He feels, he says, like he is on a hamster wheel, spinning around to look for financing. “First they tell you that your credit score is not high enough. Then, when you already have it and apply for a loan, they tell you that you haven't been in the business for enough years. The goal always gets further and further away.” A few months ago, her company was recognized as a star client of the Small Business Development Center in Washington. Barrero recounts a scene that has stayed with him: “At the celebration there were many banks that denied us financing. They told us they were sorry they couldn't help us while congratulating us on the recognition. But how does that help me?” Despite the challenges, these companies highlight the vital role of Latinos in shaping a more inclusive American business landscape. Barbara Gómez Aguinaga, associate director of LEI, explains that 52% of job creators within the Latino business community are immigrants; In the case of white businesses, only 7% come from other countries. This evidence adds to a series of studies, including one from the Congressional Budget Office (CBO), that shows the positive contribution of immigration to the entire US economy. It is common to hear that opening a business requires a push very similar to what you have when you decide to cross a border and start from scratch in an unknown place. In the business field, the obstacles multiply and many ventures fall by the wayside despite the evidence that shows that gaining equality would benefit the country as a whole. Achieving parity “is not only crucial to empowering Latino businesses, but also to strengthening the country's economy and workforce,” the Stanford report says.
Potential employer
Elián Savodivker, Director of Interaction for the Latino Business Action Network (LBAN), explains that if it were not for these difficulties, the opportunities for growth would be greater: “Without these problems, companies could reach their potential, a three-trillion-dollar opportunity.” . His experience indicates that this business community is hired at a higher rate and with better benefits. «Something we have seen is that Latinos tend to come from difficult situations and there is a feeling of family that is really strong and very similar to the one they create with employees.» What they have observed from Stanford is that when a loan is requested for a For an amount less than $50,000, Latino entrepreneurs have a higher approval rate than the rest, but when it comes to a larger amount, the situation is reversed. The reason is because in low loans the decision comes from a systematized process, but when it comes to more money the human factor intervenes. It is when you have to have the conversation at the bank and there the chances of success are reduced. It is not a minor problem. Access to financing is important to survive extraordinary moments such as the pandemic, but also to boost growth, for the functioning of the treasury, the expansion of companies and the creation of more jobs. Also to take advantage of opportunities like the one presented to AAD, Borrero's company, in 2023. In May of that year, the Olympic National Park visitor center in Washington burned while it was undergoing renovation work. To open it during the ski season they had to demolish it. The budget was $815,000 and the deadline was 30 days. The National Park Service contacted Borrero and she accepted. The problem? Have the liquidity to be able to get the contract, taking into account that payment would take months. The money did not arrive from the financial institutions and Borrero had no choice but to go to her parents. At this point, the businesswoman becomes emotional and fights a lump in her throat. She says that she knows that her parents are proud of her and her family, but that they have their own needs. “I knew they would help me but it shouldn't be like this. It shouldn't come to this because there is a lot of money out there, people making a lot of money. It is very frustrating that it is so hard for small businesses, that they continue to complicate the conditions for us again and again.” The director of the LBAN believes that financial institutions still have to learn that investing in Latino entrepreneurs is far from being a risky opportunity. “Latinos know that it is not the business, that it is the bias, and that is what has to change because when you see the numbers you cannot defend that bias,” he says. On the positive side of the scale there are some trends that can help with the current imbalance. The greater presence of Latinos in more financial institutions, who know the difficulties personally, will contribute in the long run to expanding the possibilities. Savodivker adds that Latino entrepreneurs today do a lot with little. In the end, everything is a matter of numbers: “Change will come because there is a lot of money that is not used because financial solutions are not provided to this community.”