Paul Quintero: “The growth of American small business depends on Latino entrepreneurs”
In celebration of Hispanic Heritage Month, this is one of a series of blogs exploring the needs, motivations, and everyday experiences of small Latino businesses.
Last week, a new Biz2Credit study found that Latino entrepreneurs continue to face challenges in securing financing and are more likely to borrow money from high interest, non-bank lenders. We sat down with Paul Quintero, CEO of Accion East, to discuss the findings and his work with the Latino business community.
Q: Why is it important to understand the contributions and needs of Latino entrepreneurs?
A: Statistics show that Hispanics from Latin America start a disproportionate number of new businesses when compared with other demographic groups. According to the Kauffman Foundation, 380 Hispanic adults out of every 100,000 start a business. The national average is around 280. So there’s no doubt that the growth of American small business depends on these entrepreneurs. Hispanics are also creating businesses in struggling communities where financial inclusion and economic dynamism are most needed.
Q: The Biz2Credit study identifies lower credit scores and lower business revenue as factors that help explain why Latino entrepreneurs struggle to access financing and become profitable. How significant are these factors? What other factors are important?
A: They’re central factors. Many Latino businesses struggle to increase their revenue because they lack access to financial products. When it comes to credit, many don’t have a credit score or have thin credit. Another factor to consider is collateral. Most of our low- to moderate- income clients don’t have many assets to put up against a loan, so they struggle to get funds through traditional banks. At Accion, we provide these businesses with smaller loans to make sure they have the right loan to start and grow their businesses. Instead of relying on one credit score, we’re able to look at a number of different factors to help establish their ability to pay back our loans, such as how they manage their cash flow and any credit they may have.
Q: In the first blog of our series on Hispanic Heritage Month, we looked at a WalletHub study outlining the best and worst cities for Latino entrepreneurs. As Latinos move to different cities across the country, what can cities do to strengthen their support for these entrepreneurs?
A: Cities can do a lot more to create transparency around what’s required to get a business going. A typical entrepreneur does not need help making the product; they need help knowing what is required to get up and running. When cities work with nonprofits to streamline that process, the impact for cities can be tremendous. The Association for Enterprise Opportunity reports that microbusinesses in local communities account for $5 trillion in economic impact, more than 1/4 the size of our national economy.
Q: In the second blog of our series, we explored what motivates Latino entrepreneurs to start and expand small businesses. What have you seen as primary motivators for Latino businesses you support at Accion?
A: What I hear most is a real desire to find flexibility, purpose and income through business ownership. Sure, money is important, but the majority of businesses we support are “lifestyle businesses.” It’s a way to create the life you want to live and provide a future for your kids. For women, the flexibility in schedule to accommodate families is a key driver because support of family is a key value in the Hispanic community.
Q: What is a common misperception about the Latino business community that you often have to correct?
A: The biggest misperception is that the Latino community is somehow a new or recent addition to U.S. culture, instead of a community that pre-dates English settlement in this country. For example, how many people know and appreciate the fact that the oldest city in the continental United States (St. Augustine) was founded by the Spanish 211 years before the Declaration of Independence?
The gap in recognizing the contributions of Hispanics in the history of this country leads to conversation about “them” instead of “us” and “we”. It is difficult to build bridges if we don’t truly embrace our history and this becomes a form of exclusion. At Accion, our vision is to create a world of financial inclusion for everyone. That would be aided by a sense of cultural inclusion of those who discovered, charted, named, and founded towns and cities that represent a large percentage of what we call the United States.
Q: What makes you passionate about empowering Latino entrepreneurs in the United States?
A: For me, it’s very personal. I grew up with very limited means and saw what people can do when they see a country with a glass half full mentality. My parents came from Ecuador and even though I was born here, their optimism about the opportunities available in this country is a defining characteristic that all immigrants share. We open up the door of economic opportunity at Accion so that people can create a meaningful life that they form and shape themselves. Until this door is open to everyone, we have a lot of work to do to realize our dream of a more perfect union.