NEW YORK, July 26, 2022 /PRNewswire/ — Companies owned by minority groups in the United States, such as those from the Latino community, continue to experience disparity when seeking financing, explains Angelica Fuentes, impact investor.
Despite the legal efforts raised in the Community Reinvestment Law of 1977 and the creation in 2011 of the Office of Consumer Financial Protection, both focused on reducing discriminatory barriers in the banking system, Angelica Fuentes points out that Latino entrepreneurs have not overcome the structural obstacles.
“As far as venture capital is concerned, companies owned by women and men of Latin origin obtained only 2.6% of the investments, segregating them from the North American entrepreneurial ecosystem,” she says.
Another challenge they face is the lack of financial products designed specifically for Latino communities, which are generally offered at higher interest rates than those for individuals of US origin.
“Audit studies have revealed that entry-level entrepreneurs are shown different and more expensive banking products and face more questions to legitimize their businesses. You will need some evidence of implicit bias and discriminatory practices at the time of initial engagement,” explains the “State of Latino Entrepreneurs” report by the Standard Graduate School of Business.
“The odds of a national bank approving a $100,000 loan are 60% lower for Latinos than for white business owners, even after accounting for business performance measures.
For Angelica Fuentes, the structural barriers limit Latino entrepreneurs’ development, even though statistics show that they are the racial group that presents the best cash flow and stability.
“More than a third of Latino entrepreneurs are immigrants, so their work history and credit record in the United States will hardly be a good source of support,” says Angelica Fuentes.
SOURCE Angélica Fuentes Téllez