Why is it so hard for Latinos, women to start small businesses?

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Gloria Montoya, of Meriden, has worked as a childcare worker out of her home for the past 13 years. Working with young children is no easy task, but business failure makes it even more difficult, as the US Small Business Administration (SBA) estimates that only one-third of new businesses survive their tenth birthday.

Montoya left her native Peru and immigrated to the United States in 1999. She worked in a New York supermarket for a while, but decided to pursue her passion and work with children.

“It’s a good call,” she said. “A lot of patience, a lot of love, a lot of ethics, a lot of communication with parents.

Montoya earned a child development associate’s certificate from Middlesex Community College and began working at a Wallingford daycare center in 2006. But she saw an opportunity and decided to start her own business in 2009.

“Families need someone conscientious to take care of the children so they can easily go to work,” she says.

Differences in business ownership

Across the United States, it is difficult for Latinos and women to start a small business and Connecticut is no exception. According to a recent report from the SBA, there are significant disparities between women and minorities, particularly Latinos, as employees and business owners.

“Most of the people who decide who gets a loan are not women,” says Joanne Gulbin of the Connecticut Women’s Business Development Council.

“Access to capital is the single biggest barrier for women trying to start, start or grow businesses.

The council provides opportunities for women entrepreneurs including advice, assistance, loans and networking. The council focuses on minority and low-income clients. A total of 48% of their customers are small businesses.

In a phone interview, Gulbin said the council has hired Spanish-speaking business consultants and program managers, made its website available in Spanish and offered bilingual workshops.

Hispanic women in the child care business

Gulbin has partnered with the Connecticut Office of Early Childhood to develop a series of business development services for home and center-based child care providers.

In the year One in five child care workers in Connecticut are Hispanic women, according to 2018 Census estimates. The number is higher for Meriden, as one in four child care workers are Hispanic women.

“A good number of childcare providers are Spanish-speaking,” Gulbin said. “We had to offer a lot in Spanish to do our best to serve them.”

Montoya is passionate about early childhood education, but admits that accounting is not her forte.

“I knew a lot about what business was and how to run it, but all the accounting went to my accountant,” she said. “they [the council] They have given me a lot of guidance.”

Montoya also received a technology grant during the outbreak and funding to replace her carpet with hardwood floors to better care for children with allergies.

Getting a loan

In New Haven County, small businesses account for more than half of the county’s employment. That’s higher than the national and statewide averages, according to a Record-Journal analysis of 2019 Census data.

In addition to the Council, there are several programs designed to provide resources to small businesses owned by women and racial minorities. The state announced two new programs this summer – the Connecticut Small Business Enhancement Fund and the Connecticut Future Fund.

Programs like SCORE, Connecticut Small Business Development Center, offer free mentoring to people looking to start a business.

Before a bank approves a business loan, most lenders ask applicants for 20 percent of the money needed to start the business, explained Nelson Marchan of the Connecticut Small Business Development Center. Marchan is from Colombia and has worked as a consultant for nine years with several Latino-owned businesses in the center.

A low level of English, a low credit score or a lack of collateral can prevent Latinos from getting a loan, he said. Marchan explained that most banks require technical documents such as business plans, financial projections and market research.

“The numbers must be realistic because if they are not, it is impossible to win,” he said.

For long-term success, Marchan stresses the importance of creating a sound business plan–especially when the new business owner doesn’t have to apply for a loan. Many first-time business owners get wrapped up in their ideas and don’t know how their future project will work.

“I think sometimes the lack of planning forces companies, Latino companies to fail,” Marchan said.

Reflecting on his career, Marchan said three of his most successful clients were women who had experience in their industry and went through the paperwork required to get a loan.

“We want the customer to make more money because that’s good for the economy,” he said. “If the family can make better decisions, that’s a wonderful gift for our communities.”

lguzman@record-journal.comTwitter: @lguzm_n

Latino communities reporter Lou Guzman is a member of the reporting corps for America, a national service program that places journalists in local newsrooms. Support RFA reporters with help from the Record-Journal https://bit.ly/3Pdb0reTo learn more about RFA, visit www.reportforamerica.org.



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