It can be fairly common for Latinos in the United States not to be able to access a business loan, but small business grants are a great financing alternative.
There is an estimate that Latino business owners have 22% less opportunity of qualifying for a loan, compared to business owners who do not belong to this minority.
This is still a problem, even though in the country there are more than 4.37 million businesses owned by Hispanics, which contribute to the national economy about $700 billion per year: Imagine how much that number could multiply if these entrepreneurs had the right means of financing.
Although this gap seems to be getting narrower (especially in recent years) for Latinos, it remains a challenge to meet the requirements of banks and other lenders.
In many cases, accessing capital to finance a small business becomes a matter of creativity. Latinos are recursive, and we take advantage of any opportunity, such as small business grants offered by federal agencies or private entities.
In this article, we explain what grants are, we talk about the minimum requirements that you must fill to request one of them, and of course, we highlight several grant programs available to Latinos.
What is a Grant?
Although you can apply for a small business loan to capitalize on your company, you can compete for one of the different grants for small businesses that are offered in the country and get additional resources.
Broadly speaking, grants are financial incentives offered by federal agencies, foundations, and private organizations, which in many cases just want to help small businesses in minority groups or with economic problems.
With these resources, they also seek to reward initiatives that excel in certain areas, and with the potential to become successful ventures.
Unlike a loan, you do not need to repay the money of a grant.
The downside is that it can be challenging to qualify for these small business grants.
How can I Access a Grant?
First of all, you must comply with precise requirements, and there might be regulations on how you can invest the money. Secondly, you have to compete with hundreds of entrepreneurs and business owners, unlike yourself, who want to help their businesses thrive.
But there are certain things you can do to improve your chances of getting one of these small business grants for Latinos:
- Carefully select the grant you want to participate in, and make sure you meet all the requirements demanded. Don’t forget to send your application within the established deadline!
- Provide complete and accurate information. An incomplete or inaccurate application will get you disqualified.
- Prepare a business plan. Describe what products or services you sell, what your target market is, what differentiates you from your competition, etc. Also, explain how you intend to invest the grant funds (don’t forget that some small business grants give concrete directives on how you can use the money).
- Seek professional advice. If you have doubts, ask for guidance from someone who has competed for a grant or that is well versed in the topic. You can also ask for help from an expert to help you develop your business plan, organize and verify the information, or prepare the documents you may need during the process.
5 Small Business Grants You Can Apply For
There are several grants available you can apply for, but we have selected some of the most important small business grants.
In this list, you will find public and private initiatives aimed at financing all kinds of businesses in different sectors of the economy (some of them focused on helping minority-owned businesses, including the Latino community.)
The United States Department of Agriculture (USDA) offers grants to small business owners that live in rural areas. You can use the funds to start or expand a small business.
To access this funding, your business must have fewer than 50 employees, generate an annual income of less than $1 million, and be in one of the eligible rural areas.
These grants, of between $10,000 and $500,000, can be invested in training, technical assistance, and land acquisition.
You should go to the nearest USDA office to obtain information about the application process and to find out about other grant programs offered by the agency.
This association, known as NASE, gives grants of up to $4,000. Their Growth Grant Program allows small business owners to request funds to finance their specific needs.
Some of its beneficiaries, according to the association, have invested the money in computers, equipment for agriculture, hiring employees, or marketing for their businesses. Since 2006, NASE has delivered almost $1,000,000 in grants.
To apply for one of these grants for small businesses, you must be a member of the association, explain in detail how you will use the funds and provide some basic information and documents. However, to get a NASE membership, you must pay a monthly fee.
3. Small Business Innovation Research Program and Technology Transfer
These programs are known as SBIR and STTR, and they focus on financing science-and-technology related ventures. These initiatives allow small businesses to compete for funds to research, test, prototype, and market new products.
In their different phases, these programs offer financing between $150,000 and $2.5 million. Small businesses can participate by presenting ideas or projects focused on science and technology.
However, the conditions are very demanding: the business needs to participate in research and development tasks, as well as being associated with a research institution.
Each year FedEx holds a contest in which ten small companies can earn a grant, as well as other prizes and benefits, such as the advice of experts from this company.
For-profit businesses with less than 99 employees and that have been in operation for at least six months at the time of starting the contest can participate.
The objective of the program is to share its experience and resources with small businesses, to help them grow and prosper.
The amount of grants for small businesses varies every year. In 2019, the company delivered funds for $50,000 for the first place, $30,000 for the second place, and $ 15,000 for the remaining eight winners, without counting the additional prizes.
To participate, you must enter the contest’s website and write a review, upload photographs, and your logo and create a short video about your company. The contest allows people to vote for the candidates, but the judges make the final decision.
Since 2013, they have given more than $778,000 in grants. The next contest will start at the beginning of 2020.
5. Amber grant
The Amber Foundation and WomensNet started giving this grant in 1998 to women who own small businesses. Each month, a winner receives a grant of $2,000, and at the end of the year, the 12 winners compete for a $25,000 grant.
To participate, you must fill out a brief application form with your personal information, information about your business, and how you would invest the money if you were one of the winners. Additionally, you must pay a fee of $15 for administrative expenses, and which are used as funds to finance the program.
Other resources for small businesses owned by Latinos
In addition to small business grants, there is another type of assistance you can use to expand your business.
Specialized grant websites, federal agencies, chambers of commerce, and other organizations offer financial and legal advice, guidance on accessing loans and grants. You can also find listings with a large number of grants, and other business opportunities to help small businesses owned by minority groups thrive.
These are some of those resources:
This website contains a list of grants offered by 26 federal agencies of the United States.
In total, you can find about 1000 grant programs available for small businesses, as well as information on how to access them.
To apply for federal assistance (and to do business with the American government,) you need to register on the Dun & Bradstreet website and obtain a DUNS number, and on the System for Award Management (SAM) website. Also, you must create an account on Grants.gov.
Although many of these grants for small businesses are adapted to very specific profiles, looking through this list, you may find one that fits your business.
The US Small Business Agency (SBA) offers assistance to small business owners who are socially disadvantaged or in financial difficulty. This gives training, technical support, and guidance on grants that you may qualify for.
To access these programs, you must meet certain conditions: your company must be a small business, you must be a citizen of the United States, and have at least 51 percent of the business property, amongst others.
In these centers, distributed throughout the country, it is possible to find legal advice, marketing, and guidance on loans and grants for small businesses belonging to minority groups.
Local chambers of commerce can help you get loans or even access grants.
These unions advocate improving the conditions of Hispanic businesses since they seek to invest more capital from the public and private sectors in these businesses. They also seek to devote more resources to the training of the workforce in the country.
Get a Minority Business Certification
These certifications accredit that you, as a small business owner, are a member of a minority. Having one of these certifications will make you eligible for contracts or jobs that need this certification as a requirement. Learn how to get a minority business certification.
What qualifies as a minority-owned business?
Each certification has different definitions of what a minority-owned business is. But usually, you can expect that a minority-owned business is one that is, at least, 51% owned, operated, and controlled by members of a minority.
You Can Start Growing Your Business Today
Despite its contribution to the economy of the United States, it is difficult for Latinos to access financing for their small businesses. Although business loans are an alternative for immigrants, grants are, too, a great way of raising capital.
And even though the process of applying for a grant is complicated, there are ways in which you can increase your chances of accessing one.
At Camino Financial, we do not leave any small business behind.
We are aware of the financing needs of Latinos, and we offer them all the facilities to access one of our loans. We are focused on helping minorities and supporting the Latino community so that they can continue to contribute to the national economy.