"We believe we can originate $1 billion in loans by year five," Salas said. Since it launched in 2014, Camino Financial has helped finance $1.3 million worth of small loans to 33 small businesses, according to Salas. Related: I'm no 'anchor baby.' I'm Nathalie Huerta, a LGBT gym owner "It costs a bank just as much to underwrite a $1 million dollar loan as a $100,000 loan," he said. That's because Latino businesses tend to ask for smaller loans - around $50,000 - and banks are reluctant to take on the cost of underwriting the loan. At work in the Camino Financial boardroom.Ĭamino also underwrites the loan, which not only gives lenders extra peace of mind about taking on a riskier borrower but also opens the door for more Latino business owners. Although rates typically don't go above 25%, Salas said. On average, borrowers that get approved for loans have at least one year of business, $100,000 in annual sales and a 600+ FICO score, Salas said.ĭepending on a borrower's financials, Camino's lending partners typically charge rates of between 8% and 40%. The company's credit scoring system not only takes into account a borrower's credit score and tax information, but it may also look at other public filings, bank statements and even social media data (with the borrower's permission). Since many Latino business owners often have little to no credit history, Camino Financial looks at multiple sources of information to determine their creditworthiness. Related: Immigrants: These cities want you! "The commission is 100% paid by our lending partners, and in most cases, our services come at no additional cost to the borrower," Salas said. Rather it pre-qualifies borrowers through its website then connects them with one of its 14 lending partners and takes a commission of 2.5% of the resulting loan's principal. Here's how it works: Camino doesn't finance the loans itself. Through Camino Financial, Salas and his brother not only want to help Latino entrepreneurs qualify for more affordable loans, but offer them advice and ongoing credit monitoring to help sustain their business. This has forced many Latino business owners to turn to predatory lenders, which can charge interest rates of as high as 80%, he said. aren't incentivized to lend to Hispanic business owners." "It was a combination of lack of resources, 'know how' and affordable capital to grow the business sustainably." Sean and Kenny in Mexico as teens.Ĭommunity banks used to lead the way in lending to small business, but many of them closed since the Great Recession, said Salas. "Capital is not what closed my mother's business," Salas said. And less than 1% had received venture capital funding, the researchers noted.īut Salas said his mother's circumstances, and that of many Latinos, goes beyond access to financing. Often, a lack of credit history or sufficient collateral to secure a loan keeps Latino businesses from getting the funding they need.Īccording to a recent survey from Stanford University released late last year, only 6% of Latino-owned businesses had used commercial loans. These types of stories are common among Latino entrepreneurs.
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