Why is it more difficult for Latinos, women to start small businesses?
Gloria Montoya, from Meriden, has run a home childcare business for 13 years. Working with young children is never an easy task, but it is made more difficult by the risk of business failure, as the United States 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 calling,” she says. “It’s a lot of patience, a lot of love, a lot of ethics, a lot of communication with the parents.”
Montoya earned a Child Development Associate’s degree from Middlesex Community College and started working at a Wallingford child care center in 2006. However, she saw an opportunity and decided to start her own business in 2009.
“Families need a conscientious person to look after the children so they can go to work at ease,” she said.
In the United States, it is more difficult for Latinos and women to start a small business and Connecticut is no exception. A recent SBA report found that there is a large gap between workers and business owners for women and minorities, especially Latinos.
“Most of the people who decide who gets a loan aren’t women,” said JoAnn Gulbin of Connecticut’s Women’s Business Development Council.
“Access to capital remains the biggest obstacle for women starting, trying to start or expanding businesses.”
The council provides opportunities for women business owners, including advice, grants, loans and networking. Counseling focuses on minority and low-income clients. A total of 48% of its clients are minority-owned businesses.
In a phone interview, Gulbin said the council has hired Spanish-speaking business advisers and program managers, made its website available in Spanish, and offered bilingual workshops.
Gulbin also highlighted a new program that has developed a suite of business development services for home and center child care providers in partnership with the Connecticut Office of Early Childhood.
According to 2018 census estimates, one of Connecticut’s five educators is a Hispanic woman. The number is higher for Meriden, as one in four educators is a Hispanic woman.
“A fairly large portion of child care providers are Spanish-speaking,” Gulbin said. “In order to really do our best to serve them, we needed to offer more in Spanish.”
Montoya is passionate about early childhood education, but admits accounting is not her strength.
“I knew a lot about what a business was and how to run it, but all the accounting went to my accountant,” she said. “They [the council] gave me lots of advice.
Montoya also received a technology grant during the pandemic and funding to change its carpet to hardwood flooring to provide better care for children with allergies.
In New Haven County, small businesses account for just over half of county employment. That figure is higher than the national and statewide average, according to an analysis of 2019 census data by the Record-Journal.
In addition to counseling, there are a number of 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 Boost Fund and the Connecticut Future Fund.
Programs like SCORE, the Connecticut Small Business Development Center, also offer free mentoring to people who want to start a business.
Before a bank approves a business loan, most lenders ask applicants for 20% of the funds needed to start the business, explained Nelson Marchan of the Connecticut Small Business Development Center. Marchan is originally from Colombia and worked as an advisor at the center for nine years with numerous Latino-owned businesses.
He said a low level of English, poor credit or lack of collateral could also prevent Latinos from getting a loan. Marchan explained that most banks ask for technical documents like a business plan, financial projections and market studies.
“The numbers must be realistic, because if they are not, the situation is hopeless,” he said.
To be successful in the long term, Marchan stressed the importance of creating a solid business plan, especially when the new business owner doesn’t have to apply for a loan. He said many new business owners get caught up in their ideas and don’t know how their project will work in the future.
“I think sometimes the lack of planning causes companies, Latin American companies, to fail,” Marchan said.
Reflecting on her work, Marchan said her three most successful clients were women who had experience in their industry and who had completed the paperwork to get a loan.
“We want the customer to make more money because it’s good for the economy,” he said. “If the family can make better decisions, it’s an incredible gift to our communities.”
Latino communities reporter Lau Guzmán is a corps member of Report for America, a national service program that places reporters in local newsrooms. Support the RFA reporters at the Record-Journal by making a donation to https://bit.ly/3Pdb0reTo learn more about RFA, visit www.reportforamerica.org.