Nearly 9% of small businesses in R.I. Latino-owned, highest in N.E.

RHODE ISLAND has the highest percentage of Latino-owned small businesses of any New England state. / COURTESY LATINO POLICY INSTITUTE AT ROGER WILLIAMS UNIVERSITY
RHODE ISLAND has the highest percentage of Latino-owned small businesses of any New England state. / COURTESY LATINO POLICY INSTITUTE AT ROGER WILLIAMS UNIVERSITY

PROVIDENCE – Rhode Island has one of the highest percentages of Latino-owned businesses in New England, but many of these entrepreneurs report challenges in gaining access to capital and resources that could help their business grow, according to a new report by the Latino Policy Institute at Roger Williams University.

Among the findings:

  • Latino-owned businesses have grown dramatically in number in recent years, rising by 46 percent in Rhode Island from 2007 to 2012 to 8,439 businesses
  • Among New England states, Rhode Island had the largest percentage of Latino-owned enterprises in 2012, with 8.9 percent of all businesses, according to U.S. Census data.

While the research indicates a healthy climate of entrepreneurship, challenges identified by business owners include access to capital and barriers in understanding or accessing what state and city resources may be available, said Anna Cano Morales, director of the Latino Policy Institute.

“When you look at the numbers, Rhode Island has to pay attention to this market,” she said. “It’s an absolute market.”

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The report, Engaging Latinos in Rhode Island Small Business Initiatives, was based on a research project that began with a questionnaire completed by 32 small business owners or entrepreneurs across the state, and was followed by in-depth interviews with business owners and service providers in the public and private sectors.

While the process of opening a business can be difficult for all entrepreneurs, language and cultural barriers were cited as issues by respondents and participants in the research.

The small size of many Latino-owned businesses can be a hindrance to loan approval, according to the research. Cano Morales said many of the businesses employ fewer than three or four people.

By comparison, companies with as many as 500 employees are defined as “small businesses” by the U.S. government, and so have access to the same small-business lending or service programs.

“The bank or the lending institution is usually looking for two years of financials, or two years of revenue,” Cano Morales said. “They’re looking for a pattern of revenue, to rule out risk. You can understand why these businesses look risky. A lot of times they are micro-businesses.”

In recommendations, the report supports the creation of a Hispanic Chamber of Commerce in Rhode Island, which Cano Morales said could make a significant difference, and which “100 percent” of the respondents on the questionnaire supported.

The report also recommends that Rhode Island lenders create more opportunities for micro-businesses to access resources, including through “aggregate value” loans.

These loans would provide small businesses not only with needed capital, but also financial advisers. “Not just giving people a loan, here’s $20,000, but here’s $20,000 and a financial adviser for you,” Cano Morales said.

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