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Facing the global crisis of Covid-19, Latino businesses have shown to be a great economic powerhouse for the U.S. According to statistics from the study, The Ongoing Impact of COVID-19 on LatinoOwned Businesses from Stanford Graduate School Of Business, 88% of these companies have the necessary cash flow to face more than 6 months in this situation.
The global economy has been severely affected by the pandemic, with total revenues of small businesses in the United States declining by 23.2%, according to Opportunity Insights. One of the tools to minimize the damage is credit, and considering that only 63% of Latino owners have social security, ITIN loans (loans without a social security number) are a possibility to keep their companies running.
Until 2017, there were nearly 400,000 Latino owned businesses in the U.S., employing 3.4 million people and the trend has continued over the past 10 years. This is reflected in the growth of Latino businesses by 34%, as shown by numbers from the same Stanford Graduate School of Business study.
Latino Power vs Covid-19
In the period between 2017 and 2020, the emergence of Latino businesses increased 61% and if we consider that by 2050, Latinos will represent 30% of the total population of the United States, its impact within the economy of the country will be very relevant.
“The spirit of entrepreneurship continues to thrive among the Latino populations. As the economy emerges from the pandemic, we expect to see them in the forefront of the economic rebound,” said Manuel Chinea, Banco Popular’s chief operating officer in an interview with CNBC.
One of the milestones for many Latino-owned businesses was the first round of PPP Funding. However, until May, 55% of the businesses were still waiting for approval, now the real question is what happens if they are not approved or if the PPP Funding granted runs out?
Given this scenario, it is important to have a plan A, B and even C. Another factor should not be overlooked, is the immigration status of many Latino owners, which makes it virtually impossible to cover all the requirements to apply for a business loan of any banking institution. For this reason, ITIN loans are recommended as a viable alternative.
What are ITIN loans?
ITIN loans are commercial loans granted to entrepreneurs without a Social Security number, whose only requirement is to provide the ITIN number (Individual Taxpayer Identification Number) issued by the IRS with the intention that, even if the immigration status is not adequate, such companies pay taxes.
The requirements for ITIN loans are simple:
- Have your company registered as a DBA “Doing Business As”, this means to register your company with the government, this will allow you to open a bank account in the name of your business and access to ITIN loans.
- Open a business bank account
- Go to financial institutions that offer this service, for example, Camino Financial.
Until April, the Maryland Hispanic Chamber of Commerce had over 54,000 Hispanic-owned businesses in the region on its radar. In September 2020, the number of total businesses functioning in the state had declined by 22% and total small business revenues decreased by 21.3%, according to Opportunity Insights.
The situation is not promising and small businesses are trying to defend their patrimony at any cost. The circumstances for Latino companies are not much different in essence, but problems in accessing loans present them bigger challenges.
Success in acquiring loans, according to Camino Financial’s experts, is based on paying on time, doing a clear accounting in your business to know where you will get the money to pay for the financing and, above all, before applying for the credit you must be clear on what you are going to use it for and not modify that intention.
If you want to know more about how to access ITIN loans, we recommend you to read this article from Camino Financial that will guide you step by step in obtaining a loan of this type.