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  • Is Your Credit Union Friendly to Hispanic Entrepreneurs?

    Posted by on April 23, 2018

    hispanic entreprenuersIf the answer to that question is no (or you don’t know), consider this: Hispanics are creating businesses at 15 times the national rate.

    In an article ranking the best cities for Hispanic entrepreneurs, WalletHub asked a panel of minority-business experts about the biggest challenges faced by Hispanic entrepreneurs. Nearly everyone mentioned access to capital and financial education.

    “There is a clear issue with lack of access to capital to start and grow their venture,” said Pedro F. Moura, an MBA candidate at the Haas School of Business at University of California. “This is also influenced by cultural aspects in which Latinos would rather rely on family and friends for funding than outside investors. Plus, limited financial education also plays a crucial role in understanding the funding that could be unlocked by entrepreneurs.”

    What does this mean for credit unions?

    This means Hispanic communities represent a huge opportunity for credit unions to grow their lending business – and become those communities’ preferred financial provider. If there is a known preference for borrowing from family and friends, the question for credit unions becomes, How can we build and nurture a similar relationship with Hispanic members?

    Below are a few strategies to consider.

    Offer small business-friendly loans. Small-dollar loans or Small Business Administration (SBA) loans up to $5,000 can be a great way to help entrepreneurs get their ideas off the ground. With an SBA 504 loan, for example, a borrower may only need 10 percent of equity, rather than the 20 percent required with a more traditional loan. Also, the loan is normally divided into two parts. One, which tends to be 50 percent of the loan, is held by a lender. The rest is held by nonprofit groups, such as the Certified Development Corporation, with this portion backed by the SBA.

    Provide microloans. Microloans are typically very small (under $500) short-term loans with a low interest rate, extended to self-employed individuals, new startups with very low capital requirements or small businesses with only a few employees. Microloans can be a good source of funding for a business to hire its first employee, cover startup costs or purchase initial inventory.

    Offer Individual Taxpayer Identification Number (ITIN) loans. ITIN loans are designed to help people who have a tax ID number but are not eligible for a Social Security number. Credit unions see the possibilities in serving a population that is not being served well by traditional financial institutions and they understand the value of inclusivity.

    Provide lines of credit and credit-building loans. During the early stages of developing their companies, entrepreneurs may not have diversified enough to generate a constant positive cash flow. Lines of credit accommodate the seasonal credit demands of businesses along with ups and downs in cash flow. They also enable entrepreneurs to purchase inventory in anticipation of future sales. Credit-building loans, on the other hand, can help entrepreneurs build their credit as they work to grow their business.

    Offer small-business financial education. Even the most robust small-business lending program can be ineffective without the right education plan in place to help entrepreneurs understand their options and select the right loans for their businesses. Ensure your marketing and education materials are available in Spanish and are culturally relevant to Hispanic populations.

    Build community partnerships. One of the best ways to expand your credit union’s Hispanic entrepreneur outreach efforts is to partner with organizations that offer small business assistance for Spanish-speaking entrepreneurs. Examples include local Hispanic chambers of commerce and small business incubators.

    Credit unions desiring to be Hispanic entrepreneur-friendly should work to build the right mix of lending products supported by a strong financial education program. Those that get it right will not only provide a much-needed service to Hispanics in their communities, they will also benefit themselves through lending and membership growth.

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    Credit Union Adds Three Fresh Perspectives in One New Board Member

    Posted by on August 2, 2016

    Achieving a variety of inclusivity and diversity objectives is becoming more important for credit union boards of directors. One such board is that of Community 1st Credit Union in Ottumwa, Iowa. The Juntos Avanzamos-designated credit union recently welcomed Edith Cabrera-Tello to its board.
    Edith brings a unique perspective to the credit union’s leadership as the youngest director, as well as the only female and the only Latina on the board. We had the chance to sit down with Edith to chat about her appointment, as well as her insight on the important role credit unions play in the formation of good financial habits for today’s consumers.

    Eidth Linked InHow long have you been a member and board member of Community 1st?

    I’ve been a member of the credit union since 2011 and a board member since January 2016.

    What is your view of credit unions as a financial option for the Hispanic community?

    When my husband and I wanted to start our own business, we asked our bank for help. They denied our application for a loan. We then went to a credit union and received the support we were looking for. That’s when I learned more about credit unions and the services they offered.
    I also worked for a school as the Hispanic community outreach coordinator at the time. We would offer workshops and occasionally had someone from a credit union come talk about personal finances. That was a great opportunity for those in our community who are immigrants learn how credit unions could help us. They open doors for individuals simply by accepting an ITIN number (Individual Taxpayer Identification Number). The credit union we worked with also provided financial support to make the workshops happen. That’s something no bank had offered to do.

    What changes have you seen in how Community 1st serves its members and specifically its Hispanic members since you’ve been a board member?

    I have noticed how many more services the credit union is working to make more inclusive for our community. ITIN lending has been quite beneficial, but they are not stopping there. They are continuing to look for ways to improve. The leadership has hired the right people to assist the community, too, which is incredibly important.

    How has the work with Coopera and receiving the Juntos Avanzamos designation impacted outreach to the Hispanic community?

    The designation is not only helping the Hispanic community; it’s helping everyone in our area. A lot of that has to do with awareness and exposure to new things. Take for example, board members working to properly pronounce Juntos Avanzamos. You can see their desire to do so correctly. They have seen the importance of the designation and all the efforts that come with it. They understand that the better we serve our community, the greater return there will be on the investment.

    Could you describe your experience as a board member of a credit union from the moment you decided to volunteer until now?

    It’s been pretty good. I am the only woman, the youngest and the only Latina on the board. I feel comfortable, and the other board members help me when I need it. They have so many years combined experience, I am learning from them while hopefully they are learning from me. It’s been incredible to see how they take the time to help the credit union grow.

    What advice do you have for any potential Hispanic board members thinking about or having been approached to serve on the board of a credit union?

    We need diversity on credit union boards. Being involved on the board not only allows directors to have a say on decision making specific to the credit union; it also allows that individual to support the larger community.

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