Posted by Elena del Valle on June 11, 2020
By Julian Perdomo
The Provident Loan Society
Julian Perdomo, marketing coordinator, The Provident Loan Society
Photo: The Provident Loan Society
The United States Hispanic Chamber of Commerce has reported that there are 4.4 million Hispanic-owned businesses in the United States. In fact, the Latino community has single-handedly contributed to the highest launch of small businesses than any other demographic resulting in a contribution of $700 billion annually for the United States economy, according to United States Hispanic Chamber of Commerce.
However, when the pandemic hit, many of those small businesses were forced to close their doors, furlough their staff, and find alternative routes to create a revenue stream just to stay afloat. Just this past March, the Stanford Latino Entrepreneurship Initiative conducted an online survey and found that 86 percent of Latino-owned small businesses reported a significant negative impact due to the government mandated shutdown, and nearly two-thirds of the surveyed population said they would not be able to keep their businesses running should the current pandemic conditions to remain closed or operate at a lower capacity continue. Not only is this a huge risk for the business owners, but it could be detrimental for our economy as a whole.
During these unprecedented times, there are three things business owners can do today to help them stay afloat as they navigate through the crisis.
Many businesses have already joined the online movement as they pivoted their model to become accessible online. If you haven’t already done so, you absolutely should. Since the majority of consumers already have access to the interest these days, there are great tools that small businesses can utilize that will help streamline their business virtually that can ultimately create a new revenue steam line. Online programs like Zoom, OpenTable, DoorDash, WebEx, Skype, GoogleHangout and many others are creating a platform for entrepreneurs to reconnect with their customers.
For instance, restaurants and bake shops who did not have a delivery model in place prior to the mandatory shutdowns, are able to partner with reputable contact-free delivery services like DoorDash and GrubHub. While gyms are migrating their in-person aerobic classes in a virtual class setting.
As businesses are slowly getting the “OK” to reopen, small businesses have to pivot now to rethink how their traditional brick and mortar philosophy can be adopted virtually. So, when the crisis ends, your business will have a new branch to generate revenue.
Whether your business is partially open or preparing for a full grand reopening, the safety of your employees should be priority number one. Critical safety supplies like gloves, disinfectant wipes and sprays, face masks, and even hazmat suits should be readily available to your employees. Not only will customers feel comfortable coming to your place of business, knowing that their personal health is not at risk, but your employees will be able to generate the same level quality of work your clients have grown to expect. Regardless of any situation, the safety and health of your employees and customers should always have the highest priority.
Recently, the government created a Paycheck Protection Program (PPP Loan) that businesses can apply for to pay for their payroll. Another loan that is a good financial alternative for business owners is a collateral loan. Mortgages and car loans are two common types of collateral loans that millions of Americans already have. A collateral loan is when an item of value is lent to the borrower. If the borrower is not able to continue paying for the valued item, then the lender is able to seize that valued item to recoup its losses.
A business owner is able to utilize that same model and apply it to his or her business. Not for profit organizations have been granting collateral loans, valued up to $100,000, for generations. When choosing a loan, the most important line item to review is the interest rate. While New York state allows up to 4 percent, in other states interest rates may vary from 12 percent to 24 percent or more and you might also be charged storage costs and insurance fees. Working with a not for profit company with an interest rate of 2.167 percent will save a business owner a tremendous amount of money in the long run. Additionally, a not for profit organization, compared to a traditional big bank, is funded on the roots of helping all people, even ones with little to no credit. Since a not for profit organization doesn’t have the traditional bank requirements, its staff don’t have to review personal financial records or even a client’s credit history. This allows them to process the collateral loan quickly.
While the pandemic continues to spread devastating the entrepreneurism ecosystem along its track, it’s important to remember that this too shall pass. The Hispanic community is incredibly resilient and businesses who are able to be flexible today will come out the pandemic ready and hungry for future growth.
Julian Perdomo is the marketing coordinator at The Provident Loan Society.