Title
Fear of Asking: Factors that Inhibit Latinos in Seeking and Obtaining Credit for Small Business
Date of Award
5-18-2012
Document Type
Open Access Honors Thesis
Degree Name
Bachelor of Science in Management
Department
Management and Marketing
Advisor
Maureen Scully
Director
Jeffrey Keisler
Subject Categories
Entrepreneurial and Small Business Operations | Race and Ethnicity
Abstract
Latino owned businesses and any minority business in general are important for the economy of the United States. They generate money that helps the economy grow and work. In the fiscal year of 2010, the Minority Business Development Agency of the United States Department of Commerce created 6,397 new jobs and helped minority owned businesses obtained almost 4 billion in contracts and capital. The numbers are record highs for the MBDA and it shows that minority businesses are growing now more than they were ever before. While the number is growing, the number of minority owned businesses is still small compared to the number of White owned businesses. When we walk down the street or read in a business magazine, we do not see many Latino owned business. If we do then they are mostly small business such as small food shop or neighborhood restaurant but rarely have the chance to grow to medium size businesses.
After the economic downturn in 2008, it has been found that banks are stricter now when it comes to giving out loans because of fears that they are not going to get paid back. “Banks are reluctant to lend to minority-owned firms and other businesses in the current economic recession because of concerns about the ability to repay loans.” The fact that the banks are now stricter has made it more difficult for Latino owned businesses to get credit from the bank. While the Minority Business Development Agency of the United States Department has helped minority owned businesses get 4 billion in contracts and capital in 2010, many Latino owned businesses are still being denied loans to start their own business. But is it just the fact that banks are stricter now that has prevented Latino entrepreneurs from getting credit from the bank or is there more to it such as discrimination practices by the banks? What are the factors that are making it difficult for small Latino owned businesses to get credit from the bank?
In this thesis, I will review the obstacles to obtaining credit and assess where they are particularly challenging for aspiring Latino business owners. Next, I discuss the method I used to probe these challenges further, including interviews with experts and participant observation of informational sessions for entrepreneurs. Then, I present the findings, including some factors not emphasized in the literature. I close with implications for creating more promising conditions for potential or current Latino business owners to overcome obstacles, obtain credit, and ultimately improve economic conditions for the Latino community.
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Recommended Citation
Hernandez, Brenda, "Fear of Asking: Factors that Inhibit Latinos in Seeking and Obtaining Credit for Small Business" (2012). Honors Thesis Program in the College of Management. 11.
https://scholarworks.umb.edu/management_hontheses/11