It's Time to Promote Hispanic MBLs

POSTED on September 16, 2019 IN Coopera

Credit unions need to play an active role in this process through member relations and MLBs. Your Hispanic members, a highly motivated and growing market segment whose successes will benefit both sides of the lending equation, are relying on you.

Credit union interest is growing in offering member business loans, or MBLS, even though strict regulatory limitations still exist. The lending rules are clear, but the amount of MBL dollars available differs based on a credit union’s size and the makeup and performance of its overall loan portfolio.

With fewer MBLs available compared to other loans, the ones credit unions do issue should be given to well-performing entrepreneurs with the greatest need, and who can do the greatest good with those funds for their community. In our minds, Hispanic-owned businesses should be top contenders when credit unions make their MBL decisions.

Does that surprise you? It shouldn’t. Hispanics are one of the country’s fastest-growing population segments, and also one of its most entrepreneurial. Moreover, loans to Hispanic-owned businesses are being increasingly targeted by banking industry competitors in a way that is frictionless and culturally relevant.

A 2018 Gfk Social and Strategic Research study surveyed Hispanic and non-Hispanic business owners about their beliefs and practices. These results may surprise you.

* Hispanic business owners are significantly more confident in overall economic growth than their non-Hispanic counterparts. In 2019, 68 percent of Hispanic owners believed their local economy would grow compared to 54 percent of their non-Hispanic counterparts. Although slightly lower, faith in national economic growth measured 59 percent and 55 percent, respectively.

* Concurrent with their optimism, Hispanic business owners raised greater levels of concern over the rising cost of doing business. Those concerns included everything from increasing health care costs (70 percent for Hispanic owners versus 63 percent for non-Hispanics) to continued strength of the U.S. dollar (59 percent versus 42 percent, respectively) to credit availability (45 percent versus 29 percent, respectively). Such cautionary concerns added to their overall optimism place Hispanic business owners in a stronger and more realistic position to effectively compete in an open marketplace.

Hispanic business owners surveyed about their future plans again outpace those of their non-Hispanic counterparts.

* In 2019, 74 percent of Hispanic-owned businesses expected to increase revenues, compared to just 57 percent of their non-Hispanic counterparts.

* For the same year, 51 percent of Hispanic owners plan to hire more staff, compared to 26 percent of non-Hispanic owners.

* Finally, 28 percent of Hispanic owners say they plan to apply for loans, compared to only 14 percent of their non-Hispanic counterparts.

This all adds up to greater optimism and market-readiness by Hispanic-owned business, 87 percent of which planned to expand their enterprise in 2019. It also means a greater need for available capital to help those businesses reach their lofty, but eminently achievable goals.

Credit unions need to play an active role in this process through member relations and MLBs. Your Hispanic members, a highly motivated and growing market segment whose successes will benefit both sides of the lending equation, are relying on you.

This blog post was written by Víctor Corro, CEO of Coopera. Find other blog posts at blog.cooperaconsulting.com.