NJ Hispanic businesses: High interest rates threaten

New Jersey is home to over 120,000 Hispanic-owned businesses with one of the highest rates of business ownership for Hispanic Americans in the nation. These businesses depend on reliable access to credit markets. Many of these entrepreneurs are still getting back on their feet from the pandemic. Now they're facing higher interest rates that could jeopardize their access to affordable credit. To safeguard New Jersey’s economy, we must make sure these entrepreneurs have access to economic lifelines and the resources to make informed decisions about loan commitments.

Supporting our entrepreneurs is a large focus of our work at the Statewide Hispanic Chamber of Commerce. Backed largely from Wells Fargo grant, our eight-week Latinas Entrepreneurs Training Series program teaches Latina entrepreneurs the principles of accounting, marketing and networking, helping them succeed in today’s marketplace.

However, even after they’ve gained these skills, small business owners often face financial challenges when seeking loans to expand their operations or launch new ventures. Predatory lenders take advantage of these vulnerabilities, burdening these entrepreneurs with exorbitant interest rates, hidden fees and unscrupulous practices that can stifle growth and lead to financial ruin.

As advocates for these Hispanic-owned businesses, the last thing we want to see are these entrepreneurs — who invested their time, passion, and resources into building their businesses — only to be ensnared in predatory lending traps that derail their dreams. We were glad to see Sen. Bob Menendez recently announce $255 million for New Jersey as part of the State Small Business Credit Initiative which supports numerous programs to support loans for small businesses, including for minority-owned companies.

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This is an important first step. However, the work can’t stop there. We must continue to create innovative new programs that pull the best ideas from the nonprofit sector and governments at all different levels to provide greater resources and equip these entrepreneurs with the tools to differentiate between responsible lenders and predatory ones.

Small businesses are the backbone of our nation's prosperity, driving innovation, job creation, and economic growth. In New Jersey, small businesses employ two million people — 49% of all workers in the state. This is particularly true within the Hispanic community, where entrepreneurship is ingrained in the cultural fabric.

When a small business fails, the negative consequences don’t just impact the entrepreneur. The impact ripples across the entire community, costing jobs and harming the social fabric. After years of shutdowns and crippling inflation, many of these small businesses are just struggling to get by. Let’s not take our eye off the ball now.

Carlos Medina is the president and CEO of the Statewide Hispanic Chamber of Commerce.