VP Harris and Treasury announced $8.7B in investments for small and minority-owned businesses

On Tuesday, U.S. Secretary of the Treasury Janet L. Yellen and Vice President Kamala Harris announced the release of $8.7 billion in investments through the Emergency Capital Investment Program (ECIP) to help increase lending to small and minority-owned businesses and people living in underserved communities with limited access to banking, The Associated Press reported. 

The funds from the ECIP will go to 186 community-based financial institutions. ECIP enables the Treasury to make direct investments in banks, credit unions and holding companies that are designated as a Community Development Financial Institution (CDFI) or a Minority Depository Institution (MDI).

Institutions headquartered in 36 states, as well as Guam and Washington, D.C. will be recipients of the deployed $8.7 billion. States with the largest number of institutions being offered ECIP investments include Mississippi, Louisiana, North Carolina, California, and Texas. Among the institutions recommended for an ECIP investment, approximately 54% are banks and 46% are credit unions. The ECIP investments will range, depending on the size of the institution, from over $200 million to less than $100,000. Of the funds, a total of $3.1 billion is being offered to 57 minority depository institutions.  

US Department of the Treasury, Public domain, via Wikimedia Commons

“We know that the communities hurt most by COVID-19 have often been communities of color, and Treasury has implemented relief legislation with equity in mind,” said Secretary Janet L. Yellen in a press release Tuesday. “Today, we’re seeing one result of that effort: Treasury, through the Emergency Capital Investment Program, is injecting nearly $9 billion into Community Development Financial Institutions and Minority Depository Institutions.”

According to the Associated Press, “Black Americans represent 13.4% of the U.S. population, yet Federal Reserve figures show they control just 4.3% of household wealth and more than half of Black household wealth is in the form of pension entitlements, which cannot be passed along to future generations.” 

The racial divide and these inequities in wealth have contributed to many of the hardships people of color face when applying for loans, mortgages, and other financial assistance. ECIP investments will help in bridging this gap by supporting  mission-motivated institutions to increase responsible investments in low- and moderate-income and minority communities that have disproportionately suffered from the impacts of the COVID-19 pandemic.

In a moderated conversation at the Freedman’s Bank Forum, Vice President Kamala Harris addressed these inequities stating, “Here’s what I know to be true: America is a nation that is driven by the ambition and the aspirations of her people.  But I also know that, in America today, deep racial disparities continue to hold people back from achieving all they can.

“Today, the wealth gap persists.  Today, the homeownership gap persists.  Today, access to capital is unequal.  As one example, Black entrepreneurs are three times more likely to report that a lack of access to capital negatively affects their profit margins. 

“I believe that the actions we are taking and must take to address these disparities will define our nation’s strength and economic strength in the 21st century.”

crowdfunding

How women-led companies can raise more money through crowdfunding

Ramy Elitzur, Associate Professor of Financial Analysis at University of Toronto, shares how women-led businesses can use crowdfunding to launch their startups. 

For a new venture to get off the ground, entrepreneurs require resources and support that greatly enhance the likelihood of its success. Unfortunately, there is still a gender gap in entrepreneurship that means women don’t get the same access to those resources.

In fact, while women make up 51 per cent of the global workforce, their representation as entrepreneurs, according to global crowdfunding statistics, is only 39.5 per cent.

To address this gap, entrepreneurship researcher Eliran Solodoha of Ben Gurion University and I conducted a study in which we analyzed 2,275 rewards-based crowdfunding projects to investigate the impact of the presence of women entrepreneurs and the effects of social validation on their fundraising efforts.

Social validation is a psychological phenomenon in which passive people follow or conform to the actions of others within a group. For example, people are more likely to stop at restaurants with many cars parked outside than those with few cars. Extending this idea to crowdfunding, investors are more likely to commit funds to projects with large numbers of backers and shy away from those with few.

Startups are increasingly turning to crowdfunding to raise financing for their companies. In rewards-based crowdfunding, entrepreneurs seek financing from investors in return for a product or service.

Social validation, crowdfunding success

Social validation is powerful and provides insights into the every-day behaviour of people. For example, research shows that because of social validation, people will often pick an incorrect answer on a vision test — even whey though they know it’s wrong — to conform to the others who publicly picked it.

Additional research shows that participants who read a blog post with fake comments supporting a volunteer activity agree to volunteer for more hours than those who read the same blog with fictitious comments rejecting it.

In a similar manner, potential investors may consider a business venture more attractive when they see others reacting favourably to it.

One of the problems facing women entrepreneurs is that that the entrepreneur’s role is stereotypically viewed as masculine. Consequently, women-led firms face more financing barriers compared to those helmed by men. The question we focused on is whether social validation — specifically, the number of crowdfunding supporters — can reduce the gender gap as companies helmed by women try to raise funds.

We conducted our analysis using standard statistical methods as well as machine learning algorithms that provided a clearer picture of the behaviour of crowdfunding investors.

The importance of crowdfunding backers

Our results showed that, as expected, the fact that a company is led by a woman works against it when it comes to raising financing through crowdfunding. However, our results demonstrated that women-helmed companies can overcome this obstacle and obtain crowdfunding support using social validation.

In other words, if they attract supporters, they can obtain even more supporters. The practical implication is that female entrepreneurs should strive to generate initial support, for example, by raising as much financing as possible at first from their own networks.

Another form of social validation involves the number of comments on a crowdfunding campaign, which can demonstrate the size and scope of an entrepreneur’s social networks — again a positive sign for potential investors.

Our machine learning algorithms also demonstrated that while social validation helps women entrepreneurs obtain financing, it peaks at a certain level. The results show that social validation will increase the probability of crowdfunding success by 14.5 per cent overall in combination with all other variables that include geographic location, the category the venture is in (health, music or food, for example) and prior entrepreneurial experience.

The lack of resources and support for women entrepreneurs lowers their chances of success, and ultimately leads to the under-representation of companies led by women. As we show in our study, this problem can be partially overcome in crowdfunding initiatives by socially validating female-led ventures.The Conversation

You might be interested: Why more minority founders aren’t backed by venture capital funding


Ramy Elitzur, Associate Professor, Financial Analysis, University of Toronto

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Why more minority founders aren’t backed by venture capital funding

Funding for any new business venture is a critical step that will often determine its ultimate success. Many businesses sink far too early in the process when founders are unable to secure access to capital. Unfortunately, women and minority business owners are more likely to be denied venture capital funding and bank loans compared to white, male founders.  

Why aren’t more minority founders backed by venture capital funding? (Business card photo created by rawpixel.com – www.freepik.com)

According to an article by Forbes, in the past year, only 2.6% of venture dollars went to minorities and 2.2% went to women. In total, that is only $4.2 billion out of the $87.3 billion venture capital was distributed. Additionally, as of January 2021, only 93 Black and 58 Latinx women have ever raised over $1M.

This lack of VC funding for women- and minority-owned businesses is part of an ongoing cycle and diversity issue within the entire venture capital process. The fact of the matter is, diverse venture capitalists (VCs) and limited partners (LPs) will be more likely to invest in diverse founders and entrepreneurs. But so far, these roles have been saturated predominantly by white, male individuals. 

Breaking old patterns 

In an article by Fast Company, Leah Solivan discusses her experiences in securing venture capital funding for her startup and shares ideas on how the old pattern can be broken. In sharing her experience she describes how she first struggled to secure funding because she “didn’t match the pattern.” As a woman and a Latina, these modifiers made her an “other” in the eyes of traditional venture capitalists. She was not the typical founder. 

“VCs had an idea of what successful founders looked like, and they didn’t look like me,” Leah shared in her article. “It took another woman of color hearing my pitch to open up opportunities for me. And that woman, Ann Miura-Ko, was only in a position to say “yes” to me because another VC (Floodgate’s Mike Maples) took a chance on her. As a founder and CEO, I recruited a diverse team of talented individuals who brought different backgrounds and life experiences to the table. Many of these people have gone on to become founders themselves, building their own teams. Others have gone on to become venture capitalists. This is the virtuous cycle of wealth creation in action. And all it took to get it going was one VC deciding to take a chance on someone who didn’t match the pattern.”

This process that she describes is exactly how we can work to break old patterns within the venture capital process. We need diverse LPs who can then fund venture capital funds. And diverse VCs will then seek out and fund diverse founders. These founders can then give opportunities to their diverse team members and employees who can then grow to become their own founders or investors. 

Minority business owners and entrepreneurs, especially Latinos, have great potential to grow and thrive with the right backing. According to the Stanford Research 2020 State of Latino Entrepreneurship Report, Latinos are starting businesses at a faster rate than the national average across several industries, growing 34 percent over the last 10 years compared to just 1 percent for all other small businesses. Additionally, the report showed that over the past two-years, Latino-owned firms grew revenue at an average of 25 percent per year while white-owned businesses grew revenue at 19 percent.

Moreover, much of the growth in the number of new businesses among Latinos has been driven by women. Latinas represent 40% of all Latino business owners and the number of Latina-led employer firms has grown 20% within the last five-year period.

Forbes also reported that in the last year, 40% of new businesses were started by women and 47% of those businesses were started by minority women. 

You might be interested: Dr. Marlene Orozco demystifies misconceptions about Latinas through data 

We need diverse venture capitalists to support diverse founders

“Capital remains in the communities that manage it,” says Ivelisse Rodriguez Simon, Managing Partner of Avante Capital. Earlier this year, Ivelisse spoke as a panelist during Latina in Business’ virtual panel, “Latina Small Business Post-Covid: Recovery Resources and Trends. There she shared trends in investment capital and discussed why many women and minority owned businesses struggle to access capital. 

Ivelisse Rodriguez Simon, Managing Partner of Avante Capital.

There’s about $70 trillion of capital to manage in the United States and only 1% of that capital is managed by women or people of color. So even though women and people of color represent 75% of the US population, we only manage 1% of the capital. And the result of that is that our communities don’t get access to that capital.” 

To break this cycle, we need diverse venture capitalists and limited partners. Ivelisse says that this is an issue Avante has been really committed to. “Not only supporting women and people of color managing businesses but really trying to get women and people of color into this industry to manage capital so that we can go out and find entrepreneurs from our communities and help them grow. Because if there are not many people in my seat that look like us, our people are never gonna get capital,” she says

Don’t miss our Summer Speakers Series and Networking Blast Events throughout August!  Interested in learning how to access business funding for your venture? Sign up for our August 11th workshop, “Resources to Increase Your Business Revenue.” 

While pushing for more diversity throughout the various positions in the venture capital funding process, we also need to hold venture capitalists accountable. It should not only be the job of diverse and minority venture capitalists to fund diverse founders and entrepreneurs. More venture capitalists need to be willing to take risks. After all, is that not the point of “venture” capitalists. 

As Leah Solivan nicely said, “Venture capital was once a business that took big bets on outsiders—it wasn’t long ago that the college drop-out computer nerd cliché was a novel, risky opportunity. As the industry has matured, we’ve defaulted to pattern matching (which too often means young, white males that resemble those once-novel success stories) instead of seeking out founders of different backgrounds, different geographies, different skill sets, and different demographics. Our current cycle tries to play it safe. There’s nothing virtuous about that, and it also runs contrary to the ethos of venture capital—which is about taking a chance on something or someone with the potential for disruption.” 

We need diversity in all stages of the venture capital process. We need to break-down old patterns and biases about what a founder looks like. And we need to hold traditional venture capitalists accountable and push them back to their roots, to take risks on something new, and take a chance on the underdog.

SIA Scotch Whiskey, The Entrepreneurial Spirit Fund,

SIA Scotch Whisky partners with Hello Alice to launch groundbreaking new entrepreneurship fund

Did you know that in the United States, multicultural entrepreneurs have reportedly received only a 2% share of venture capital annually over the last decade? SIA Scotch Whisky, an award-winning spirits brand founded by a first generation Hispanic entrepreneur, is looking to help bridge this gap by partnering with Hello Alice and celebrated activist, actor and producer Wilmer Valderrama to launch The Entrepreneurial Spirit Fund by SIA Scotch. Spearheaded by SIA’s founder Carin Luna-Ostaseski and inspired by her journey of building the brand from the ground up, this initiative aims to challenge conventions and inspire others to achieve the unexpected.

SIA Scotch Whiskey, The Entrepreneurial Spirit Fund,

Carin Luna-Ostaseski and group (PRNewsfoto/SIA Scotch Whisky)

This new grant program will deploy a quarter of a million dollars to multicultural small business owners in need of support, especially after the additional challenges they face because of COVID-19. It will also offer recipients access to mentorship opportunities with SIA’s founder, who is one of the first Hispanic people in history to create a Scotch Whisky, and who faced many challenges during her own entrepreneurship journey. 

SIA Scotch Whiskey, The Entrepreneurial Spirit Fund,

Carin Luna-Ostaseski, Founder of SIA Scotch Whisky (PRNewsfoto/SIA Scotch Whisky)

“SIA Scotch Whisky was born out of passion, determination and perseverance – the same characteristics that drive many other entrepreneurs. As a first generation Cuban American, I experienced so many uphill battles, from securing funding to dealing with regulations and securing investors,” said Carin Luna-Ostaseski. “But, after finally getting crowdfunded on Kickstarter and seeing those first bottles on shelves, I knew my purpose was to help inspire other underrepresented entrepreneurs achieve their dreams too. I am so proud of The Entrepreneurial Spirit Fund and its mission to embrace the cultural diversity that helps define our country.”

The Entrepreneurial Spirit Fund by SIA Scotch launches in partnership with Hello Alice, a free online platform that guides business owners through the growth of their company and matches individuals with the resources to make their dreams a reality.

“Now, more than ever, it’s important to recognize the impact that multicultural small businesses have on their communities,” said Elizabeth Gore, President & Cofounder, Hello Alice. “In the last 10 years, multicultural entrepreneurs have represented over 50% of new businesses started and created 4.7 million new jobs, yet they are largely excluded in funding. We are thrilled to be continuing our support for this community in partnership with SIA Scotch Whisky.”

You might be interested: Say ‘Hello Alice’ to the platform that is opening doors for small businesses and new entrepreneurs

SIA Scotch Whiskey, The Entrepreneurial Spirit Fund,

Wilmer Valderrama joins SIA Scotch Whisky (PRNewsfoto/SIA Scotch Whisky)

Additionally, activist, actor and producer Wilmer Valderrama joins The Entrepreneurial Spirit Fund as partner, continuing his ongoing tireless mission to push for diversity and inclusion. “Supporting the progress and perseverance of multicultural entrepreneurs who are trying to achieve their dreams and disrupt the status quo is incredibly important to me. I’m so honored to partner with SIA Scotch Whisky on The Entrepreneurial Spirit Fund and I believe that their work will make a big impact, especially during these difficult times,” said Wilmer Valderrama

The Entrepreneurial Spirit Fund by SIA Scotch will award $10,000 grants to 25 qualifying entrepreneurs who self-identify as people of color, for a total of $250,000. To apply, visit siascotchfund.helloalice.com. To be eligible, the business owner must be a citizen or legal permanent resident of the United States, 25 years or older, and must operate in at least one of the following states where SIA is sold: California, Florida, Illinois, Nevada, New York and/or Texas. For complete eligibility criteria and important restrictions, visit the application site. Applications are open now through August 10, 2021, grant recipients will be announced by September 14, 2021 and funding will be distributed by October 8, 2021.

Latinas in Business partners with Rutgers’ Entrepreneurship Pioneers Initiative (EPI) Program

Jasmine Cordero is the director of Rutgers’ award-winning Entrepreneurship Pioneers Initiative (EPI) Program where she manages the 9-month training program focused on helping entrepreneurs in NJ grow their businesses and attain resources, financial coaching, peer-mentoring, and networking opportunities. 

Entrepreneurship Pioneers Initiative

Apply today! Deadline March 31.

The Entrepreneurship Pioneers Initiative (EPI) offered by Rutgers University’s Center for Urban Entrepreneurship & Economic Development (CUEED) is an exclusive program that has helped countless entrepreneurs grow and improve their businesses for over 13 years. 

Now, Latinas in Business is becoming Strategic Partners with Rutgers’ EPI program to bring our Members more support and resources and help them get their businesses to the next level. Latina in Business Members will receive an exclusive discount on the program, paying only $300 instead of $550. 

Additionally, Rutgers will be sponsoring 3 scholarships for Latina in Business Members each year. 

“We are grateful and excited that Rutgers EPI program has partnered with Latinas in Business to give access to better knowledge, support and resources to our members. Latina entrepreneurs are a hard-working community that can use all the help they can get,” said Latinas in Business President and CEO, Susana G Baumann. 

Susana G Baumann with 2019 Latinas in Business Pitch Competition winners.

How the EPI Program will help you grow your business

Speaking with Jasmine, she explains what the EPI Program does, what participants can expect and gain from the program, and how to apply. 

“The EPI is an award-winning program and has won several national and international awards for its innovative curriculum and aiding economic development. The goal is to help entrepreneurs have thriving, sustainable and profitable businesses.

Participants receive intensive business training, individual business and financial coaching, peer mentoring, networking opportunities and mentoring over a 9-month period to help them grow and improve their businesses. The program also helps participants develop the skills and tools needed to recover from the COVID-19 pandemic and any other crisis that their business may face.” 

Jasmine Cordero as one of the judges at the 2019 Latinas in Business Pitch Competition.

What do small Business owners take away from the program? 

“Entrepreneurs leave the program with a road map, actionable, and measurable plan on how they are going to grow their business within the next three years. They also leave with an expanded network, a support network, and increased business knowledge to help them with their business growth.”

How do they graduate, and what are the requirements for graduation? 

To gain the full benefit of the EPI program, all participants must commit to:

    • Half a day training sessions biweekly on Fridays (Virtual via Zoom)
    • Additional hours (approximately 6-10) over the nine-month program for business development and financial coaching 
    • Developing and presenting a customized growth plan for your business
Entrepreneurship Pioneers Initiative

Visit https://www.business.rutgers.edu/cueed/epi for more information on the program and how to apply.

Is there funding involved?

Each participant will have their own business and financial coaches. As part of the coaching, the business coach will help them identify opportunities to grow and the financial coach will help them find funding. 

Who can apply? 

In order to be able to apply to the program you must be in business/fully operational for at least a minimum of 2 years and located in NJ.

Registration is now open for the 13th cohort. The deadline to apply is March 31. You can complete an application at https://www.business.rutgers.edu/cueed/epi.

financial strategies

Best use of PPP and other financing strategies for Latina business owners

Latina business owners are usually in industries that traditional funding sources are reluctant to invest in such as restaurants, beauty and the like. But sooner or later, they will need financing.  Economic times may seem challenging, but they are filled with opportunities.  In fact, this is the best time to invest in your business.  Many businesses have suffered financially.  However, the good news is that there is still capital available.  Take advantage of all the capital resources available right nowand develop your financing strategies.

What is a good financing strategy?
Financing should be part of your overall business.  You spend time on marketing, sales, operations, hiring and administration.  How much time do you spend on developing financing strategies?  A strategy consists of looking at short-term and long-term goals for your business.  All successful businesses had a plan to access capital.  For instance, Facebook raised debt and equity capital until it went public.  They had a financing strategy in place.  What are your options?

Government financing
First, take advantage of the Payment Protection Program (PPP) and Economic Injury Disaster Loans, or EDIL program loans.  Make sure you apply to both PPP and EDIL program.  Many business owners got discouraged when they heard that PPP had run out of funds.  Also, in May the SBA stopped taking EIDL applications.

Now, this has changed.  There is still PPP funding and the SBA is taking new applications for eligible businesses.  These grants and loans are probably the best for your business. Even if you had to pay back these loans, the interest rates on these loans range from 1% to 3.75%.  Also, do not get discourage if you are denied.

You can reapply as many times as you want as long as you can provide new financial documentation to support your case.  With the EIDL you have until December of 2020 to apply and reapply unless if they shut down again. You may need an agent or a business financial advisor to help you out.  Also, there are many initiatives for Latina Business Owners via the SBA and other resources.

Short-term financing options
Second, look into short-term financing options.  Prior to Covid-19 there were many online lenders who were providing business lines of credit and term loans up to 24-months.  Today, that is not the case.  Sad but true, the best online lenders such as On Deck Capital, Kabbage, and others have put lending to a halt.  Many banks are not lending to due the uncertainty in the economy, pending fed rates and also busy processing PPP loans.  As a result, short-term financing may be your only option.  These are loans are based on daily, weekly, and bi-weekly payments.  The repayment terms may range from 3 months to 12 months maximum.  How to integrate this type of capital into your financing strategy?

  1. Short-term returns
    If you are purchasing inventory and you can turn it around in 30 days, you can use short-term funding. If you gain a short-project, this capital may come in handy.2. Short-term planning
    There is saying “There is no tomorrow and there was not yesterday; if you truly want to accomplish your goals you must engulf yourself in today.” Cash flow is the blood line of any business. Integrate short-term financing into a short-term sales strategy. For instance, if you plan to increase online sales that can generate short-term cash that will help you repay back a short-term loan.3. Do not overleverage
    You may get approved for $50,000 but only use what you need.  Instead use $25,000.  This will avoid many problems in the future. Even if you do not need it use a minimal amount to establish a credit relationship4. Establish a credit relationship
    Any lender who is lending right now is assuming a huge risk. The effects of the pandemic on the economy and its recovery remain uncertain. However, if you establish an existing relationship with a short-term lender the future can only get better.  Usually, you can renew these loans when you pay off 50% of the balance or mid-way through the repayment term.  Let us assume you took out an 8-month loan. In month number 4 you can renew the loan.  This means you may be eligible to obtain more money, refinance it and obtain a better repayment term and interest rate.

Equipment financing
Equipment financing is also available in these turbulent times.  Since these loans have the equipment as collateral, they offer great terms.  Repayment terms can range from 2 to 5 years.  Furthermore, they offer monthly payments which help you manage cash flow better.

Sample of financing strategies

Quality Online Cargo Distributors was approved for $30,000 under the Payment Protection Program (PPP). They used the money to cover payroll for the next two months and rehire back existing employees.  Instead, of having the business pay for some of their personal expenses and taking the tax ride offs, they will have those expenses covered by the owner’s salary.  This way they avoid having to repay back PPP funds. In order for the PPP loan to be forgiven, at least 75% of the funds must be used for payroll costs, and 25% or less may be used for other authorized purposes. Payroll costs include: Salary, wages, commissions, or tips.  This business knows that this money will only last for two months.

You might be interested:

This business has other financial needs to address in the future.  As a result, they will need more capital.  With this in mind, they applied for the Economic Injury Disaster Loan (EIDL).  They were approved for $100,000 at a 3.750% interest rate with a 30 year repayment period.  Since this loan has a long-term payment repayment period, rather than using the money all at once they have developed a long-term plan.  Within that plan they considered their slow season and also new business development strategies to capture new clients due to the loss of clients resulting from the pandemic.  They know that this may take 1 year to achieve.  At the same time, they will set aside some of this money for business reserves for emergencies.

Lastly, this business applied for short-term funding and got approved for $100,000.  Instead of taking the $100,000 because the interest rate is higher; they only took $50,000.  They will use this money over a 3-month period, and they have projected to make a short-term return on the use of funds.  Also, they understand that this source of capital can serve their short-term needs on an ongoing basis.  On the other hand, the government incentives program will not be around in the years to come unless in there is another disaster.  Having a source of capital ready, when needed is important for your business.

financial strategies

Lendinero, a bilingual company that works with all types of small businesses. (Logo Courtesy Lendinero)

This business has created a strategy on how to use numerous capital resources.  More important, rather than using the money all at once they have diversified the usage according to the business short-term and long-term needs.  The biggest mistakes businesses make when obtaining funding is not having a clear plan of action and using the funds all at once.  Then, several months later you find yourself in the same position.  The most important aspect of using debt for your business is knowing how to use it and how to achieve return on investment.

This is a brief example.  This plan for this business also entailed a budget, projected profit to loss and other financial projections taking into account loan payments, accounts payables, accounts receivables, reserves, risk management and hypothetical outcomes. This requires time, but it’s worth the investment.  A business with no direction is bound for failure.

(This is a paid contribution from Lendinero, the number 1 company dedicated to find financial solutions for small businesses) 

PPP sole proprietor, forgiveness

How to request forgiveness for PPP sole proprietor

I got my PPP sole proprietor funding last week. How did I do it? I’m not a CPA or a lawyer, and I don’t give accounting or legal advice. This is just my experience, researching, asking my business advisors and the organizations that really represent and work with Latinas in Business Inc.

For sole proprietors and micro-businesses -also known as solo-preneurs-, the SBA subsidies and loans have been a frustrating experience.  Although we were allowed to apply for both the EIDL and the PPP (Paycheck Protection Program) loans, these programs have been designed with large employers in mind.

PPP sole proprietor, forgiveness

(Photo Credit: Sharon McCutcheon – Unsplash)

I reached out to some of our Latinas in Business members and many have given up on applying because they didn’t understand the guidelines, they were wrongly informed by other organizations -and they stayed with that opinion, which is never advisable- or they just didn’t want to “get another loan.”

For whatever reason you did not do it and now you have regrets, you are still on time to apply for the PPP sole proprietor funding  until June 30 -check with your local banks, some are still taking applications!

If there are enough people applying for this or other programs still available, Congress might consider a third round of subsidies for small business, yes, like us.

Keep in mind how to apply for PPP sole proprietor funding (in case of a 3rd round)
  1. If you have an established relationship with your banker -which you always should because they are the ones who take care of your business and the money you earn with so much hard work-, call your banker and ask them if they are still taking applications. If they are not, here’s a list of SBA approved lenders you can go to.

View a list of lenders participating in the Paycheck Protection Program by state as of May 5, 2020.

A shout out to Branch Manager at Investors Bank Jacqueline Sansone, who patiently guided me through the process!

PPP sole proprietor

Isahias Stanback, StedFast, and Jackeline Sansone, Branch Manager, Investors Bank at 2019 Latina SmallBiz Expo.

  1. Make sure you comply with one of these conditions:
    1. You are an independent contractor -you work for some company or companies as a consultant, freelancer or service provider and receive a 1099 at the end of the year.
    2. You are a small-business owner or sole proprietor -you work on your own, and do not receive a 1099 from anyone but your own annual sales (products or services) but you pay self-employment taxes. 
    3. You might be a combination of both -1099 and sales.
    4. You can work under an LLC (Limited Liability Company) as a legal structure and still be considered under these categories.

A shout out to my LegalShield lawyers for their advice on how to determine my eligibility. LegalShield is one of our affiliate marketing programs* and you can apply here to learn more, and start making some residual income right now! 

PPP sole proprietor, forgiveness

Our Affiliate Marketing Program LegalShield is a reputable organization that offers accesible legal protection for small businesses. (L from R) Tenille Ortiz, The Cupcake Factory, LegalShield Rep and Susana G Baumann, Latinas in Business Inc. at the 2019 Latina SmallBiz Expo.

  1. You DO file your taxes as a sole proprietor business and fill out a Form 1040 Schedule C. This is an important step to prove you really are self-employed, no matter in what category you apply on your tax return (sole proprietor, contractor/1099, or LLC if your single-member LLC is taxed as a sole proprietorship). If you are a corporation or S-corporation, and pay yourself a salary, you file a different set of forms.

No matter what SBA said about taking your 2018 tax return as a guidance, you REALLY need your 2019 tax return for your calculation, so file immediately! If you need help filing your taxes we recommend Turbo Tax.

A shout out to TurboTax for making the Self-Employed Tax Filing FREE and Intuit.com QuickBooks for Self-employed for only $1 a month!

  1. What you can include in your calculation:
    1. You take your income on 2019 Schedule C Income Line 31 – Net profit or (loss). Obviously you need net profit to prove you made money out of your business.
    2. Take that number and divide it by 12 -that would be your monthly net profit.
    3. Now multiply this new amount by 2.5.

Example: If your annual net profit was $30,000, your monthly net profit would be $2500, your PPP loan would be $6250. Easy peasy!

  1. Once you fill out your application with your bank, they will require certain documents -such as your 2019 Tax Return Schedule C and a couple of bank statements from your business account- that you would have to attach to prove the amount you are requesting. Remember this could be tax-free income and can be entirely forgiven if you spend the money according to the guidelines under the CARES Act.

You can download a copy of the PPP borrower application form to see the information that will be requested from you when you apply with a lender.

SBA information

Screenshot from SBA.gov website that shows first round of PPP disbursement.

What you can pay with your PPP sole proprietor funding to be forgiven

According to SBA guidelines, “The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll).”

So, let’s go one by one:

  1. Payroll: So at least 75% of your PPP must be used for payroll. If you don’t pay yourself a salary and you make payments straight out of your business account for your business expenses, make sure to:
    1. Keep track of personal expenses -if any- versus business expenses;
    2. Keep track of expenses that are not PPP forgivable -supplies, office expenses, car expenses, contractors and vendors, account payables, inventory supplies, etc.
    3. Another way would be to pay yourself at least 75% of that amount by check or transfer to a personal account but this is not an SBA guideline! These are just ways I found out from chat rooms and financial experts’ advice.

ALERT! There are no specific guidelines yet on self-employed or sole proprietors that do not take a salary on how the “forgiveness” must be proven, so keep that in mind and keep your records neat!

DO NOT TAKE THESE IDEAS AS LEGAL OR ACCOUNTING ADVICE, ALWAYS TALK TO YOUR BUSINESS ADVISORS BECAUSE EACH SITUATION IS DIFFERENT!

The rest of the PPP or 25% can be used as follows:

  1. Interest on mortgages: These are interest on mortgage obligations and loans for your business -for instance, you own your chiropractic practice building and you are paying a mortgage on it so your business property is collateral. You cannot include the interest of your house mortgage loan, at least so far, for your home-based business. These expenses qualify as long as these loans were incurred before February 15, 2020.
  2. Rent: Again there are no specific rules for self-employed solo-preneurs but let’s suppose you rent a store building, a workspace or you work in a commercial kitchen, you could pay those expenses with PPP funds from the moment you receive the money in your account over an 8 weeks period. Please document everything carefully! There are no guidelines yet on how to calculate home-based businesses in case you rent and work from home. More to come!
  3. Utilities: The same way, you can pay utilities for an 8-week period since you collect the funding. What is included in “utilities” we partially know, as the SBA guidelines describe phone, internet, gas, water, electricity, etc. What would be included in “etc.” is still a mystery but we believe cell phone bills might also be included. Keep your records straight!
Am I getting “forgiveness” fo my PPP Loan?
forgiveness

(Photo Credits: Felix Koutchinski – Unsplash)

Remember this is A LOAN. Your bank might consider forgiveness if you comply with the SBA Guidelines -and then SBA will repay the loan to your bank. However, they are the ones looking into the nitty gritty details to prove to the SBA that you had followed all the rules and your bank is ultimately responsible for how they see forgiveness or how they want you to prove forgiveness.

Your will have to request forgiveness at the end of the 8-week period for your banking institution to consider it. To maximize your forgiveness, it is mostly necessary that you keep excellent track of all expense information and have it available at the end of your 8-week period.

In case you do not receive forgiveness, loan payments will be deferred for six months, which means you don’t have to pay it back for the next 6 months, and then you will be making payments at 1% per year rate for 18 months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.

More guidance on both qualified expenses and forgiveness should be announced by SBA soon. In the meantime, this outline allows you to begin to spend on qualified expenses and properly track all your expenses.

PPP and Unemployment Insurance (UI) benefits

ALERT! According to The Federal Register, which is The Daily Journal of the United States Government, you cannot “double dip” receiving PPP and Unemployment Insurance benefits or Pandemic Unemployment Assistance (PUA), which comes from your state government.

In addition, you should be aware that participation in the PPP may affect your eligibility for state-administered unemployment compensation or unemployment assistance programs, including the programs authorized by Title II, Subtitle A of the CARES Act, or CARES Act Employee Retention Credits.

If you are not sure which program is better for you, think carefully which one will be more helpful for your business and your situation. If you are still doing business -food delivery, catering, essential services, etc.- it is advisable that you use a break with the PPP and get that help.

But if you think your business will be closed for a long time, UI or PUA might be the way to go for you. Again, seek advice from an CPA, tax advisor, or a lawyer to make your own decisions.

You might be interested:

Additional financial assistance resources

According to Business.NJ.gov, here’s a list of other federal financial assistance resources for self-employed and home-based businesses:

 

*Disclaimer: Latinas in Business Inc. receives residual income from affiliate marketing programs we select carefully because they benefit our members and provide us with funding to continue our mission.

Investors Bank competition

Investors Bank competition for small businesses offers Two Grand Prizes

Investors Bank competition for small businesses offers Two Grand Prize Winners a prize package valued at more than $100,000 in Easy-to-Enter Competition in New York/New Jersey. 

Investors Bank is inviting small businesses in New York and New Jersey to compete for one of two grand prize packages valued at more than $100,000. The easy-to-enter Investors Bank Movers & Shakers Small Business Competition is open to businesses doing between $2 million and $20 million in revenue with less than 100 employees, headquartered or conducting the majority of business in Metro New York and New Jersey. Ten finalists will be selected from among the two categories: general business and minority- or women-owned business. There will be two grand prize winners named from among the finalists.

Investors Bank competition

Investors Bank competition offers a Grand Prizes Package valued at $100,000 (Logo courtesy of Investors Bank)

Investors Bank competition

Investors Bank, WCBS Newsradio 880, and the New Jersey Devils are providing the grand prizes for the Movers & Shakers Small Business Competition, which include:

  • $10,000 in cash from Investors Bank;
  • $15,000 in advertising value on WCBS Newsradio 880;
  • Exclusive New Jersey Devils corporate sponsorship assets; and,
  • VIP event experience at Prudential Center for the contest winners and 15 guests.

“Investors Bank is committed to helping small businesses grow by supporting those that share our key ideals of creativity, competitiveness, and community,” said Domenick Cama, President and Chief Operating Officer, Investors Bank. “Small businesses are vital to the local economy. The extent to which small businesses provide valuable services determines the local economy’s prosperity. We want to support this prosperity.”

Investors Bank competition

Domenick Cama, President and COO, Investors Bank (Photo courtesy Investors Bank)

Interested applicants should submit an “elevator pitch” of no more than 1,000 words describing how their business aligns with the Investors Bank ideals of:

  • Creativity – uniqueness, bringing a new approach to the marketplace;
  • Competitiveness – managing near-in competition and with the larger conglomerates; and,
  • Community – having a positive impact on the immediate neighborhood where customers and employees live and work, as well as the region and the world.

Entries must be submitted to www.myinvestorsbank.com/SmallBizEntry by February 28, 2020. A short video about the competition also is available at that website.

“Small businesses are the foundation of our communities and Investors is committed to finding better ways to serve them,” said Mike MacIntyre, Head of Business Banking at Investors. “We recently hired an additional team of small business bankers dedicated to helping our small businesses succeed, as well as have plans to phase in a digital loan origination platform to streamline our small business loan origination process.”

All of the finalists will be invited to an event at the Radio.com Theater, and will receive tickets to the WCBS NewsRadio 880 New Jersey Business Breakfast in June. Each of the grand prize winners will be featured in a Small Business Spotlight on WCBS.

NJ Devils at Prudential is one of the supporters of the Investors Bank competition (Photo courtesy Investors Bank)

“Investors prides itself on its commitment to community, whether through our support of small business, the work we do through our foundation, our sponsorships, or the tens of thousands of hours volunteered each year to support local initiatives,” said Bill Brown, Executive Vice President, Chief Retail Officer, Investors Bank. “Community is who we are, and small businesses are the backbone of communities.”

You might be interested:

More information on the Investors Bank Movers & Shakers Small Business Competition is available in your local Investors Bank branch or at www.myinvestorsbank.com.

For contest rules and eligibility, visit www.myinvestorsbank.com/SmallBizEntry.

This is an advertorial article. Investors Bank is a supporter of Latinas in Business Inc. However, Latinas in Business Inc. is neither related to nor receives any compensation from the Investors Bank competition for small business.
Erika Basurto

How Latina entrepreneur Erika Basurto found success in real estate

Real estate Latina entrepreneur Erika Basurto found her strengths around her “weaknesses” as a Spanish-speaking immigrant. Since she lived the struggle of overcoming language barriers and learning a profession that would eventually open doors for her, she decided to give back to her community by creating investment opportunities for other Hispanic families in Texas.

Erika Basurto

Erika Basurto, Bravo Investments, at Houston Hispanic ERA (Photo courtesy of Erika Basurto)

 

 

 

Real estate is a tough business to break into, and that’s probably an understatement. And once you’re in, you still have to deal with the long hours and working on commission, among other challenges, to achieve success in the world of real estate.

That’s what makes Erika Basurto’s accomplishments so impressive. She founded two Real Estate Investors Associations (REIA), one of which is the Houston Hispanic REIA. She has also been hosting the Invierte en Bienes Raíces con Erika Basurto (Invest in Real Estate with Erika Basurto) radio show since 2016, where she talks about real estate aimed at the Hispanic community.

real estate

Erika Basurto teaches Hispanic families in Houston and surrounding areas to invest in real estate. (Photo courtesy of Erika Basurto)

But before her success in such a competitive real estate industry, the challenges were doubly hard for Basurto because of the language barrier. Before moving to Houston, she lived in Mexico where she worked in logistics and didn’t speak much English. In an interview with Voyage Houston, she said that a chance encounter sparked her dream of finding success in the real estate industry. While working as a logistics store clerk, one of her customers asked her help in translating a real estate contract from English to Spanish, resulting in months of work.

The single mother earning $10 an hour was introduced to the possibility of making a lot more in less time. For Basurto, the choice was clear, albeit not easy to achieve.

During a guest appearance on The Landlord Survival Show (video above), she recounted how she started with a $500 class on wholesaling. Then she took another class worth $6,000, for which she had to borrow the money, and a few other classes that would help her gain the knowledge and skills — the tools she needed to find success in real estate. She also read books on subjects like attracting investors, watched free YouTube tutorials, and attended many networking events to foster connections with others in her field.

real estate

Erika Basurto, overcoming barriers to achieve success as a real estate investor (Photo courtesy of Erika Basurto)

One of the main challenges she experienced was that there were no classes taught in Spanish. She admits that she struggled a lot with jargon and often felt disconnected from fellow realtors and clients. It’s what prompted her to establish the first REIA in Houston that caters specifically for the Hispanic community. They regularly host bilingual events on a variety of topics in real estate.

Considering that the Hispanic population in Texas is almost as big as the white population, and there are a lot more Spanish-speakers in the state, she realized that these initiatives would help a lot of people who are interested in finding real estate success, whether as an investor or career person.

As relayed above, Basurto wasn’t handed her title and reputation on a silver platter. She had to rise through the ranks starting with translating contracts. She also needed to get familiar with the hierarchy in the industry, and what to do to get to the next level.

A featured post on Yoreevo details the differences between a real estate agent and a broker — essentially, you have to gain a few years of experience as a real estate agent and reach a minimum number of deals before you can become a broker. Basurto is now a business partner at Bravo Investors, which allows her to harness her brokerage and entrepreneurial skills.

 

You might be interested: Latina Career Coach Bonnie Negron gives advice for achieving career goals

In a competitive business such as real estate, ask yourself what it is that you can offer to the industry. Basurto knew that she wasn’t the only one who struggled with the language and she wanted to help others fill that gap. Her real estate success story tells us that even the toughest barriers can be broken with determination.