Small firms have been unable to quickly hire new employees because it’s too hard to get bank loans, Hispanic business leaders say.
Roberto Barragan, president of Van Nuys-based Valley Economic Development Center, said there are small businesses that want to add as many as 20 new workers, but instead hire one or two people because they lack financial backing from a bank.
“Unfortunately, in Los Angeles, with 12 percent unemployment, we can’t afford (just) one or two jobs,” said Barragan, after he spoke on a panel at the United States Hispanic Chamber of Commerce convention in downtown Los Angeles.
Frank Garcia can relate. Four years ago, the business owner approached a bank for a $100,000 loan for his Bronx, New York company that recycles laser printer toner cartridges. The bank turned him down.
Garcia, now chairman of the New York State Coalition of Hispanic Chambers of Commerce, said he would have used part of the loan to hire 20 more employees.
He calls the challenges facing small businesses “a big crisis” in New York. Problems surrounding regulations, access to capital and not enough government support for businesses, make it difficult for small businesses to thrive, he said.
“It’s very volatile,” Garcia said, adding that in New York State, “20 to 30 businesses a day are closing down."
However, bank representatives said the lending environment is improving. Wells Fargo said it made $7.4 billion in new loan commitments in first half of 2012 for small businesses. Those businesses generally make $2 million to $20 million in gross annual revenue.
“There is money out there and we are lending money,” said Mike Galvez, a Wells Fargo vice president and business banking manger, said at a convention panel.
More than 5,000 people attended the convention at the JW Marriott. The three-day event ends today.