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Latino Owned Businesses are the Future! Why is lending behind, our contracts smaller and why we need to change this NOW!

Originally published on LinkedIn on February 21, 2023.

Last Thursday February 16th, I had the distinct pleasure of sharing the stage with David Andalcio , CEO of Chicago based Wynndalco Enterprises, LLC.Saskia Sorrosa, Founder of New York based Fresh Bellies.

Indulge me for a moment as I show my wanna-be graphic designer and video editor skills:

Jennifer Garcia, COO of the LBAN/Latino Business Action Network moderated our panel discussion where we talked about contracts, missed opportunities and debt and equity financing landscape for Latino Owned Businesses.

I shared my short bio, mom of three, and Contract Manager and CFO at CG Moving Company Inc. with warehouses in South San Francisco and Sacramento, and (soon) West Sacramento California. We are a federal, state, municipal and commercial contractor, as well as residential movers and licensed installers of modular systems. We offer online inventory management and on demand delivery services.

Our origin story, and how my husband Charlie Gonzalez, against my advice, founded the company in 2005 after years of working as a packer, mover, driver and supervisor. When he is not around, we say “CG” stands for “Cool Girls Moving Company” since Olga Garcia and I manage the company’s licensing, insurance, contracts, estimating, invoicing, and other administrative and operational tasks.  I was laid off in 2008, and after managing a HELOC operations, admin and collections department (Transferred over 3,000 loan files and close to $400M in HELOCs to the federal government and investors ) I joined the company. I am glad my husband did not listen to my advice!

The first question centered about missed opportunities when Latino Owned Businesses do not do business with the federal government. The 2022 STATE OF LATINO ENTREPRENEURSHIP REPORT pointed out that although Latino Owned Businesses are more likely to win contracts with corporations, federal and state governments, the size of the contracts is substantially smaller. On average Latino Owned Businesses (LOB) win $1.4M vs $4.8M for White Owned Businesses (WOB), $.6M LOB vs. $20.5M (WOB) for state contracts and $.5M (LOB) vs. $14.8M (WOB) for federal contracts. When we look at these numbers, I feel infuriated.

We can all agree the summit was a success, hundreds of Latino Owned Businesses from all over the U.S. and Puerto Rico, more than 700 people filled the Cemex Auditorium, and two overflow rooms were at capacity. It was wonderful to reconnect with so many of our peers and allies.  But now that the summit is over, we need to revisit the report and share this information and we need to continue this conversation with the banks we bank with, and the people we put in power at all levels, municipal, state, federal.

At CG Moving Co. we are a microbusiness, and two of the largest federal contracts we hold exceed the report’s average of $500K ($1M and $600K yearly), it is an anomaly and it shouldn’t be.

Federal, state agencies, and corporations are missing out when they do not hire Latino Owned Businesses. We are resourceful, agile, competitive and super prepared. We are a strong, youthful and diverse force. We have this fire, it is our nature, we are always trying to work harder than the next person. It is who we are.

On the other hand, if you are a Latino Owned Business you are missing out on opportunities if you are not doing business with the government. The federal government is the largest buyer of products and services, in fact the GAO U.S. Government Accountability Office reported that in Fiscal Year 2021, the federal government spent about $637 billion on contracts.

As an example a military base has homes, and they need painters, movers, educational support services, and also things: paper products, clothing, food etc. Anything you currently sell to a commercial customer, you can sell to the federal government.  And why not? They are using our own tax dollars! While we can go on and on about ‘why sell”, I also want to frame this question of why not me? Why not my business? We already know and there is data in multiple reports that businesses owned by people of color are more likely to hire people of color, we increase the economic activity in communities of color, and there is increased competition, which is good for the public and taxpayers.

Next we moved on to matchmaking and internal connections to meet key people in organizations. One of the perceived success factors from the report, in securing corporate  contracts was attending and participating in matchmaking opportunities, and yet, we are reporting  longer corporate contract cycles.

I shared from my experience, when I was new to the contracting space, I would sign up for every matchmaking opportunity. This took time out of our small business and eventually, I felt that this time could be better spent looking at sources sought/request for information where you can actually influence the solicitation by sharing commercial practices/practicability and whether there are any diverse or small businesses interested and capable in a future bid.

If matchmaking has worked for your business, keep doing it. But from my point of view, we need to have more accountability and we need to ask the organizers of these events, especially when they are public, state, federal agencies, what actual contracting dollars are resulting from those events. We cannot keep showing up when our racial, demographic or social group is queued up for the annual Black History, Latino/Hispanic Heritage Month, Pride Month etc for the agency or corporation’s social media content. We need to demand transparency and see who is actually coming out of those events with actual and meaningful connections and how those have resulted in contracting dollars. Show me the data!

In the findings regarding access to debt or equity capital, the report found that White Owned Businesses are more likely to secure loans with national banks, when the loan amount exceeds $50,000.  On loans $500K and higher, WOB secured 85% of the loans and LOB only 67%. We should be questioning our banks, why is this happening and what are they doing to change it?

In my own experience, I had a traumatic experience going thru the first PPP round. I did not need it, but seeing that everyone was getting them I applied. Confidently thinking I have a degree in Finance (Go Gators!), I worked in banking, I know my business. I was not prepared to be denied nine times. The last straw was finding out that my Tia Reina, who owns Reina’s Restaurant on Mission St in San Francisco, had gotten the loan! Eventually I did get it. But when it came time to look for financing to purchase two buildings in West Sacramento, I decided I would not go through a national bank. Back in 2019, I had met Vicente Lopez, through LBAN capital matchmaking, and kept in touch. He was able to connect me with Dan Fujitmoto of Community Bank of The Bay and Stephanie Chung, of Business Finance Capital, and together they worked to get an SBA 504 loan for both buildings, tenant improvements and equipment for close to $3.4M

In closing, I encouraged all LBAN/SLEI alumni to connect with their peers in the network. I have been able to meet, engage and learn from people in different industries, across the country who have been nothing but supportive and enriched my life. People like my “BHAG” (Big Hairy Audacious Goal) group. A small group of CEO’s who meet monthly to discuss our business challenges, successes and share resources with each other.  I have been able to meet legendary business leaders such as Daniel MontesJavier LucateroDavid SalasLermit DiazAlejandra ChavezBea StotzerNadine Cino LEED AP Madeleine F. Wallace, Ph.D.Yaeli MerenfeldMaria Fernanda Reyes and many others!

Next steps, what the hell do we do with this information? LBAN and Stanford have eight years of data, what now? We need to keep empowering each other and act! We need to challenge the systemic practices and policies that have kept us and other minorities of color and LGBTQ, veterans and disabled business owners out of the ring. And we do that by demanding transparency in business practices, contracting practices and policies, pointing out and changing roadblocks that keep our communities out of large contracting opportunities. We also do that by supporting businesses that are willing and able to reinvest in our community, whether it is funding programs for education, business development or contracting training and assistance. Furthermore, what is your own business doing to achieve this? Are you buying from Latino Owned Businesses? And are you buying without asking for a “primo/hermano/family” discount? Are we connecting people to others within our networks for possible teaming arrangements? Let’s rise together, it is good for you and for the country! And it is the right thing to do.

If you like to watch a video of the event, here is the link to the Stanford Graduate School of Business YouTube channel.

If you like to connect with me, to talk about all things federal contracting, small businesses and anything in between, send me an invite and tell me if you were at the SOLE Summit!

If you know of a Latino Owned business who may benefit from participating in the Stanford Graduate School of Business and LBAN’s Business Scaling Program visit their website to apply.

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