The United States’ Latinx population is growing, and the number of Latinx business owners is growing along with it.
While new business creation slowed down between 2007 and 2012, Latinx-owned businesses grew by 46 percent, according to the Census Bureau.
All that industry yields significant results. If the U.S. Latinx economy were its own country, it would be the eighth richest in the world, according to the Latino Donor Collaborative.
Despite those impressive statistics, Latinx business owners often have trouble securing business loans and other financial services because many have limited credit histories.
Twin brothers Kenny and Sean Salas started addressing this disconnect during their time at Harvard Business School. Their company, Camino Financial, developed a proprietary algorithm to assess applicants’ creditworthiness and in 2018 partnered with specialty finance company Crédito Real on a credit facility tailored to Latinx business owners.
Camino Financial announced Wednesday it raised an $8 million Series A round led by Crédito Real.
The investment is reflective of the so-far successful partnership between the two companies, Camino Financial said in a company statement. Since its launch, the collaboration has led to $30 million in loans and a 419 percent year-over-year increase in monthly loan originations. The companies project the facility will outgrow all competitors focused on the Latinx economy within the next year.
Camino Financial’s model is a boon for business owners as well, it says. First-time borrowers typically pay half of what their monthly payments would be if they borrowed the same amount from a different lender, according to Camino. Borrowers also can earn lower rates and longer terms by making payments on time.
Additionally, the company works with third-party vendors to get its borrowers better rates on business necessities like commercial insurance, legal services, tax preparation, bookkeeping and website development.
Going forward, Camino aims to get its product in front of target customers through a variety of channels.
“Ultimately, we see a future where Latinx businesses expect finance companies to have omnichannel capabilities, so we’ve designed our technology for simple integration into corporate distribution partners with entrenched networks in the Latinx market,” CEO Sean Salas said in a statement.
Camino Financial’s total funding is $20.4 million, according to Crunchbase, including $3 million in notes held by DILA Capital, 10x Capital Management and other existing investors that will convert to equity in conjunction with the Series A round.