Congressional Hearing - Hearing Fintech And Transparency In Small Business Lending Witness Statement Added 07 13 2022 At 11 40 Am

Summary

Written testimony of Sean Salas, chief executive officer and co-founder of Camino Financial, for the House Committee on Small Business subcommittee hybrid hearing "Fintech and Transparency in Small Business Lending" on Wednesday, July 13, 2022. Salas describes Camino Financial as an AI-powered lender and national community development financial institution making microloans, with applications 100 percent online, and calls it the largest Latino-focused small business lender in the United States. He says he founded it with his brother, Kenny, while completing MBAs at Harvard Business School, and recounts his mother's restaurant business collapsing when he was 12. He says banks and larger investors do not actively serve over 97 percent of the Latino business credit market, a gap he puts north of $20 billion, and that Camino has helped over 9,500 small businesses over the last 6 years.

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                                Testimony of Sean Salas
               Chief Executive Officer and Co-Founder, Camino Financial
              U.S. House of Representatives Committee on Small Business
    Subcommittee Hybrid Hearing: “Fintech and Transparency in Small Business Lending”
                               Wednesday, July 13, 2022

Chairwoman (Nydia) Velazquez, Ranking Member (Blaine) Luetkemeyer and Subcommittee
Chairman (Dean) Phillips and Ranking Member (Beth) Van Duyne and other members of the
subcommittee, thank you for having me here today.

My name is Sean Salas and I’m the co-founder and chief executive officer of Camino Financial.

Camino Financial is an AI-powered lending platform that empowers entrepreneurs to grow
their business and boosts access to capital for underserved communities. Our microloans
provide small business owners with the flexible financing they need to thrive in a competitive
market.

We are a national community development financial institution, or CDFI, that is pioneering
affordable credit through technology and AI. Our mission is to build generational wealth in
underserved communities. We take a digital first approach and Applications are 100 percent
online. We predominantly serve entrepreneurs in California, but our digital-first approach
allows us to serve businesses in other states.

Today, I’m proud to say that we’re the largest Latino-focused small business lender in the
United States. We did this by providing a “camino” or a pathway to capital by educating our
borrowers. This pathway involves providing resources that teach them how to formalize their
business and access the tools they need to get on a “path” to qualify for larger, lower-interest
rate loans.

I founded Camino Financial with my brother, Kenny, while completing our MBAs at Harvard
Business School. We are the sons of a Mexican entrepreneur, who truly sought the American
Dream. Our mother opened over 30 restaurants in Southern California while raising six children,
but when I was 12 years old her entire business collapsed. She moved us to Mexico to restart
our lives, despite us being U.S. citizens.

When you’re a twelve-year-old kid and you see your mom lose her business, there’s a fire that
lights in you that doesn’t go out. There was no lightbulb moment for starting Camino Financial.
The moment Kenny and I graduated from high school in Mexico, we decided to immigrate back
to the U.S. to pursue what my Mom had lost, the American Dream. We were lucky enough to
be admitted to UC Berkeley and thereafter build our careers in finance. While working in
finance, we first realized the capital gap for investing in micro businesses in minority
communities. So, we decided to leverage our MBA experience to incubate Camino Financial, to
help businesses, like my mother’s, grow to a point where they can access a broader suite of
wealth building solutions.
The average Latino business earns $250,000 in revenue, that’s about roughly half the national
average. Most of Latino-owned businesses are micro businesses, not even small businesses,
with 4 or less employees. Banks and larger institutional investors do not actively service over
97 percent of the Latino business credit market, leaving a gap that we measure to be north of
$20 billion in unmet capital demand.

Ultimately, we provide opportunities to one of America’s fastest growing business segments,
one that is critical to the ongoing growth of the U.S. economy. If Latinos don’t build wealth,
America does not build wealth. And as we know, entrepreneurs are the bedrock of building
wealth in our communities.

We work with the most underserved entrepreneurs in construction, retail, transportation,
restaurants and bars, as well as other professional services, such as janitors and landscapers
that are the beating heart of nearly every community.

I’d like to share with you a few examples of the types of entrepreneurs we help:

In Long Beach, California, a Latino entrepreneur needed a loan to buy equipment to take on
more work and hire more employees for a small business that performs car detailing and
cleaning services.

In Los Angeles, a small restaurant owner used our loan for working capital during the pandemic
and to bolster sales by 70 percent and has since opened a new location.

Another business in Los Angeles, used our loan to buy a new smog check machine for their
small auto repair and smog check station.
And a Latina small business owner in Highland Park, used our loan for inventory purchases to
expand her art supply and home decor store. As a result of our loan she expanded her business
and took on a new location.
Because we are a digital-first company, transparency has been critical to our success. I know
today’s hearing is on fintech and transparency in small business lending. And while I’m not here
to talk about our competitors, what I can tell you is that transparency is critical to our business.

Whether it’s to our investors or borrowers, our credibility is based on our transparency with
both costs and risks. We know our members shop around for the best deal, and by being
transparent, our clients feel reassured they’re comfortable with the payment structure and
making the right decision.

In the end, our business is about helping more entrepreneurs achieve the American Dream. So
many people like our mother attempt to achieve this dream without advanced skills and
degrees, but with the drive and ambition to succeed and provide for their families. We believe
that what we’re doing– providing capital as well as resources that educate entrepreneurs on
cash flow, financials, and other core business practices—is important to helping more
underserved entrepreneurs and communities succeed.

Through our financial platform, over the last 6 years we’ve helped over 9,500 small businesses
across the U.S. scale and succeed. It’s my hope that as we continue to grow, we’ll help many
more budding entrepreneurs live the American dream.

Thank you for the time and the privilege to speak today.


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