FRANK LOPEZ : Selling to a Growing Market : Hispanic and Black Businessmen Target Orange County

As the Latino population in Orange County--and the rest of the state--grows, so do opportunities for the Latino business community. Frank Lopez, a former banker and the president of the fledgling Hispanic Chamber of Commerce of Orange County, calls it a “numbers game” whose odds are in his members’ favor.

But the picture is not entirely bright for Latino businesses. Like small businesses in general, they are plagued with difficulties in getting loans and keeping afloat in a very competitive market place.

To Lopez and the Hispanic Chamber of Commerce, the road to prosperity lies in strengthening Latino businesses’ ties with their own community. But the chamber also helps members move beyond a minority marketplace and into the mainstream, where real growth lies.

Lopez, 38, is a certified public accountant who spent 10 years working in Orange County banks and savings and loans, specializing in real estate. He now is majority owner of Capital Charters and Acquisitions, a Tustin firm that offers consulting services to local financial institutions. Lopez is the new president of the Hispanic Chamber of Commerce, a group that has grown from 50 to 300 members in its 18 months of life. He discusses minority business trends and troubles with Times staff writer Maria L. La Ganga.

Q. What is the Hispanic Chamber of Commerce’s main function?

Lopez: It’s simple and pure: Our mission is to promote business within our current, existing members, to allow them an avenue to meet other Hispanic business people, to look for other opportunities within the Hispanic community and to also explore avenues to find other means of business other than just in the Hispanic community in Orange County.

Q. Do minority businesses find that they do best when they operate in an area with a high concentration of the population they represent?

A. To a certain degree, that’s true. It depends on the original make-up of the business itself. If it started off as a minority business it tends to stay in that fashion, and it tends to thrive better in its local community. And that’s what we see a lot of.

Q. With what kinds of companies?

A. Generally what I would call service companies and light manufacturing. What I’ve found is that they hit a point where their growth becomes somewhat limited until they can find a larger market. And that’s where the chamber comes in--if they’re specializing in the Hispanic community--to try to give them avenues where there’s further business within that community. If (the Hispanic community) is not where they want to concentrate, the chamber gives them an opportunity to take a look at other business possibilities within the county that may not necessarily be Hispanic-type businesses.

Q. Is the Hispanic business community thriving here and what is the evidence for that?

A. The chamber started about 18 months ago with about 50 members. Now we’re up to 300. We started with a budget that was probably in the area of maybe $25,000 to $30,000 for the year. We expect our budget from memberships and corporate memberships will probably be in excess of $250,000. The number of Hispanic businesses in Orange County is beyond 3,000. Probably the most exciting part of the growth is that we’re seeing a tremendous number of individuals moving beyond the Santa Ana community, where the largest base of Hispanics is. We are now getting members in San Juan Capistrano, Laguna Niguel, Mission Viejo, Irvine, Anaheim, Buena Park. It has started to really expand more to really a county business community and a county chamber of commerce. And one of the opportunities we see this year is a chance to start flowing capital to those business and trying to help those businesses eventually find means to grow.

Q. How would you get money to them?

A. By references to banks interested in the minority community.

Q. What banks are those and how many are there?

A. Right now, Mechanics National is very interested. They sponsored a seminar and spoke to our chamber, told our members of the programs they had available. Their desire is to lend to the Hispanic community and minority communities in general. And they have an SBA program. The SBA has spoken to us themselves. Sanwa Bank wants to be involved. Pan American Bank in Santa Ana is getting involved. We see the banks starting to come forth. When the banks start coming, it’s because their research shows that there are lucrative avenues for them to be involved.

Q. Most small businesses find that banks will not loan them capital--start-up or otherwise. Why are you seeing this change here and now?

A. I think they’re seeing that the Hispanic marketplace itself, in pure numbers, has expanded in Orange County. The banks don’t want to lose their share of that marketplace. For example, I am on a committee with Security Pacific Bank, and they recognize Orange County as a mecca of new and aspiring businesses. And they recognize that with the number of Hispanics growing there too, there’s a combination of two things: Opportunity to lend and an opportunity to acquire new business as the population starts to grow.

Q. What’s it like for a minority company of any sort to do business here?

A. In general, Orange County can be somewhat of a tough area for a minority to begin business. There’s a lot of well-established companies that already have made large inroads into the market, particularly the more technical you get. And these entrenched companies are also better financed. That just really leaves more of a low-cost entry type of business left. Manufacturing, which requires more start-up capital, is tougher to get into. You see a lot of the minority businesses going into service areas that require less capital and the facilities are cheaper to get into.

Q. But is the long-term future as bright for such service businesses as say high-tech businesses, where there’s very little black or Hispanic representation?

A. No, but high-tech is tougher to get into and tougher to compete in terms of obtaining contracts from the government. Basically, you’ve got to have 2 years of experience, a background of qualified people and you have to be able to show a trend that you’ve been successful in the past. And that is tough for businesses coming up through the ranks.

Q. The county and the federal government have mandates to give a certain percentage of their contracts to minority groups, particularly through the so-called federal “8(a)” program. Are these of any use?

A. They are very tough to get into. It seems like, with the amount of time and effort it takes, that a company cannot consider it to be the main line of business. It’s like a little adjunct, complementary business because of the time level and the amount of paper work. If one goes into business seeking out 8(a) work, they’re going to have a tough time, because it really takes a long time to get. A number of our members have been successful doing it. A number have been very frustrated with the time. It’s just too slow of a process for a small business.

Q. Especially a start-up business?

A. A start-up business cannot do that, wait 6 to 9 months for a contract to come in. A number of our members have been very successful. But the key is knowing how and whom to deal with. One of our members that’s been successful is an Anaheim firm that provides auxiliary components to defense businesses, to government contractors. They have been successful because they have worked at it very closely with the Small Business Administration.

Q. Who has had troubles and why?

A. A company in Huntington Beach has been one of the few Hispanic businesses involved with the oil industry, an industry in which there are not very many minorities at all. They have had a tough, tough time dealing with the Section 8(a).

Q. Is there enough business out there for them without 8(a) contracts?

A. In terms of a company their size, no. And that’s a problem. They’re relying heavily on 8(a) business, which one cannot concentrate on exclusively, because of the length of time it takes to get contracts. One will not be totally successful if they rely on that.

Q. Looking at your member population, what are the most common sorts of businesses you see? And what’s the biggest growth area?

A. Lots of CPAs, lawyers, doctors. The list is long, but they’re generally service-oriented companies. As far as growth, it’s pretty much following the county. The county’s biggest growth area is service-oriented. We’re not getting a lot of manufacturing companies. We have a fair amount of real estate people. But we are paralleling the rest of the county in terms of where our growth is coming from; it’s very much service oriented.

Q. How is the Hispanic business community thriving compared to the Vietnamese or the black business community?

A. The Vietnamese business community is really taking a good stance. They have grown very rapidly and seem to be making good headway, too. I can’t really speak to the black community. They seem to be having some troubles. But right now, our biggest problem is that we’re growing so fast, we’re probably getting five new members a week.

Q. Why is that a problem?

A. Our problem is coordinating our efforts to get the Hispanic business community to do a fair amount of business with itself, to have it multiply. The Japanese business community has been very, very successful doing that. The Korean community has been very successful. And the Vietnamese community is really doing the very same thing. And we’d like to get businesses that are non-Hispanic but have interest in the Hispanic market to share, say 10% or 15% of their business with Hispanic businesses.

Q. You’re talking contracting, internal business?

A. Yes. We’d like companies that want to do more business with our community to come forward and give contracts to Hispanic businesses. We want to gather, say, 10% of the internal business from corporate members like El Pollo Loco, 7-Up, El Torito. It will allow the Hispanic business community to flourish and allow our businesses to grow and proper.