The Hispanic dilemma: banks work to fill void in commercial activity.

Log onto the Web site of almost any of the major banks and even some of the small ones and you are almost sure to find a button that reads en espanol.

Acutely aware of the large and growing market, bankers for several years now have been actively courting Hispanics for retail banking services ranging from checking accounts to investments, including building Spanish language Web sites.

But when it comes to finding a Spanish-language banking Web site for business owners, well, they may just as well hang a different sign - no habla espanol.

Some banks have recently moved to fill that void. They have opened Hispanic divisions to cater to Latino businesses. Others have added bilingual relationship managers to their business lending operations. And a few Hispanic-run banks are starting to sprout, including the newest bank in organization in the San Fernando Valley, Americas United Bank in Glendale with an anticipated opening in the fourth quarter of this year.

But the efforts are still sparse, particularly in light of the growing Latino business population. There are currently some 2 million Hispanic-owned businesses nationally. Latina business owners are the fastest growing small business segment. And in Los Angeles County estimates are there are more than 140,000 Hispanic-owned businesses.

So why has all the effort so far been placed on retail banking and not on the business sector?

"First, there are a lot of barriers to entry," said Gilbert Dalmau, who is slated to become president and CEO of Americas United Bank in organization. "If you want to start a Hispanic business bank, you want your CEO and your executives to be Hispanic, and there is a very limited group of Hispanic commercial banking executives."

De novo banks, those launched from the ground up, undergo a stringent process of regulatory approval, and one of the things regulators look at closely is the past experience of those who will be running the bank, both operating officers and board members. Bankers say there is not a large population of such experienced executives to draw from.

But perhaps more important is the cultural and language expertise required to attract and retain Hispanic commercial banking customers.

Although most Hispanic business owners speak both English and Spanish,

many prefer to deal with bankers in their native tongue, bank executives say.

"They feel more comfortable," said Manuel Salcido, vice president at First Bank's Hispanic Business Group, set up in Warner Center in 2002 to focus on Hispanic entrepreneurs.

The First Bank unit which has built a $65 million loan portfolio since it opened four years ago, is situated in a separate location from the bank branch, in part so that it can be staffed from receptionists through credit officers, with Spanish-speaking personnel.

"When they call up they're speaking to someone in Spanish," said Salcido. "They feel more comfortable because they found someone they can really talk to."

Bankers and others who specialize in the Hispanic marketplace say that, although the financial needs of Hispanic small business owners are pretty much the same as those of small business operators of any ethnic background, distinctive cultural differences come into play when dealing with Hispanic business customers.

Unlike retail banking, where a Spanish-language Web site may be sufficient to attract Hispanic customers, business owners tend to put far greater emphasis on their banking relationships.

"All banks have identified the Hispanic market as a high growth area, but getting out to that market is a little tough, said Vladimir Victorio, senior vice president and manager of specialized lending at Mission Valley Bank, a unit that launched in January and now includes three bilingual relationship managers. "For me to be successful in dealing with Hispanic businesses, I need to build their trust with me, and that's more apparent in that market than in other markets. Other markets it's, gaining the right deal. Even if I can do something someone else hasn't offered, if they don't have the trust, it won't happen."

The time and effort it takes for outreach and relationship building are resources that many general market banks can't or won't spare, especially since Hispanic businesses often neither require nor can they qualify for large loans.

"A lot haven't had the chance to grow and acquire other companies," said Carlos president of Garcia Research Associates, a Burbank-based Hispanic market research firm. "A lot are morn and pop operations. Part of it is time. Part of it is generational."

At Wells Fargo, which set up a Latino Business Services division in 1997 and has loaned a total of $3.6 billion to small business owners since then, the average loan size remains quite small.

"The best part of this program is they are not loans to businesses that are borrowing $1 million," said Tim Rios, senior vice president and a spokesman for the Latino Business Services group at Wells. "On average, these loans are between $26,000 and $35,000. What it's telling us is we're making up those numbers not with huge loans, but loans going out to small enterprises that were having a difficult time accessing capital."

Indeed, many of the banks that have invested in Hispanic business services say they often end up referring these customers to organizations and agencies that specialize in micro loan programs that the banks cannot profitably run.

But the tradeoff is that by getting these business owners early, they will be well-positioned when the company grows to a size that warrants larger loans.

"We're going to fund a small line of credit with the idea that we'll fund more later," said Salcido.

SHELLY GARCIA

Senior Reporter