There's a powerful force turbocharging small-business growth in the United States that often goes overlooked. It's the Latino contingent that has outstripped all other demographic groups in the sector. The nearly 4.4 million Latino-owned businesses in the United States contribute more than $700 billion to the American economy every year, according to a study by the U.S. Hispanic Chamber of Commerce. In fact, Latino-owned companies have grown 31.6 percent since 2012, more than double the growth rate of all businesses across America (13.8 percent), the USHCC reports.
The achievements of Latino small businesses are impressive when you consider it is often hard for them to gain access to capital. Yet they are making progress.
An estimated 55 million Latinos live in the United States, according to the U.S. Census Bureau, and the numbers continue to climb. In fact, Latinos represent 17 percent of the country's population, making them the country's largest ethnic or racial minority. Census Bureau projections reveal that 120 million Latinos will compose 28.6 percent of the U.S. population by 2060. Almost two-thirds of the Latino population (64 percent) are of Mexican heritage, followed by Puerto Ricans, who comprise almost 10 percent, according to the Census Bureau.
A new study of small-business loan applications from more than 28,000 businesses, including requests from over 2,000 Latino entrepreneurs on Biz2Credit's online credit marketplace, found that average annual revenue of Latino-owned business jumped an impressive 26.5 percent during the past 12 months. Revenue for Latino businesses grew from $258,702 in 2017 to $327,189 in 2018.
The analysis also revealed that the number of credit applications from Latino-owned businesses rose 22 percent over the same time period and that their average credit scores increased from 592 in 2017 to 594.
"Biz2Credit's study confirms what we have known for some time: the growing contribution and importance of the Latino-owned businesses in our marketplace. For years we have been strong supporters of their entrepreneurial needs and believe it is critical to enable their business growth with comprehensive product offerings, tools, education and services," said Manuel Chinea, COO of Popular Bank.
"Providing access to better and faster financing options will allow Latino-owned businesses to build upon this momentum," Chinea added.
Meanwhile, optimism has grown in the community.
"As a Latino business owner, I have seen such an increase in the Hispanic population over the past 20 years. This growth has afforded Latino business owners with a great deal of confidence and has made the general market take our community serious," said radio station owner Victor Canales, president of VCMG Live.
"The Latino business community now represents billions of dollars in income despite constraints and barriers. It is these constraints, whether political, financial or cultural that still holds back Latino entrepreneurs from enhancing their businesses."
"In the last year, specifically in Florida, we have seen a tremendous influx of displaced Puerto Ricans due to natural disasters," added Canales, well known in the New York radio market as Vic Latino. "I believe once these families arrive and see companies owned and operated by fellow Latinos, it gives them a sense of pride and inspires them to become business owners."