As the Latino population steadily grows in the United States, more Latino-owned businesses are being launched. The influx of Latino-owned businesses has led to a significant contribution to the nation’s economy.
The key features of Latino businesses across the country give insight into the makeup of these companies, the source of some of their struggles and the contributions that they have made to the U.S. economy.
Approximately nine out of 10 Latino businesses are family owned and most of those are self-financed, with startup funds typically coming from personal sources, including credit cards and personal savings accounts.
Latino-owned businesses employ about two-thirds of the number of people per business as compared with non-Latino businesses and average sales of $150,000 per year as compared with $573,000 per year in sales for non-Latino businesses, according to a recent survey of Latino-owned businesses by the Stanford Graduate School of Business.
Latino immigrants have exceeded the country’s overall entrepreneurship rate, the survey found, and are more likely to start new businesses than the U. S. population overall. This can have a great impact in the U.S. economy as more Latinos pursue entrepreneurship.
As more Latino businesses emerge, economic experts wonder why Latino businesses tend to be smaller in terms of both employees and sales.
A slightly lower average credit score than non-Latino businesses may limit access to financing. Lack of access to funds is paired with a reluctance to accept outside financing due to hesitation over relinquishing full control of the company.
When Latino entrepreneurs hope to launch a startup soon after arriving in the country, they may have trouble obtaining credit due to differing methods of analyzing and reporting credit history from one country to the next.
Hurdles aside, there is no question that Latino-owned businesses have contributed to the U.S. economy.
Small business applications for Latino-owned businesses increased by 18 percent in 2014, according to the Hispanics in Business 2014 study by Geoscape.
During the recent recession, the number of Latino entrepreneurs increased by over 70 percent, the study found.
In another recent study, The Partnership for a New American Economy and the Latino Donor Collaborative’s new report, “Better Business: How Hispanic Entrepreneurs Are Beating Expectations and Bolstering the U.S. Economy,”shows how the number of Latino entrepreneurs continues to grow at a rate that is nearly 10 times faster than the rate of growth for the overall U.S. population.