Feb 18, 2018

Latino Entrepreneurship Is on the Rise

Over the past ten years, Latino-owned businesses have been growing at an exponential rate, leaving everyone else in the dust. A study recently released by Stanford found that Latino businesses increased by 44% between 2002 and 2007, and 47% between 2007 and 2012. Non-latino businesses, on the other hand, increased by only 15% from 2002 to 2007, and actually decreased 2% between 2007 and 2012.

This growth has been hugely important to the U.S. economy. Researchers estimate that unemployment rates would have risen above 10% were it not for Latino business creation. Also, if Latino business growth were eliminated, there would be a net decrease in business between 2007 and 2012.

Many experts wondered at the root cause of this exponential growth. Some speculate that ladies are leading the way. This is because female Latino-owned businesses increased 87% between 2007 and 2012. Female latino entrepreneurs now represent nearly half of all Latino businesses.

As well, millennials are making a stand in the Latino business market. A whopping 86% of immigrant-owned firms with $1 million-plus in revenue are owned by millennials who immigrated to the U.S. as children. “There’s sort of this hopeful message among the millennial group, which has a larger percentage of growing businesses and scaling them,” said Paul Oyer, a senior fellow with the Stanford Institute for Economic Policy Research.

Yet, even unprecedented increases throughout the small business sector, Latino-owned small businesses are still struggling to fund their businesses with outside capital.  Only 12% of Latino-owned businesses have access to bank loans compared with 18.4% for white entrepreneurs, 15.3% for Asians, and 14.2% for blacks.

“We’re just scratching the surface in terms of understanding where the funding gaps are coming from,” said Marlene Orozco, a research analyst with the Latino Entrepreneurship Initiative. The big banks aren’t budging, leading many Latino business owners to choose forward-thinking venture capital and marketplace lenders.

How much more growth and promise do Latino businesses need to show before big banks take notice? That’s the real question, and there’s not a clear answer. Truth is, Latino-owned business will continue grow and excel with help from those who care enough to open their eyes. So even though the future doesn’t look perfect, it does look bright.

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About the author

Andrew Mosteller
Andrew Mosteller is a freelance writer and regular contributor to Lendio News. His upbringing in an entrepreneurial family nurtured a passion for small business at a young age. Andrew's father, an equity fund manager, taught him the ins and outs of investment financing. Now, Andrew spends his time writing copy for business owners, helping them expand and advertise their unique brands. He's also studying Strategic Communications at the University of Utah. When Andrew's fingers aren't glued to the keyboard, he spends his time reading, podcasting, composing music, and bombing down the ski slopes.

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