Despite such challenges as inadequate access to capital, the number of Latino-owned businesses in the U.S. is growing at a rate that outpaces just about every other ethnic group. A persistence among Hispanic entrepreneurs is facing all the challenges and overcoming all the odds.
A study done by the Stanford Latino Entrepreneurship Initiative has had some interesting findings, among them that the Latino population has grown at a steady clip and now accounts for 18% of the U.S. population. However, the rate at which new Latino firms are being created outpaces Latino population growth.
But there are obstacles that Hispanic businesses must still face. One factor hampering expansion of these businesses, the study found, is limited access to capital. National banks are a smaller source of funding to Latino businesses than to entrepreneurs from other ethnic groups. Only 12% of Latino firms employing more than one person received bank loans, compared to 18% of white-owned firms, 15% of Asian-owned firms, and 14% of Black-owned firms.
Millennials are also having an impact within this sector. A surprising 86% of immigrant-owned firms with at least $1 million in annual revenues are owned by millennials (under age 34) who came to the U.S. as children. The authors refer to this group as “DACA comparable” — those who are likely to be eligible for the Deferred Action for Childhood Arrivals immigration program, which delays deportation for undocumented immigrants who came to the U.S. as children and grants recipients the right to study or work.
There are several opinions as to what may be driving this surge in Hispanic owned businesses. Some attribute it to more educational degrees and the that for many young immigrants it just makes more sense to own their own business. It may be one of these reasons, or a combination of many reasons. Which ever is the case, the number of Latino owned businesses continues to rise and will be a big economic force in the future.