Hispanic Heritage Month

Celebrating Hispanic Heritage Month: Spotlight on Hispanic Business Owners

Hispanic Heritage Month (September 15 – October 15) is one of the many opportunities throughout the year to celebrate and honor the incredible contributions of Hispanic-owned businesses.

  • There are nearly five million Hispanic-owned businesses in the United States
  • Hispanic-owned businesses represent the fastest growing sector and contribute $800 billion annually to the nation’s economy
  • Future contributions from Hispanic- and Latino-owned businesses are expected to grow to $1.4 trillion by 2050 if they continue at the same rate as the national average

As this powerful group of innovators continues to support America’s economy, it’s just as important to recognize where more support is needed to fuel further small business growth amongst the Hispanic community.

Impact of Hispanic business owners

There are nearly 5 million Hispanic-owned businesses in the U.S. that contribute $800 billion annually to the nation’s economy.1 And, as the fastest growing sector of America’s economy, it’s expected the contribution from Hispanic- and Latino-owned businesses will swell to $1.4 trillion by 2050 if they grow at the same rate as the national average.2 

The Hispanic population in the U.S. is expected to grow tremendously in the coming years to make up 26.9% of the population by 2060, up from 19.1% in 2023.3 In 2023 alone, Latinos accounted for 36% of new businesses.4 And, that growth is expected to expand into business ownership as well. It is predicted that:

  • Latino entrepreneurs will make up 29% of the U.S. population by 2050, up from 17% today.5
  • By 2026, 13% of employer Latino-owned businesses expect to have 100 or more employees compared with just 8% of employer white-owned businesses.6
  • Latinos are projected to account for 80% of the total growth in the U.S. labor force between 2010 and 2050.7

Latino employer businesses

The entrepreneurial spirit of the Hispanic and Latino community is unmatched. And these savvy business owners don’t keep the success to themselves. Latino-owned businesses are credited with generating nearly two-thirds of all new jobs in America.8

Funding challenges for Hispanic business owners

Access to capital is one of the most daunting challenges Hispanic entrepreneurs face. In 2020, only 20% of Latino-owned businesses that applied for bank loans in the U.S. exceeding $100,000 were approved. Comparatively, half of white-owned businesses were approved.9

Because of the funding discrepancy, Hispanic and Latino entrepreneurs rely on personal finances to launch their business — 70% of their funding comes from personal savings.10  

Hispanic and Latino business funding stats

  • Hispanic small business applicants received 8.5% of all distributed Small Business Administration (SBA) 7(a) loans and 10.3% of 504 loan proceeds.11
  • 32% of Hispanic small business owners report being denied financing like loans and lines of credit.12
  • 57% of Hispanic small business owners plan to use business credit cards to finance their business, while 29% plan to use personal credit cards.13
  • Less than 1% of funds from leading venture capital (VC) and private equity (PE) investors wind up in the hands of Latino-owned businesses.14

While Hispanic and Latino entrepreneurs are forced to take greater personal financial risks with their businesses, supportive resources are becoming more available.

Funding for Hispanic business owners

Because Hispanic business owners often face limited access to capital — as demonstrated in the stats above — developing a financial strategy is crucial. Hispanic and Latino entrepreneurs may consider funding resources like those listed below.

SBA loan programs

The SBA offers a variety of loan programs for small business owners. And while Hispanic and Latino business owners have traditionally received a minimal percentage of these proceeds, that number is shifting rapidly. The number of SBA-backed loans granted to Latino-owned small businesses has doubled, equating to $3 billion in lending to Latino entrepreneurs in Fiscal Year 2023. That’s an 80% increase since 2020.15

The most common SBA-backed loans for business owners are:

  • 7(a) Loans. Typically used for expenses like working capital, equipment purchases, or real estate.
  • 504 Loans. Typically used for expenses that fall under fixed assets like real estate or machinery.
  • Micro loans. Typically used for expenses like working capital, equipment, real estate, or inventory. This loan has less stringent eligibility requirements, making it ideal for startups.

Accion Opportunity Fund

Accion is dedicated to supporting small businesses typically denied traditional funding. The financial support system has invested more than $515 million into small businesses with over 90% of Accion’s client base consisting of women, people of color, and/or low-to-moderate income.16

Not only does Accion offer small business loans, but it also offers a resource library to business owners to help build skills in areas like marketing, business planning, and maintaining good business credit. This non-profit lending resource also invests in community service-focused projects to improve low-income communities.

Grants.gov

Latino entrepreneurs can register with Grants.gov to apply for grants for which their business qualifies. For example, Hispanic and Latino business owners can search for grants designed for Hispanic and Latino entrepreneurs.

The website is managed by the federal Office of Management and Budget and serves as a database for small business owners. The site provides information on more than 1,000 federal grant programs for which business owners can apply.

CDFI funding

Certain banks, credit unions, funders, or venture capitalists are categorized as Community Development Financial Institutions (CDFIs). These types of lenders are apt to support businesses in underserved communities.

CDFIs are supported by the U.S. Department of the Treasury, they often offer more affordable loan terms than other financing options. Locate a CDFI in your area with this locator tool.

How to support Hispanic owned businesses

As Hispanic business owners overcome financial disparity, there are ways to support this innovative community. Search for Hispanic owned businesses in your community. Leave positive reviews online and promote the services or products on social media.

  1. https://www.sba.gov/about-sba/organization/observances/hispanic-heritage-month
  2. https://www.jpmorganchase.com/newsroom/stories/latino-owned-businesses.
  3. https://www.nbcnews.com/news/latino/1-4-americans-will-latino-2060-census-projects-rcna124244
  4. https://www.presidency.ucsb.edu/documents/icymi-latino-entrepreneurship-surges-under-the-biden-harris-administration
  5. https://www.bain.com/insights/closing-the-capital-gap-fueling-the-promise-of-latino-owned-businesses/
  6. https://www.bain.com/insights/closing-the-capital-gap-fueling-the-promise-of-latino-owned-businesses/
  7. https://www.bain.com/insights/closing-the-capital-gap-fueling-the-promise-of-latino-owned-businesses/
  8. https://www.forbes.com/sites/korihale/2024/04/02/the-unstoppable-growth-rate-of-latino-owned-businesses-in-america/
  9. https://www.gsb.stanford.edu/insights/latino-entrepreneurs-face-can-overcome-funding-obstacles
  10. https://www.jpmorganchase.com/newsroom/stories/latino-owned-businesses.
  11. https://www.bankrate.com/loans/small-business/hispanic-small-business-owner-statistics/
  12. https://www.bankrate.com/loans/small-business/hispanic-small-business-owner-statistics/
  13. https://www.bankrate.com/loans/small-business/hispanic-small-business-owner-statistics/
  14. https://www.bain.com/insights/closing-the-capital-gap-fueling-the-promise-of-latino-owned-businesses/
  15. https://www.sba.gov/article/2023/10/16/biden-harris-administration-announces-record-3-billion-lending-latino-owned-small-businesses.
  16. https://aofund.org/