Latino-owned businesses (LOBs) in the U.S. continue to be powerful job creators, according to the just-released report The State of Latino Entrepreneurship. Released annually by the Stanford Latino Entrepreneurship Initiative (SLEI), the report states, “ The number of jobs created by LOBs has grown from 1.9 million in 2007 to 2.9 million in 2019, representing a 53.6% growth rate.”
Marlene Orozco, associate director of SLEI, tells WorkingNation editor-in-chief Ramona Schindelheim in an upcoming Work in Progress podcast, “If we look at the last 10 years alone, the number of Latino-owned businesses has grown 44% compared to just 4% for non-Latinos.”
She emphasizes, “This is not just happening in those businesses that are non-employer businesses or solo-led businesses. This growth is also happening in employer businesses. And this is important because the number of Latino-owned employer businesses has grown 35% compared to just 5% for all others.”
Access to Capital
Despite the significant growth numbers, Latino owners still face hurdles when it comes to obtaining funds.
Orozco says, “Only 9% of all Latino-owned businesses are employer businesses [meaning those with at least one paid employee other than the owner]. This is a small slice of the pie. We’ve uncovered that one of the biggest thresholds for Latinos is going from a solopreneur, a self-employed person with nobody on payroll to becoming an employer business. That is a significant hurdle that is really exacerbated by a number of challenges as it relates to capital, for instance.”
“We’re really trying to point out where some of these gaps are so that decision makers, capital providers can start to hone in and hopefully rectify some of these gaps.”
The report also notes that Latinos – when seeking capital – are more likely to be required to provide more collateral despite having credit characteristics similar to White-owned businesses (WOBs).
Optimistic, Despite the Pandemic
Both Latino and White business owners are generally optimistic about the prospects of recovering from the pandemic, according to the report – with 79% of LOBs reporting confidence, while 77% of WOBs feel the same.
Orozco says LOBs proactively made business pivots to address the challenges presented by COVID-19. “I’m really heartened by the strategies and the resilience of Latino owned businesses to navigate the pandemic through their resourcefulness.”
You can read the full research brief here.
Hear more of Marlene Orozco’s conversation with editor-in-chief Ramona Schindelheim on Work in Progress, beginning February 1. Watch the video below for a short preview.