What’s Fueling Latino Entrepreneurship — and What’s Holding It Back

CNN Money

Good story, not so good angle. What about, despite challenges Latinos are starting business faster than other groups?

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 new study from the Stanford Latino Entrepreneurship Initiative found.

The study — titled “State of Latino Entrepreneurship 2017” and coauthored by Stanford GSB professor emeritus Jerry Porras, GSB economics professor Paul Oyer, and SLEI research analyst Marlene Orozco — analyzed data from more than 5,000 Latino businesses to get insights on the entrepreneurs, their successes, and the barriers they face.

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. “Latinos have been starting businesses at an incredible rate over the past decade — a million net new businesses every five years,” says Porras, who is also the cofounder of the Latino Business Action Network. He notes, however, that most Latino-owned businesses remain small: 98% report less than $1 million in annual revenue.

The Funding Gap

One factor hampering expansion of these businesses, the study found, is limited access to capital. “It’s all about the financing,” Oyer says. “There’s a real funding gap for this group.”

In particular, 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.

“A lot of it has to do with the size of the company,” says Orozco. “National banks are not willing to take on the risk of these smaller firms.”

READ MORE

Subscribe today!

  • This field is for validation purposes and should be left unchanged.

Must Read

Texas quinceañeras to offer voter registration at their coming of age parties

Victor Landa May 17, 2019

AUSTIN (KXAN) — A Texas-based nonprofit is aiming to bolster the Latino vote by offering young women the opportunity to hold voter registration booths at their quinceañeras. And they already have […]

Latino Health Paradox is a Laughing Matter

Victor Landa

High-quality conversations and laughter may contribute to longer life expectancy in Latinx populations in the United States, according to a new study in PLosONE by the University of Connecticut.  Researchers sought to explain […]

Census citizenship question began as GOP plan to hurt Democrats, documents show

Victor Landa June 3, 2019

Newly revealed documents appeared to confirm Thursday what many critics had long suspected — that the Trump administration’s drive to add a citizenship question to the 2020 census began as […]

Hispanic Texans on pace to become largest population group in state by 2022

Victor Landa June 6, 2019

For many years, the prospect that Hispanic Texans would become the state’s largest population group has been a question of “when” and not “if.” With growth among the Hispanic population […]

Latino leaders sound alarms over mobilizing Latino voters in 2020

Victor Landa June 11, 2019

Democratic presidential candidates are squandering a critical early opportunity to mobilize Latino voters ahead of 2020, potentially easing Donald Trump’s path to reelection, according to leading Latino political operatives in battleground […]