hispanic-small-business-owners-statistics

Hispanic Small Business Owners Statistics

Key takeaways

  • Only about 7 percent of businesses in America are Hispanic-owned, even though nearly one in five people in the country are Hispanic

  • Hispanic-owned businesses received 8.5 percent of SBA 7(a) loan funds in the 2023 fiscal year

  • Resources like grants and networks are available to help Hispanic small business owners

Nearly 20 percent of the American population is Hispanic, but only 6.9 percent of companies operating in the U.S. are Hispanic-owned. You might assume that share is so small because of historical obstacles, but Hispanic small business owners come up against major roadblocks even today.

Even so, the share of Hispanic-owned companies has seen notable growth in recent years.

To give a clearer picture of minority-owned businesses in the United States, we’re breaking down some Hispanic small business statistics.

Hispanic-owned business statistics

In October 2023, the U.S. Department of the Treasury reported that roughly 5 million Latinx-owned businesses operated nationwide. These companies generate over $800 billion in annual revenue with an economic output of $2.8 trillion.

That report also revealed that this share is growing. In 2021, almost 25 percent of the entrepreneurs behind new business applications were Latinx. And between 2019 and 2023, the share of self-employed Latinx workers across the country grew by 26 percent.

On top of all of that, the number of Hispanic small businesses grew by 8.2 percent between 2020 and 2021, according to the U.S. Census Bureau.

When it comes to loans backed by the Small Business Administration (SBA), Hispanic small business statistics also show positive growth. As part of its weekly lending report, the SBA shared that in the 2023 fiscal year (which ended on September 30), Hispanic small business applicants got 8.5 percent of all distributed 7(a) loan proceeds and 10.3 percent of 504 loan proceeds.

While these numbers are nowhere near the percentage of funding white business owners received (almost half of all approved funds for both loan types), both 7(a) and 504 approval amounts increased for Hispanic business owners from the 2022 fiscal year.

Challenges Hispanic-owned businesses face

While SBA-backed loans can offer a path forward for Hispanic small business owners, 32 percent of owners report being denied financing like loans and lines of credit, compared to only 18 percent of white-owned businesses. Although SBA loans are available for startups, many lenders generally require at least two years in business, which can exclude newer businesses.

Results from the Federal Reserve’s 2022 Small Business Credit Survey show that Hispanic small business owners have a harder time getting the money they need to start or grow a business. As a result, many startups lean on their own savings (i.e., bootstrapping) or turn to family and friends for money.

In 2021, 28 percent of Hispanic people who applied for loans, lines of credit and cash advances were fully approved. In 2022, there was a slight increase, with 38 percent getting the green light. Further, a whopping 68 percent of Hispanic small business owners said they had relied on their own personal savings or money from family and friends.

Loans from personal networks — such as family and friends — generally deliver much smaller amounts than, say, the $5 million maximum of an SBA 7(a) loan. Alternatively, business owners might turn to riskier forms of financing like invoice factoring.

Additionally, the 2023 Bank of America Women & Minority Business Owner Spotlight revealed that a decreasing number of Hispanic small business owners were optimistic about their businesses. When asked:

  • 63 percent said they expected revenue to increase in the year ahead (down from 71 percent the year prior)

  • 51 percent said they planned to expand (down from 59 percent the year prior)

  • 43 percent said they planned to hire more employees in the coming year (down from 45 percent in the year prior)

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Bankrate insight

The 2023 Bank of America Women & Minority Business Owner Spotlight also found that 89 percent of Hispanic business owners were planning to obtain financing for their businesses. Funding sources include:

  • 57 percent using business credit cards

  • 46 percent using personal savings

  • 31 percent using a traditional bank loan

  • 29 percent using personal credit cards

Resources available to Hispanic-owned businesses

While some Hispanic small business statistics might feel disheartening, people and programs actively work to overcome obstacles and lessen burdens. You can explore options like:

  • Latino Economic Development Corporation (LEDC)

  • Association of Latino Professionals for America (ALPFA)

  • National Association Latino Community Asset Builders (NALCAB)

  • Hispanic entrepreneur hub from SCORE, which offers SBA-backed training and mentoring

Alternative funding available for Hispanic business owners

While getting a business loan through a traditional lender is an option, other types of funding are available. Options to consider include:

  • Grants: Hispanic small business owners can explore grants for minorities. These grant programs — along with others for which you might be eligible — offer money you never need to repay.

  • SBA loans: As we mentioned, SBA loans can be a solid option for Hispanic-owned companies. Going through a lender who offers an SBA Community Advantage Loan can further heighten your likelihood of getting approved.

  • Community development financial institutions (CDFIs): These financial institutions focus on underserved communities. If you’ve had trouble with other banks, look into a CDFI.

  • Hispanic-owned banks: If you’re ready to work with someone who understands the specific challenges of Hispanic small business owners, you can explore these banks.

  • Loans for minorities: Some loans are tailored for minority business owners. Here are the best business loans for minorities you can explore.

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Bankrate insight

Getting a minority small business certification might make it easier to get financing, receive support from the resources we’ve outlined and provide development opportunities.

How to support Hispanic-owned businesses

If you want to support the growing number of Hispanic small business owners, use your dollar. Buying from these companies goes a long way toward helping them scale sustainably.

For a handful of ideas to get you started, here are a few different roundups:

  • 15 suggestions from New York Magazine

  • 27 Oprah-recommended Hispanic/Latinx brands

  • 99 suggestions from Cosmopolitan

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Bankrate insight

Small Business Saturday — the Saturday right after Thanksgiving — also gives you a great opportunity to support Hispanic-owned small businesses. This shopping holiday specifically aims to support small businesses and celebrate shopping small, juxtaposing box store-bolstering Black Friday the day before.

Bottom line

Hispanic small business statistics show this is a growing segment of American companies. But they also reveal that Hispanic small business owners — like other minority-owned businesses — can have more difficulty securing financing. By choosing to shop small and support small businesses, you can help uplift your local community and help diversify the economy.

Frequently asked questions

  • What percentage of business owners are Hispanic?

    Roughly 6.9 percent of businesses in America are Hispanic-owned, according to the U.S. Census Bureau.

  • What challenges are Hispanic American business owners facing?

    Polls and surveys reveal that Hispanic small business owners report having a more difficult time getting financing — and that challenge has grown in recent years. Surveyed Hispanic owners also said they felt less optimistic about the coming year than they had in years prior.

  • What is the fastest-growing demographic of entrepreneurs?

    According to a recent report from J.P. Morgan, Black women are the fastest-growing demographic of entrepreneurs. That said, Hispanic-owned businesses are also growing at a notable pace: by 8.2 percent between 2020 and 2021.

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