Latino-owned businesses are making waves in the U.S. economy, with the rate of new business launches by Latinos being more than twice that of the general population. In 2023, 36% of new businesses were owned by Latinos, highlighting the community’s innovation and drive for entrepreneurship. With projections showing that Latinos will make up 29% of the population by 2050, these businesses have the potential to contribute a staggering $1.4 trillion to the U.S. economy, a significant boost to the $18 trillion economy.
As of 2023, there are five million Latino-owned businesses in the U.S., generating over $800 billion in annual revenue. These businesses represent nearly one-fifth of the population and contribute significantly to the GDP, making them a crucial part of the U.S. economic landscape. The growth of Latino/a-owned businesses has been rapid, with a 34% increase from 2007 to 2019, contrasting starkly with a decline in the number of white-owned businesses.
Latino-owned businesses play a significant role in job creation and economic growth, with nearly two-thirds of all new jobs in the U.S. being created by these enterprises. They also account for almost half of the private-sector output, with Hispanic employer businesses employing about one million workers and contributing over $100 billion in annual payroll. Their impact on the economy is undeniable, highlighting the vital role of Latino entrepreneurs in shaping a more inclusive and dynamic business landscape in America.
Despite their impressive growth and contributions, Latino-owned businesses face challenges in securing financing, with 70% of initial funding coming from personal savings. While one in three sought financing in 2022, they faced lower approval rates for loans over $50,000 compared to white-owned businesses. Additionally, less than 1% of venture capital funding in 2021 was allocated to Latinos, exacerbating the financial challenges they face. Organizations like Endeavor and Accion are playing a crucial role in offering resources and guidance to bridge the gap to more substantial funding sources.
Looking ahead, collective efforts between venture funding, accelerators, and traditional banks could address the immediate challenges of financing for Latino-owned businesses. By laying down pathways for sustainable growth and contribution to the U.S. economy, these businesses have a promising future. With the support of such mechanisms in place, Latino entrepreneurs are poised to break new ground and continue their trajectory of impactful economic contribution.
