Latinos in Business

In 2006, when I opened my first restaurant, I was driven by the pursuit of my dreams. However, I soon discovered that I lacked the necessary knowledge and experience. This situation is common among many Hispanic entrepreneurs in the United States. We are hardworking, consistent, and have great potential, but often, we do not have a clear understanding of our business performance.

The Entrepreneurial Spirit: In the Hispanic community, starting a business isn’t just about making money; it’s about climbing the social ladder. The numbers tell a story — from 1.58 million Hispanic-owned businesses in 2000 to about 5 million by 2023. This surge is driven by necessity, dodging job market barriers like immigration status or language, and a deep-seated wish to leave something for our families and communities.

The Challenges:

• Access to Capital: Starting off with little cash and often no Social Security Number, they’re at a disadvantage right from the get-go. Traditional lenders see them as high risk, making capital hard to come by.

• Peer Network: Community support is strong, but it’s a double-edged sword since many are in the same financial boat, limiting how much they can help each other grow.

• High-Cost Borrowing: When they do find funding, it’s usually high-interest, short-term loans that bleed their businesses dry rather than help them grow.

• Credit Limitations: Without a solid credit history, getting a business credit card or loan is like pulling teeth — only 25% have one.

• Higher Revenue, Less Reserves: Even with good income, many don’t have much cash saved up — 41% have less than a month’s reserves.

• Limited Familiarity: A whopping 74% struggle with basic finance tasks because of low financial literacy and language barriers.

Economic Impact: Despite these obstacles, they’re a powerhouse, contributing around $800 billion in revenue annually and boosting the economy by about $2.8 trillion. The kids of immigrants are also stepping up, often moving into tech and seeing better revenues.

Cultural Dynamics:

• Industry Concentration: Businesses are mostly in construction, food, retail, and personal care, where cash flow can be unpredictable, making traditional loans tough.

• Economic Resilience: They’re adaptable and resilient, especially in tough times, thanks to our community and diverse customer base.

• Cultural Trust and Branding: Building trust through shared cultural understanding gives an edge, a chance for financial services to connect genuinely.

• A Key To The American Dream: Over the last decade, Hispanics have been starting new businesses 44% faster than non-Hispanics.

• Whatever it takes: 76% are more than willing to use tools and resources that help address these challenges.

Untapped Potential: If financial services had spoken my language — culturally and literally — my journey might’ve been smoother. Here’s what’s missing:

• Cultural Intuition: Financial products should resonate with cultural values, not just translate words.

• Formalizing the Informal: Many start small, under the radar. Formal financial support could turn these into stable, growing businesses.

• Tools: Simple, tech-savvy financial tools to help them make smart decisions.

• Something Easy: Financial solutions should react to real-time business performance, limiting dependency on bookkeeper and end-of-month P&L

Conclusion: I’ve seen firsthand the grit and potential in Hispanic entrepreneurship. We can drive America forward by building for Hispanic entrepreneurs. In 2022, JP Morgan Chase pegged Latino-owned businesses as a top growth sector for the U.S. economy.

-Edgar Carreon