Nearly 25% of new entrepreneurs in 2021 were Latino, with the typical Latino employer seeing revenue increase 25% during the pandemic and recovery.
WASHINGTON – Today, in observance of Hispanic Heritage Month, the U.S. Treasury Department released a report showing that Latino business ownership and revenue in the United States are on the rise, and detailing how investment federal funds – including those from President Biden’s American Rescue Plan – are on the rise. develop and sustain Latino-owned businesses.
According to a report released last month by the Stanford Latino Entrepreneurship Initiative (SLEI), the United States is currently home to more than 62.5 million Latinos, or 19 percent of the U.S. population. With an economic output of $2.8 trillion, there are approximately 5 million Latino-owned businesses in the United States, generating more than $800 billion in annual revenue.
However, the COVID-19 pandemic has caused disproportionate harm to Latino businesses and communities. At the height of the pandemic, Latinos were more likely to lose their jobs, more likely to work in frontline positions that increased their risk of exposure, and had some of the highest mortality rates. Latino unemployment peaked at nearly 19% in 2020.
As part of the post-pandemic recovery, the Biden-Harris administration has taken important steps to build a fairer economy. Although much remains to be done, these efforts have led to the most equitable and broad economic recovery in modern history.
More and more Latin American entrepreneurs are creating businesses
From 2020, we are seeing a lasting boom in business applications and startups. Average monthly business applications were 50% higher in 2021-2023 than in 2018-2019, and nearly 25% of all new entrepreneurs in 2021 were Latino. There is evidence that increased job applications have resulted in a higher percentage of Latino and Black business owners, as areas with a higher proportion of Latino and Black residents have experienced relatively larger increases in employment rates. application in 2020.
Latino-Owned Businesses Are Earning Higher Revenues Than Before the Pandemic; Latino workers enjoy higher wages and record unemployment
During the pandemic and recovery (2019-2022), the median revenue growth rate was 25% for Latin American employers. From 2019 to 2022, the median weekly wage increased by 2.4% for Latino workers after accounting for inflation. At the same time, Latino unemployment reached a record high last September.
The number of Latino self-employed workers increased during the recovery
According to Treasury Department calculations based on monthly Current Population Survey data, the number of Latino or Black self-employed workers has increased significantly since 2019. Growth in the number of self-employed Latinos and Black Americans outpaces far from what happened in previous economic recoveries. .
- From 2019 to 2023, the number of self-employed Latino workers increased by 26% in the United States.
- The share of Latino workers who are self-employed increased from 8.9% in the first 8 months of 2019 to 10.2% in the first 8 months of 2023.
In contrast, in the four years since the start of the Great Recession, the number of Latino self-employed workers has declined and increased only slightly for black workers.
Federal programs helped spur and support Latino small business boom
Americans – including Latino entrepreneurs – filed nearly 10.5 million new business applications in 2021 and 2022, the two highest years on record for new business formation. To support small business growth, record demand was met with new federal resources. For example, in 2022, according to the aforementioned SLEI report, Latino-owned businesses were 50% more likely to seek financing than white-owned businesses, with the intention of using the funds to expand their businesses, acquire additional fixed assets and meet operating expenses. The Treasury Department has played a leading role in implementing programs and initiatives to support small businesses in all communities.
- The nearly $10 billion State Small Business Credit Initiative (SSBCI) – reauthorized and expanded by the American Rescue Plan – includes $2.5 billion in funding and incentive allocations for support the provision of capital to underserved businesses – $1 billion of which will be awarded to jurisdictions that successfully reach underserved businesses.
- Through the Emergency Capital Investment Program (ECIP), the Treasury Department invested $1.6 billion in Latino-designated minority depository institutions. In total, ECIP participating institutions have received more than $8.5 billion in Treasury investments in ECIP, which could allow them to collectively increase lending to Latino communities by more than 50 billion dollars over the next decade.
- The Treasury Department prioritized fairness in its spending guidelines for the American Rescue Plan’s State and Local Fiscal Recovery Fund (SLFRF) – the largest direct pay infusion ever to US governments. State, local and tribal. To address both the disproportionate impacts of the pandemic and the historic underinvestment that has left some communities more vulnerable, the Department has provided a broad range of services to improve health, housing, employment and equity economy in low-income, high-poverty communities.
- To boost workers and small businesses across the island, the American Rescue Plan significantly expanded Puerto Rico’s version of the Earned Income Tax Credit (EITC), quadrupling benefits for workers through the first federal enhancement of Puerto Rico’s EITC since the credit’s inception nearly 50 years ago. There is.
- Purchasing from government agencies plays an important role for many minority-owned businesses. At the Treasury Department, the amount of prime contracts awarded to Latino businesses has increased 23% since fiscal year 2020. The Department also designated two minority financial institutions as government financial agents.
Real Businesses Get Real Results
- The Latino Connection (TLC), based in Harrisburg, Pennsylvania, is a consulting firm focused primarily on outreach and education initiatives aimed at supporting underserved communities, with a mission to educate, empower and uplift the Latino community. This year, the company took a growth step by acquiring another company – a merger that will allow TLC to add marketing and communications business lines to its roster of services. However, this meant the business needed a new space in order to better serve its customers and attract new ones. Having difficulty obtaining a loan from a traditional bank, TLC turned to Capital Region Economic Development Corp. (CREDC), a nonprofit community economic development organization participating in the Pennsylvania Department of Community and Economic Development’s State Small Business Credit Initiative (SSBCI) loan participation program. . Using federal SSBCI funds leveraged by a private credit issued to purchase the real estate, CREDC was able to design a $250,000 enhanced credit agreement to support the renovation and furnishing of the space, the hub of the TLC in full growth. Melissa Stone, CREDC’s vice president of economic development, noted the important role SSBCI dollars played in this and other transactions: “SSBCI helps us ‘check’ the credit boxes on the transactions we really want to do, and otherwise could not close.
- Washington, DC invested nearly $40 million of its SLFRF funds into DC’s Bridge Fund 2.0, which invested in small businesses in the community, including a $75,000 grant to Peruvian Brothers. Founded by Mario and Giuseppe Lanzone, two brothers who grew up in the coastal La Punta district of Peru, Peruvian Brothers focuses on the dishes they miss most from their childhood. The business began as a food truck, joining the city’s then-burgeoning food truck scene. It has since expanded into three food trucks, a catering operation, and a Latin American market food stand called La Cosecha, which features culinary talent from many South American countries.
- Asian Financial Corporation, based in Philadelphia, Pennsylvania, is a recipient of funding from the Treasury Department’s Emergency Capital Investment Program and has created and offered a new loan product and financial service, titled Small Business Booster Loans (SSBL), to underserved business owners. in the form of a term loan or line of credit. Examples of loans provided during the pandemic recovery include:
- In October 2022, the SSBL program provided a $50,000 loan to a Latino-owned cleaning service to purchase additional equipment and software, allowing the owners to run a more efficient business.
- In June 2023, the SSBL program provided a $30,000 working capital loan to a Latino-owned truck repair business, allowing owners to replace more expensive debt with bank debt and finance the purchase new equipment.
- In September 2023, the SSBL program paid $100,000 to a Latin American restaurant to replace aging kitchen equipment.
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Business ownership in underserved communities will be among the topics discussed at the Treasury Department’s Freedman’s Bank Forum on October 25. Media wishing to attend can confirm their presence at press@treasury.gov.