The annual Latino-Owned Business Study by Biz2Credit reported that revenues, credit scores, and age-of-business of Latino-owned businesses all increased over the past 12 months. However, expenses also rose significantly due to inflation, leading to lower earnings in 2023-24 compared to the previous year. The analysis, released during Hispanic Heritage Month, looked at financial indicators for small to midsized companies in the U.S. from July 1, 2023, to June 30, 2024, comparing Latino-owned and non-Latino-owned businesses.
Revenues for Latino-owned businesses saw an 11.6% increase, with annual revenue averaging $671,360 in 2023-24. Although this was slightly less than the 11.5% increase for non-Latino-owned businesses, earnings for Latino-owned businesses were higher than their counterparts. Despite the revenue growth, operating expenses for Latino-owned firms rose by 22.7%, resulting in a decrease in earnings of 36.3%. Additionally, the average personal credit score for Latino-owned businesses saw a slight increase from 641 to 647.
The study also found that the age of business for Latino-owned companies increased from 4.5 years to 5.3 years, indicating the staying power and longevity of these businesses. The average approved funding amount for Latino-owned businesses also increased from $55,396 to $75,680 in 2023-24. However, the funding rate for Latino-owned businesses was slightly higher than that of non-Latino-owned businesses, with funding amounts averaging $62,371 and $76,503, respectively.
In terms of industry categories, construction was identified as the largest sector for Latino-owned businesses, followed by Other Services, Accommodation and Food Services, Retail Trade, and Transportation and Warehousing. The study revealed that nearly one-quarter of funding requests from Latino-owned firms came from Florida, with California, Texas, New York, and New Jersey following closely behind. These numbers highlight the impact and significance of Latino-owned businesses on the U.S. economy.
Despite the growth and resilience of Latino-owned businesses, the past year has been challenging due to inflation, rising costs of labor, fuel, rent, and insurance. These factors, combined with high-interest rates, have resulted in a decline in earnings for small businesses across the board. However, with inflation easing and the Federal Reserve lowering interest rates, there is hope for a potential rebound in revenues and profitability for Latino-owned businesses.
As Latino entrepreneurs continue to play a crucial role in the U.S. economy, contributing over $800 billion annually and owning nearly 5 million businesses, their resilience and perseverance in the face of economic challenges are evident. With Latinos projected to make up 29% of the U.S. population by 2050, their impact on the economy is expected to grow significantly. As business owners remain optimistic for the future, the strength and growth of Latino-owned businesses continue to be a key indicator of the health and vitality of the U.S. economy.
