Latino-owned businesses have rebounded faster than white-owned businesses from the pandemic-induced downturn, according to a new report.
The 10th annual State of Latino Entrepreneurship report from Stanford Graduate School of Business found that the number of Latino-owned businesses increased by 44% nationally from 2018 to 2023. The number of white-owned businesses decreased by 3% in that same time frame.
Latino-owned businesses in Massachusetts grew by 111% in that same timeframe, the report found.
”Latinos are creating companies faster. Those companies are growing revenue faster. They’re creating jobs faster,” said Arturo Cázares, CEO of the Latino Business Action Network, which worked alongside Stanford on the report.
Entrepreneurial growth in the U.S. has been declining generally but minority populations, specifically immigrants, are fueling growth, according to Marlene Orozco, a research consultant for the report.
The report found that Latino-owned businesses reported more profitability on average, as 84% of Latino-owned businesses nationally turned a profit in 2024 but only 80% of white-owned businesses reported profits.
“Population trends alone aren’t just fueling this growth,” said Orozco, CEO and founder of Stratified Insights, a Los Angeles-based consulting firm.
“It is, I believe, a propensity to be entrepreneurial,” she added. “From the immigrant’s perspective, coming to the United States is kind of the epitome of risk taking. So, starting a business, which is another form of risk, perhaps pales in light of what they have experienced.”
Massachusetts had the fifth-highest growth among U.S. states in the number of Latino-owned businesses from 2018 to 2023. Despite this growth, significant gaps separate Latino-owned businesses from white-owned businesses.
Access to capital is one of the more glaring gaps. White-owned businesses are twice as likely as Latino-owned businesses to receive all the funding they request from banks and other lenders.
More striking is that only half of Latino entrepreneurs receive an explanation for funding denial while 86% of their white counterparts are given a reason for denial.
“The loop isn’t being closed,” Orozco said. “They’re being left in the dark as to what it is that they need to improve.”
Diana Cardona and her twin sister own Chocolaffee, a Revere-based food company. Cardona told GBH News that funding is her biggest barrier.
She started Chocolaffee in 2016 which produces Colombian-style chocolate and nuts. It opened as a coffee shop to the public last July. Cardona said that the lack of capital has gotten in the way of potential growth for her company.
“Many of the places that you apply, sometimes they ask you that you have to make a certain amount of money to get access to certain capital,” Cardona said. “But sometimes you’ll be like, ‘If I had that amount of money, I wouldn’t be needing the access to capital.’
“And they tell you no just because you’re going day-by-day,” she added.
The report found that many Latino entrepreneurs avoid seeking capital altogether. The main reason cited among the 10,000 survey responses was that owners didn’t want to accrue debt. But Ángel Díaz avoids asking for help because of how much of his time it takes up.
As the owner of The Centerpiece Flower Shop with two locations — one in West Roxbury and another in Roslindale — he said he doesn’t have time to chase the money.
“I know there is an opportunity,” Díaz said. “But there are so many steps that we went through the first two years … and it was a waste of time.”
Revenue is another gap highlighted in the report. While Latino-owned businesses have been more profitable, they’ve also reported less revenue on average. Latino businesses made an average of $1.4 million in revenue in 2023, while white-owned businesses generated $3.7 million on average.
If Latino and white-owned businesses averaged the same revenue, an additional $1.1 trillion in revenue would be added to the U.S. economy, according to the report.
Cázares said that barriers Latino entrepreneurs face also apply to Black and women-owned businesses. If the gaps among all these communities were closed, it would add up to ”multiple trillions of dollars“ for the economy.
