Income of Latino-owned businesses overtook non-Latinos

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NEW YORK, October 6, 2021 (GLOBE NEWSWIRE) – Average annual income for Latino-owned businesses ($ 258,251) in 2020-2021 was $ 82,535 lower than their revenues the previous year ($ 340,787), a drop of 24.2%, according to the annual Biz2Credit study Latino-Owned Business Study. The analysis also found that the average annual income of Latino-owned businesses was $ 45,435 higher than that of non-Latino-owned businesses ($ 212,816).

Average earnings of Latino-owned businesses fell from $ 218,802 in 2019-2020 to $ 162,725 in 2020-2021, a loss of revenue of $ 56,077, representing a decrease of 25.6%. However, Latin American companies surpassed those of non-Latin American companies ($ 132,753) in 2020-2021, according to Biz2Credit.

Meanwhile, the report revealed that average operating expenses for Latino-owned businesses were lower in 2020-2021, from $ 121,985 to $ 95,526. This drop in spending of $ 26,458 can be attributed to COVID, as spending for many businesses has been significantly reduced due to closures related to the pandemic.

Credit ratings of Latino owners (614) fell from 590 in the previous 12 months and was also higher than for non-Latino business owners (610) in 2020-2021.

However, despite superior performance measures, the Latin American corporate finance rate was 34.5%, slightly lower than the non-Latin American business financing rate of 36.6% in 2020-2021. Additionally, the average loan amount for Latino-owned businesses was $ 47,031, compared to $ 81,156 for non-Latin American businesses in 2020-21.

“Our primary data shows the relative success of Latino business owners compared to others,” said Rohit Arora, CEO of Biz2Credit, one of the country’s leading experts in small business finance. “One of the reasons is that business owners of all ethnicities have battled the pandemic, and many loan applications have come from non-Latino business owners in urban areas that have been hit hard by the pandemic and government restrictions on their operations. “

Biz2Credit complies with the Stanford Latino Entrepreneurship Initiative of State of Latino Entrepreneurship Report 2020, who also found that Latino-owned businesses are significantly less likely than white-owned non-Latin American businesses to have loan applications approved by domestic banks, despite the publication of strong metrics on many criteria key loan. Additionally, the Stanford report said that Latino business owners are no more likely to be at high credit risk than their non-Latino white counterparts, and among the most credit-vulnerable business owners (without – paper and micro-business owners), default rates are no higher than those of non-Latinos.

According to Biz2Credit analysis, California was the state from which the most business loan applications originated (20.7%), followed by Texas (18.0%), Florida (14.9% ), New York (8.4%), Illinois (4.0%), Arizona (3.8%), New Jersey (3.4%), Georgia (2.3%) , Colorado (2.1%) and Pennsylvania (1.8%) in 2020-2021.

Services (excluding public administration), the largest category of business, accounted for nearly 23.6% of Latino-owned businesses in the Biz2Credit study. The following industries were construction (16.2%), transportation and warehousing (11.8%), retail trade (9.8%), accommodation and food services (8.9%) %) and Professional, Scientific and Technical Services (4.8%) Arts and Entertainment (4.5%), Health and Social Assistance (4.3%), Real Estate and Leasing (2.7%) and Wholesale trade (2.50%) in 2020-2021.

“This report showcases the resilience and dynamism of Latino entrepreneurs. COVID has introduced unthinkable hurdles, but Latin American small businesses have consistently outperformed other groups,” said Representative Nydia M. Velázquez (D, NJ- 07), chair of the House Committee on Small Business. “Despite the success of these companies, they still have a harder time obtaining financing than non-Latino companies. Capital. This report makes it clear that Congress still has work to do to increase equity in the lending space . “

Latin American Business Statistics

According to the Census Bureau, twelve states – Arizona, California, Colorado, Florida, Georgia, Illinois, New Jersey, New Mexico, New York, North Carolina, Pennsylvania and Texas – had at least 1 million Latino residents. Additionally, the Latino population, which includes people of all races, was 62.1 million in 2020. This figure represents an increase of 23%, while the rest of the population grew by only 4.3%. since 2010.

There are approximately 4.65 million Latino-owned businesses in the United States, making it the fastest growing segment of American small businesses, up 34% over the past 10 years, reports the SBA. The Stanford Latino Entrepreneurship Initiative report found that in pre-pandemic times, Latino-owned businesses generated nearly $ 500 billion in annual revenue and employed 3.4 million people. He also found that businesses owned by Latinas were more affected by the pandemic than businesses owned by men and that twice as many businesses run by women were closed, compared to businesses run by men (30 % against 16%). Layoffs were also higher for companies run by Latinas (17% vs. 12%). Only 20% of Latino-owned businesses said the majority of their employees could work remotely, compared to 34% of businesses run by Latinos and 48% of businesses run by white men.

How a Latino-owned San Jose salon survived COVID

Like most salons, Limón Salon, which opened 14 years ago in San Jose, California, struggled to survive when it was closed by COVID restrictions for eight months and limited to operating at less than 50% of its capacity for several months after that. Owner Carlos Letelier, whose clients include employees of Silicon Valley tech giants Google, Apple and Facebook, saw his revenue drop from $ 2.1 million in 2019 to just half that amount in 2020.

Letelier, whose parents emigrated from Chile, was able to secure first and second round PPP loans of $ 275,000 each.

“I paid the staff and covered their health care benefits with PPP funding,” he explained. “It helped us survive.

During COVID, the salon also rotated and sold professional coloring kits with curbside delivery. Before the pandemic, he sold hair products online with little success, but during COVID, earnings for them jumped to $ 20,000 per month. Now, he says his business has almost fully recovered and is on track to generate $ 1.8 million in revenue in 2021.

Biz2Credit Latin American Owned Business Study Key Findings

  • California was the state with the most loan applications (20.7%), followed by Texas (18.0%), Florida (14.9%), New York (8.4%) , Illinois (4.0%), Arizona (3.8%), New Jersey (3.4%), Georgia (2.3%), Colorado (2.1%) and Pennsylvania (1.8%) in 2020-2021.
  • The average credit score for Latinos was 614 in 2020-2021, down slightly from 618 in 2019-20.
  • The average age of businesses was 55 months, one month older on average than the previous year.
  • Services (excluding public administration), the largest category of business accounted for nearly 23.6% of Latino-owned businesses in the Biz2Credit study. The following industries were construction (16.2%), transportation and warehousing (11.8%), retail trade (9.8%), accommodation and food services (8.9%) %) and Professional, Scientific and Technical Services (4.8%) Arts and Entertainment (4.5%), Health and Social Assistance (4.3%), Real Estate and Leasing (2.7%) and Wholesale trade (2.50%) in 2020-2021.
  • Average annual income for Hispanic businesses ($ 258,251) was $ 45,435 upper than non-Latin American companies ($ 212,816) in 2020-2021.
  • Average operating expenses ($ 95,526) represents 37% of Hispanic business revenue. In comparison, non-Latino business expenses ($ 80,063) accounted for 38% of revenue in 2020-21.
  • Average annual earnings for Latino-owned businesses ($ 162,725) surpassed those of non-Latin American businesses ($ 132,753) in 2020-21.
  • Despite superior performance measures, the the financing rate of Latin American companies was 34.5%, slightly lower than the financing rate of non-Latin American companies 36.6% in 2020-2021.
  • Average loan amount for Latino-owned businesses was $ 47,031, compared to $ 81,156 for non-Latino businesses in 2020-21.

For analysis, Biz2Credit looked at the financial data of more than 40,000 small businesses that applied for financing other than Paycheck Protection Program (P3) loans.

Biz2Credit owned and non-Latin American companies (year-to-year comparisons)

Latino-owned businesses 2020-21 2019-20 Difference
Average annual income $ 258,251 $ 340,787 – $ 82,535
Average credit score 614 590 24
Average operating expenses $ 95,526 $ 121,985 – $ 26,458
Average age of the company (in months) 55 54 1
Average earnings $ 162,725 $ 218,802 – $ 56,077
Non-Latin American companies 2020-21 2019-20 Difference
Average annual income $ 212,816 $ 380,875 – $ 168,059
Average credit score 610 597 13
Average operating expenses $ 80,063 $ 159,550 – $ 79,487
Average age of the company (in months) 52 59 -7
Average earnings $ 132,753 $ 221,325 – $ 88,572

About Biz2Credit Latino Small Business Credit Study

Biz2Credit, one of the leading lenders in the online marketplace, analyzed the financial performance of 43,000 businesses, including over 4,000 Latino-owned businesses, who submitted funding requests through the company’s online marketplace. . All of the companies included in the survey have fewer than 250 employees and less than $ 10 million in annual revenues. The report covered small businesses across the country, from start-ups to established businesses.

About Biz2Credit

Founded in 2007, Biz2Credit has arranged over $ 7 billion in small business financing. The company extends its cutting-edge technology into customized digital platform solutions for banks and other financial institutions, investors and service providers. Visit www.biz2credit.com or Twitter @ Biz2Credit, Facebook and LinkedIn.

Media contact: John Mooney, (908) 720-6057, [email protected]


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