Earnings of Latino-Owned Businesses Jumped 46% in Past 12 Months

The average revenue of Latino-owned businesses improved 46.5% in 2019, increasing to $479,413 from $327,189 in 2018, according to Biz2Credit’s annual study. Meanwhile, the number of credit applications from Latino-owned businesses increased by 23% over the past 12 months.


The study, which examined the primary financial information submitted by 3,000 Latino-owned businesses on Biz2Credit’s online platform, also revealed that while revenues climbed, the average credit scores Latino-owned businesses dipped to 588 from 594 last year.

Latino-owned businesses have grown 31.6% since 2012, and our research finds that revenues of Latino-owned companies jumped 23% from 2017-18. Cost management is a challenge for young and growing firms, which can factor into the dip in credit scores. Latino businesses are thriving and expanding, and they help contribute to the overall strength of the U.S. economy.

Manuel Chinea, COO of Popular Bank concurs.

“The growth of Latino businesses is undeniable and will undoubtedly increase as this important group becomes a larger section of the population. By 2050, Latinos are expected to comprise almost 30% of the population, compared to 18% today,” Chinea said. “We see first-hand the enormous contribution these businesses make to our economy and communities, and Popular Bank works with them as the complexity of running their business increases.”

Among the other key findings of the Biz2Credit Study of Latino-Owned Businesses:

  • Average Annual Revenue of Latino-owned business increased to $479,413 in 2019, with an improvement of 46.5% from $327,189 in 2018.
  • The number of credit applications from Latino-owned businesses increased by 23% over the past 12 months. However, they comprise only 9% of the total number of applications submitted last year.
  • The average credit score for Latinos slightly dipped from 594 in 2017-18 to 588 last year.
  • Accommodation and Food Services remains the largest category of businesses represented nearly 18% of the Latino-owned companies in the study. Services (except Public Administration) were at 17%, Construction came in at close to 15%, Retail Trade was 10%, and Transportation and Warehousing represented 8% of the businesses.
  • Average annual revenue for Latino-owned businesses ($479,413) was $25,067 lower than Non-Latino-owned companies ($590,110) in 2018-19.
  • Average operating expenses represents 45% ($215,846) of the Average Annual Revenue ($479,413) for Latino-owned businesses, which was 43% ($140,806) in 2018. The rise of nearly 3 percent is observed in average operating expense of non-Latino businesses which is 40.6% (2019) from 38% in 2018.
  • California was the state where the most loan applications originated (23.5%), followed by Texas (20%), New York (7%), Florida (6%) and New Jersey (5%).

In this economy, Latino businesses across the nation have thrived. However, it is a little concerning that credit scores dropped from the previous year. This would seem to indicate that business owners may be using their own personal credit cards to fund their business growth if their companies did not qualify for loans. When credit scores are less than 600, it is hard to get traditional bank loans or even SBA loans. In such cases, business owners may have to borrow from non-bank lenders, such as merchant cash advance companies.

Merchant cash advance companies provide an upfront sum of money in return for a percentage of the borrower’s future sales on a daily basis. Most term loans and SBA loans are paid back a fixed sum monthly. With a merchant cash advance, the borrower makes daily payments (plus interest and fees), until the advance is repaid.

Latino companies are seeking funding for both long-term needs, including commercial real estate and equipment purchases, as well as shorter, cash flow-related issues.

Many Latino businesses apply for SBA microloans (amounts up to $50,000) that are offered by regional and community banks with government guarantees, which encourage lending to companies that otherwise might not qualify for bank loans. For companies that need larger amounts, SBA Community Advantage Loans provide up to $250,000 in funding to companies located in under-served areas.

How important is SBA lending?

This week, the agency announced its Fiscal Year 2019 lending figures showing that it guaranteed over $28 billion to entrepreneurs who otherwise would not have access to capital to start, grow, or expand their small businesses.

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