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Results of a new business study. Photo: Pixabay.

Why do Latino businesses generate less revenue than the others?

According to Biz2Credit, although the gap has narrowed between 2021 and 2022, the lag is still worrying.

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The annual study of Latino-owned businesses conducted by the financial firm examined annual revenues, profits, operating expenses, credit scores, and approved loan amounts, as well as small business financing requests under $10 million in annual revenue, from startups to established companies nationwide, from July 31, 2021 to June 30, 2022.

Rohit Arora, Biz2Credit CEO, one of the nation’s leading experts in small business finance, stated:

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Our primary data shows the relative success of Latino business owners compared to others in the last year.

Key findings 

  • Average annual revenue for Latino-owned companies ($538,588) was lower than those of non-Latino-owned firms ($583,502) in 2021-22.
  • Revenue growth for Latino-owned companies was up by 4%, while for non-Latino-owned companies it shrank by 5%, narrowing the gap in average revenue to just over $45,000.
  • Average operating expenses for Latino business owners was $415,101, compared to $431,680 for non-Latino business owners in 2021-2022.
  • Average earnings (Annual Revenue - Operating Expenses) across all businesses decreased by 10.5%. Latino-owned companies ($123,487) had lower profits than non-Latino-owned firms ($151,821) in 2021-22.
  • Credit Scores: Based on submitted applications, the average credit score for Latino business owners decreased from 638 in 2020-21 to 634 in 2021-22, while credit scores for non-Latino business owners dropped from 645 to 640.
  • The average financing amount for Latino-owned businesses ($57,470) was $24,529 less than that of non-Latino-owned firms ($81,999) in 2021-22 based on requested and approved financing amounts.
  • The state where the most financing applications from Latino-owned businesses originated was Florida (23.3%), followed by California (18.2%), Texas (15.4%), New York (7.3%), and New Jersey (4.5%), in 2021-22, according to submitted applications.
  • The largest category of businesses was Services (except Public Administration), which represented 18.6% of the Latino-owned companies in the Biz2Credit study. The industries that followed were Construction (16.8%), Transportation and Warehousing (14.8%), Retail Trade (10.7%), Accommodation and Food Services (8.6%), Professional, Scientific, and Technical Services (5.3%), Healthcare and Social Assistance (4.0%), Real Estate and Rental Leasing (3.5%), Wholesale Trade (3.1%), and Arts/ Entertainment (3.0%).
  • The average age of business for Latino-owned businesses is lower at 61.9 months (a little more than five years) than for non-Latino businesses at 66.8 months in 2021-22.

“Latino business owners have made some significant gains compared to a year ago. One reason is that business owners of all ethnicities struggled during the pandemic, and many loan applications came from non-Latino business owners in urban areas that were hit hard by both the pandemic and government-mandated restrictions on their operations,” added Arora.

About the study

Biz2Credit, a leading provider of online financing for small businesses, analyzed the financial performance of more than 154,000 businesses, including more than 14,000 Latino-owned firms that submitted financing requests through the company's online platform.

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