While some companies shuttered during Covid, a significant number of Hispanic- and Latine-owned businesses launched during that time. In fact, one-third of the Hispanic and Latine business owners surveyed started a business during or after the pandemic.
There are approximately 5 million Hispanic- and Latine-owned owned businesses in the U.S. And those businesses are booming, according to Lantern by SoFi’s recent survey of 1,000 Hispanic and Latine business owners in the U.S. In fact, more than two-thirds of survey respondents report that their companies are doing the same or even better than they did before the pandemic.
Some business owners were able to turn the challenging lockdown period into an opportunity: One-third of respondents cited Covid-19 as the motivation for launching their companies.
Even as Hispanic- and Latine-owned businesses thrive, however, respondents report that some roadblocks remain. For instance, half of the Hispanic business owners surveyed say they face prejudice from their customers and from other business owners. Some 40% need a second job in order to make ends meet. Yet despite the obstacles, Hispanic business owners say they would encourage their peers to pursue their entrepreneurial dreams.
Who is the Boss?
Of the Hispanic and Latine business owners who participated in our survey:
• 60% are female and 40% are male.
• 62% founded or started their business.
• 56% are sole proprietors, while 44% have at least one partner.
Seizing the Opportunity
While some companies shuttered during Covid, a significant number of Hispanic- and Latine-owned businesses launched during that time. In fact, one-third of the Hispanic and Latine business owners surveyed started a business during or after the pandemic.
For some of the one-third of respondents who chose this answer it was a necessity: 30% took the plunge because they could no longer pay their bills and needed a source of income. But for just as many, pursuing a dream was the driving factor. Thirty percent said they launched their companies because they “realized life is short and decided to pursue a passion.”
Of Hispanic and Latine business owners with household incomes above $125,000, 36% said the pandemic gave them additional resources to work with, such as stimulus checks and more time to devote to their startups.
Pain Points
Hispanic- and Latine-owned businesses do face some challenges, however, including:
– Inflation Is a Major Concern
The high cost of supplies due to inflation poses the biggest threat to the growth of their business, 54% of respondents say. This was almost double the second greatest obstacle — difficulty hiring qualified employees.
• High cost of supplies due to inflation: 54%
• Difficulty hiring qualified employees: 28%
• Banks’ reluctance to approve loans: 26%
• Decline in brick-and-mortar business in favor of the internet: 25%
• Supply chain issues: 25%
– Good Funding Is Hard to Find
Securing the capital to start a business is often difficult for Hispanic and Latine business owners, according to a recent report from the Stanford Graduate School of Business. Almost half (49%) of the Lantern survey respondents said they used their personal savings to help start or acquire their businesses. And 29% used family savings to help get their business off the ground.
Household income determines how Latine- and Hispanic-owned businesses are funded, our survey found. Respondents with household incomes less than $50,000 were much more likely to use personal savings than those whose household incomes were more than $125,000. Some of the higher earners secured home-equity loans or business loans. Those with lower household incomes did not and instead resorted to personal credit cards and personal assets other than savings.
Those with household incomes under $50,000 used:
• Personal savings: 56%
• Family savings: 25%
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