The 2020 State of Latino Entrepreneurship Report, produced by the Stanford Graduate School of Business in collaboration with the Latino Business Action Network (LBAN), provides an in-depth analysis of the challenges and opportunities facing Latino-owned businesses (LOBs) in the United States. This report sheds light on how Latinos are driving economic growth as the fastest-growing segment of the U.S. small business ecosystem, despite facing significant barriers to accessing capital and resources.

The report highlights the extraordinary growth of Latino-owned businesses, which have increased by 34% over the last decade, compared to just 1% for all other small businesses. This surge is particularly evident in industries such as construction, finance, insurance, transportation, and real estate, where Latino-owned businesses are growing at more than double the rate of their non-Latino counterparts. Despite these impressive gains, the report reveals a persistent “scale wall,” where Latino businesses often struggle to break past the $1 million revenue mark, largely due to disparities in access to funding from national banks.

Latino-owned businesses consistently report higher revenue growth rates compared to White-owned businesses, with an average annual growth of 25% versus 19% over the past two years. However, Latino entrepreneurs face significantly lower approval rates for loans from national banks, even when their businesses demonstrate strong financial performance. This funding gap forces many Latino business owners to rely on higher-risk personal financing sources, increasing their financial vulnerability.

The report also underscores the impact of the COVID-19 pandemic on Latino businesses, particularly those led by Latinas. Twice as many Latina-owned businesses faced closure compared to their male counterparts, highlighting the gendered challenges within the Latino entrepreneurial ecosystem. The report calls for more inclusive financial practices, greater access to networks, and targeted support to help Latino businesses scale and thrive.

For a comprehensive understanding of the state of Latino entrepreneurship and the strategies needed to support this vital sector, download the full 2020 State of Latino Entrepreneurship Report from the Latino Donor Collaborative website. Join the effort to close the capital gap and empower Latino entrepreneurs.