There are about 1 million minority-owned businesses in the United States. That’s about 1 in every 5 businesses. That’s according to the 2019 Annual Business Survey by The U.S. Census Bureau. Blacks and Latinos own a respectable chunk of these businesses. Blacks and Latinos in the US chasing the American dream have defied hurdles on their path to establishing businesses whose impact on the economy cannot be understated. Whether it’s the generation of revenue, employment opportunities, and taxes, Blacks and Latinos have made a remarkable contribution. They’ve been resilient in an environment that’s speckled with discriminative tendencies, especially when accessing small business loans. We’ll dig into the figures that show the contribution of Black and Latino businesses t the economy. We’ll further explore new financial possibilities for minority-owned businesses to support and expand their business operations
The Contribution of Black and Latino Businesses to the Economy
Black and Latino-owned businesses are a powerful force that’s supercharging the US economy, particularly in growing small businesses.
Latino businesses have been pumping humongous figures annually into the American economy and continue to grow. As of 2108, Hispanics owned about 331,625 businesses representing 5.8% of all business firms in the US. These firms generated annual sales of about $456 billion, with a workforce of about 3 million. The salaries of their employees hit over 100 billion annually. Considering that Latinos make up 18% of the US population that’s projected to grow to 30% by 2050, theirs is a huge contribution. There has been a growth of about 3% in Latino-owned businesses between 2017 and 2018 with revenues skydiving by over 50% from 2017 up to 2020. Unfortunately, the entrepreneurial spirit and the massive growth trajectory have been dampened by the coronavirus pandemic. They need support to bounce back and continue to make a contribution to the economy. Latino-owned businesses provide employment opportunities, support their communities, and make a tremendous contribution by payment of taxes.
Black-owned businesses have continued to grow and contribute immensely to the US economy in terms of revenues generated, job creation, and payment of taxes. Blacks constitute about 14.2% of US residents and own about 124,551 businesses. Close to one-third of their businesses are in the Healthcare and Social Assistance industry. The number of black-owned businesses with employees grew by a third from 2002 to 2017. Despite the promising growth of Black-owned businesses, they continue to experience a challenge in accessing small business loans to support their businesses. Supporting Black-owned firms should be more than an online trend. Adopt it to grow these businesses so that they have a greater impact on the economy by creating more jobs, and generational wealth. Unfortunately, the coronavirus pandemic has worked to disproportionately slow down the steady growth momentum of these businesses.
New Financing Possibilities for Minority-Owned Businesses
Latinos, Blacks, and other minority-owned businesses can look beyond the traditional financing model that’s created a racial wealth gap through discriminatory lending practices. Here are some options that these businesses can consider.
1. Fintech Companies
Several fintech companies have stepped up to fill the racial disparity in accessing capital by offering digital loans. These companies offer loans to minority-owned businesses that may not meet the eligibility criteria of conventional banks. Examples: Camino Financial, Remitly, CNote, Chime, Gig Wage
Minority-owned businesses can obtain funding by pitching their loan requests on popular crowdsourcing platforms. To up your chances of success, make a compelling pitch with a persuasive justification for your funding need. Then market it aggressively on social media platforms. Examples: Kickstarter, IndieGoGo, GoFundMe, and Fundable.
3. SBA Loans
The SBA assists small businesses to access loans from commercial financiers by giving a government guarantee on the loans. The SBA guarantees up to 85% f the loan should the borrower be unable to repay the loan.
Black and Latino businesses have significantly contributed to the economy by generating revenues, jobs, and paying taxes. These businesses continue to grow despite hurdles and challenges of discrimination in accessing funding. You’re advised to explore new financing possibilities to obtain small business loans through fintech companies, crowdfunding, or government-guaranteed SBA loans.