Despite setbacks and racial disparities, Latino and Black entrepreneurs are making important progress.
Underrepresented entrepreneurs shouldn’t be underestimated.
The pandemic caused unparalleled challenges for the entire U.S. business community, but some groups were affected more than others. For instance, between February and April 2020, Black business ownership dropped 41 percent–more than double the rate for White business owners. Latino business ownership dropped 32 percent during the same period, according to national economic justice organization Insight Center.
But research shows that Black and Latino entrepreneurs have made notable strides since then.
Latino-owned businesses experienced a median revenue growth rate of 25 percent between 2019 and 2022, while White-owned businesses saw a growth rate of 9 percent, according to the recently released State of Latino Entrepreneurship report. Black-owned small businesses saw an impressive pandemic rebound as well. In 2021, they boomed at a rate not seen in 26 years, according to a Washington Post analysis of Bureau of Labor Statistics data.
“We see minorities represented at board meetings. We see minorities launching unicorns in the tech space. We see, also, minorities in the C-suite space. That representation has enabled us to have access to conversations, to be added to the room,” says Gustavo Suarez, one of the respondents in the State of Latino Entrepreneurship survey and the founder of Trez, a San Francisco-based payroll tech platform.
How did Latino and Black entrepreneurs succeed, despite the odds? Many used recovery resources to their advantage. According to the National Bureau of Economic Research, a surge of new small businesses in Black communities coincided with the federal stimulus. Similarly, a case study in the State of Latino Entrepreneurship survey pointed to the success of the U.S. Small Business Administration’s program for firms owned by “socially and economically disadvantaged individuals.”
But Latino and Black entrepreneurs also leaned into creative marketing and branding strategies. The SLE survey shows that Latino-owned businesses were more likely than White-owned businesses to “use a range of channels to advertise their products and services, including social media, websites or blogs, email marketing, printed flyers, search engine optimization,” and more. Black businesses, on the other hand, have increasingly identified as “Black-owned” since the movement to “buy Black” took off in 2020. Search activity for and mentions of Black-owned businesses have jumped, according to Bloomberg.
Still, challenges persist. Financing for Black businesses dropped 45 percent in 2022, according to Crunchbase data. Black women entrepreneurs face even tougher odds. Latino-owned businesses likewise struggle with funding. According to the SLE survey, Latino-owned businesses are much less likely than White-owned companies to be approved for large loans, despite their higher approval rates for loans under $50,000.
But underrepresented entrepreneurs are actively working to overcome these and other challenges. Though the Great Resignation hit Latino-owned businesses harder than their White counterparts, the SLE survey notes that Latino-owned businesses were more likely to “increase compensation and benefits packages, flexibility in work hours, improve company culture, [and] offer more training and development opportunities” to improve retention.
Underrepresented entrepreneurs have shown an extraordinary ability to do more with less. But with fewer barriers and more resources, opportunities could abound. “We have the responsibility to continue to bring a strong economy for this country and continue to provide for the generations that are coming,” Suarez says.
