Empowering Latino-Owned Businesses: A Look at Federal Credit, Growth, and Challenges

The Small Business Administration (SBA) backed a total of 7,746 loans to Latino-owned businesses, amounting to over $3 billion. that represents a 50% increase year over year..

SBA Loans to Latino-Owned Businesses Surge in 2023

In a notable development, the Small Business Administration (SBA) backed an impressive total of 7,746 loans for Latino-owned businesses during the fiscal year 2023, injecting more than $3 billion into this dynamic sector of the U.S. economy.

Comparison to Previous Years

This recent surge is not just a blip on the radar. When set against the backdrop of the last five fiscal years, where the average stood at just above 5,000 loans, the magnitude of this increase becomes apparent. Notably, there was a dip in the fiscal year 2020 during the pandemic, which makes this recovery all the more commendable.

Increasing Loan Amounts

The Biden administration, known for its efforts to support minority-owned businesses, has seen the loan amounts for Latino-owned businesses more than double - soaring from $1.6 billion in fiscal 2020 to the present $3 billion in fiscal 2023.

Significance of Latino-Owned Small Businesses

It's no secret that Latino-owned small businesses are a cornerstone of the U.S. economic landscape. They not only generate over $800 billion annually but also create numerous jobs. Echoing the significance of these businesses, SBA Administrator Isabella Casillas Guzman underscored the importance of investing equitably in them.

Furthermore, when pitted against white-owned businesses, Latino-owned businesses have showcased an impressive trajectory over the past 15 years, registering higher growth rates. This includes outperforming in metrics such as revenue growth and expansion of payroll.

Challenges in Securing Capital

However, the journey is not without its challenges. These businesses, despite their noteworthy contribution and growth, often grapple with hurdles in accessing fair and adequately priced capital from mainstream lenders. Interestingly, their application rates for assistance are on par with those of white business owners, yet the approval rates tell a different story.

Credit Disparities

Shedding light on the disparity, a 2021 Federal Reserve Small Business Credit Survey unveiled that a mere 31% of Hispanic and Asian-owned businesses saw their credit requirements fulfilled. In contrast, this figure stood at 50% for white-owned enterprises.

SBA's Augmented Role

In a bid to bridge this gap, the SBA has considerably ramped up its role, evident from a 47% growth in Community Advantage (CA) loans directed at Latino-owned businesses. Presently, Latino firms constitute 12% of the SBA's entire guaranteed lending portfolio.

In summary, while challenges persist, the future of Latino-owned businesses seems bright, especially with increased support from entities like the SBA.

Latino-Owned Business Data

Loans to Latino-Owned Businesses Over the Years

Growth Comparison between Latino-Owned and White-Owned Businesses

Credit Needs Met by Demographic Group

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