Hispanic Heritage Month is a time to celebrate Hispanic and Latino entrepreneurs’ contributions to communities and local economies across the country. Hispanic and Latino-owned businesses employ millions of people and generate over $700 billion in revenue each year. They create widespread impact on society by providing jobs, serving as mentors, and keeping traditions alive, all essential to the nation’s growth.
“Hispanics and Latinos fuel local economies across the spectrum, not just as entrepreneurs, but as taxpayers, as homeowners, as workers, as consumers,” says Alejandro Manzanares, Vice President of Business Growth and Entrepreneurship for Advancing Hispanics & Latinos at JPMorgan Chase. “If you are a region that has a majority Latino population and you don’t have intentional strategies to support economic mobility, then your region will be left behind.”
Hispanic and Latino Americans pursue entrepreneurship at a higher rate than any other group. The unjust reality is that they face challenges that White Americans rarely do. The COVID pandemic highlighted this – minority businesses were disproportionately impacted and 50% less likely to receive relief under the Payment Protection Program.
Let’s delve into some challenges they face to better understand why resources are needed to help this group thrive in today’s business landscape.
CHALLENGES HISPANIC AND LATINO ENTREPRENEURS FACE
On average, Hispanic and Latinos Americans make just 73 cents for every dollar earned by their White counterparts. This means they are collectively underpaid by $288 billion a year. Additionally, their average household wealth — which directly affects their ability to accumulate generational wealth — is just one-fifth of that of white Americans.
It’s no secret that discrimination plays a role. Even when all other variables are identical – their credentials, companies, and clothes – Hispanic and Latino Americans are treated differently than their White counterparts. Discrimination can be found in higher interest rates, longer repayment periods, loan denial, and less favorable financial terms and conditions.
Because Hispanic and Latino entrepreneurs are often left out of conversations about their ecosystem, they are on the fringe of development efforts. To create a more inclusive business environment, they must have a seat at the table.
RESOURCES TO PROMOTE INCLUSION
Manzanares – previously senior program manager of the Latinos & Society Program for The Aspen Institute’s Latino Business & Entrepreneurship Initiative – endorses action from community leaders, encouraging them to ask themselves how they can be thoughtful when serving these populations.
“It is crucial for economic developers and the ecosystem-building leaders to understand that their outreach efforts should be inclusive of Hispanic-serving or Latino-serving ESOs and capital providers,” he says. “It starts with policy, then asking: how does policy create the conditions for other major players like capital providers? Then, what can other large institutions do to ensure that we’re responsive?”
One of Latino and Hispanic entrepreneurs’ biggest hurdles is the need to tap into capital. Not just any capital, but the right type for various stages of growth. In addition to the usual difficulties in securing funding, they often lack networks and resources that can help connect them with the right investors.
Moreover, because of potential language barriers and cultural differences, they may not even know the different financing types available. As a result, many Latino and Hispanic entrepreneurs struggle to get their businesses off the ground.
Fortunately, several initiatives are working to address this issue. For example, the Truth in Lending Act advocates for accurate and fair credit billing and credit card practices. Other efforts include developing Spanish-language versions of critical documents so that entrepreneurs can understand what they are agreeing to. These changes will help level the playing field for Latino and Hispanic entrepreneurs, and as more businesses succeed, it will only become easier for others to follow in their footsteps.
Policymakers and community leaders benefit from uniting with the local entrepreneurship ecosystem. Determining the message and getting it across is crucial in providing necessary support. Situations like banking deserts across minority communities and lack of physical locations decrease success rates. Providing accessible resources, including addressing issues that affect businesses – such as affordable and accessible childcare – is necessary.
As the United States becomes increasingly diverse, communities need to understand the needs of all who live and work within them. This is especially true in the Hispanic and Latino societies, which are often lumped together as a single group.
“You need to understand that different communities respond differently. To be thoughtful, respectful, responsive, and effective at your work, there needs to be greater focus on the DE&I [diversity, equity, and inclusion] side,” says Manzanares. “Fostering a healthy ecosystem culture starts with knowing the people. Employer demographic information provides insight into how an organization operates, making it easier to identify gaps or problems before they become serious. Ecosystem-builders can gather this kind of data through surveys answered by regional small business owners and the resources they rely on.”
Hispanic and Latino-owned businesses often face the challenge of overcoming unnecessary business paperwork barriers. Non-profits can help by providing information, business coaching, and expert advice to assist entrepreneurs in getting qualified for grants or other financial assistance. Additionally, joining or donating to organizations like Support Latino Business, Hispanic Heritage Foundation and Grassroots Latino makes a positive difference. Through meaningful pledges and partnerships, these institutions help create space for solutions to advance the economic drivers in the Hispanic and Latino communities.
From a consumer perspective, a seemingly simple way to show support is to buy from these businesses and recommend them to friends and family. Purchase products and services, and spread the word in person or on social media. Business leaders can diversify their company’s vendor list to open doors to new purchasing, capital and networking opportunities.
LOOKING TOWARD THE FUTURE
Nationally, Hispanic Latino enrollment in four-year colleges has reached a new high. “We’re seeing higher educational outcomes. We see multi-generational wealth start to spike. Across the spectrum, the demographic is very strong,” Manzanares says.
As the Hispanic Latino population grows, it is crucial to support the next generation of entrepreneurs. By helping them to navigate the challenges of starting and growing a business, we can ensure that these businesses thrive and contribute to the vibrancy of our economy.
Manzanares sees the ideal outcome as no longer having to address the systemic barriers that prevent Hispanic and Latino entrepreneurs from thriving as they strive toward the American Dream.
“In the future, this conversation is unnecessary,” he says. “That’s because we will operate from a more fair and thoughtful understanding of the dignity of every American to access the right type of capital and support.”
The time to act is now. Choose to support Hispanic Latino organizations to ensure a better future for all Americans. Signing up for our newsletter can help you keep up to date on trends in DEI and entrepreneurship. Or, if you’d like guidance on fostering a more inclusive entrepreneurial ecosystem within your community, reach out to us or schedule a meeting to start the conversation.