NEW YORK CITY - While the pandemic brought many disruptions to small businesses, a report by Wells Fargo shows that businesses owned by Latino women persevered and many were able to overcome ensuing challenges and thrive, surpassing national averages.
The report shows that many businesses experienced robust growth in both employment and revenues despite facing systemic disparities, expanding their market reach and contributed significantly to the economic landscape.
A Quick Snapshot
- The number of Hispanic/Latino women owned businesses has grown to 2,009,000.
- Average revenues for these businesses increased 17.1% between 2019 and 2023 compared to all women-owned businesses' 12.1% rise.
- Businesses owned by Latino women currently employ 845,000 people and generate $175.2 billion.
- Latino women are still underrepresented as entrepreneurs, if they achieved the average revenue of white women, they would add $269.0 billion in revenue to the U.S. economy and if they achieved the average revenue of men, they would add $1.3 trillion in revenue to the U.S. economy.
Robust Growth Despite the Pandemic
According to the report, during the 2008 financial crisis, many women-owned businesses were impacted when revenue when down by 6.3%, but the pain was far greater for businesses owned by Latino women, whose revenues drastically decreased by 24.2%.
However, the pandemic was different, Hispanic/Latino women-owned businesses came out stronger. Despite early struggles to secure federal stimulus funds, these businesses bounced back and showcased their adaptability. Average revenues for these businesses increased 17.1% between 2019 and 2023 compared to all women-owned businesses which only rose 12.1%.
Since the pandemic, Hispanic/Latino women-owned businesses have experienced substantial growth. The number of businesses has grown to 2,009,000, representing 42.3% of all Hispanic/Latino businesses and 14.3% of all women-owned businesses. They employ 845,000 people and generate $175.2 billion, contributing 6.5% to women-owned businesses' total revenue.
Overcoming Systemic Disparities
The report also found that Latino women encounter distinct challenges. Entrepreneurship is an avenue to wealth creation, yet the opportunity to launch and grow a business is not equally accessible to them, the report said.
Latino women earn 65% as much as white men, and lower earnings mean smaller amounts in savings. Latino women also have a harder time accessing outside financing, their businesses are more likely to apply for outside financing, more likely to seek financing to cover operational expenses but less likely to receive full or partial financing.
Moreover, many Latino women lack the networks or social capital that can connect them to financial capital, expertise, and services, therefore have less substantial business experience because they are less likely to be hired and promoted.
Closing the Gap
The report also found that Latino women are underrepresented as entrepreneurs, accounting for 18.5% of all women in the U.S. and 14.3% of all women-owned businesses. They could contribute significantly more to the economy if given the opportunity. As mentioned, if they achieved the average revenue of white women, they would add $269.0 billion in revenue to the U.S. economy and if they achieved the average revenue of men, they would add $1.3 trillion in revenue to the U.S. economy.
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