In recognition of Hispanic Heritage Month, the U.S. Department of the Treasury released a report on October 12, 2023, highlighting the growing success of Latino-owned businesses in the United States, and the impact of federal investments, including those from President Biden's American Rescue Plan, in sustaining and promoting their growth.
According to a recent report from the Stanford Latino Entrepreneurship Initiative (SLEI), the United States is home to over 62.5 million Latinos, representing 19% of the total population. These Latino communities contribute significantly to the economy, with an economic output of $2.8 trillion. The report also reveals the presence of approximately 5 million Latino-owned businesses across the nation, collectively generating over $800 billion in annual revenue.
The COVID-19 pandemic disproportionately affected Latino businesses and communities, with higher job loss rates, increased exposure risks, and higher mortality rates. In 2020, Latino unemployment reached a peak of nearly 19%.
To address the challenges posed by the pandemic and stimulate recovery, the Biden-Harris Administration introduced measures to create a more equitable and inclusive economy. The efforts have resulted in what is described as the most equitable and broad-based economic recovery in modern history.
One notable trend is the surge in business applications and startups, starting in 2020. Monthly business applications have seen a 50% increase in 2021-2023 compared to 2018-2019, with nearly 25% of new entrepreneurs in 2021 being Latino. This surge in business applications is contributing to a higher proportion of Latino and Black business owners, particularly in areas with more Latino and Black residents.
Additionally, Latino-owned businesses are experiencing significant revenue growth post-pandemic. During the pandemic recovery period (2019-2022), the median growth rate in revenues for Latino employers was 25%. Median weekly earnings for Latino workers increased by 2.4% from 2019 to 2022, adjusting for inflation. At the same time, Latino unemployment reached a record low in September.
Self-employment among Latino workers has also seen substantial growth. The number of self-employed Latino workers in the United States increased by 26% from 2019 to 2023, and the share of self-employed Latino workers rose from 8.9% in the first eight months of 2019 to 10.2% in the first eight months of 2023. This growth surpasses previous economic recoveries, especially in comparison to the aftermath of the Great Recession.
Federal programs have played a crucial role in spurring and sustaining this growth in Latino small businesses. The State Small Business Credit Initiative (SSBCI), reauthorized and expanded by the American Rescue Plan, has allocated $2.5 billion to support underserved businesses, with $1 billion dedicated to jurisdictions successfully reaching underserved businesses. The Emergency Capital Investment Program (ECIP) invested $1.6 billion in Latino-designated minority depository institutions, with the potential to increase lending in Latino communities by over $50 billion over the next decade.
The American Rescue Plan's State and Local Fiscal Recovery Fund (SLFRF) emphasized equity in its spending guidelines, providing services to enhance health, housing, employment, and economic equity in low-income and high poverty communities. Additionally, Puerto Rico's version of the Earned Income Tax Credit (EITC) received a significant boost under the American Rescue Plan, quadrupling benefits for workers.
Furthermore, the Treasury Department has increased the dollar amount of prime contracts awarded to Latino-owned businesses and designated two minority-owned financial institutions as financial agents of the government, further supporting minority-owned businesses.
Real-world examples illustrate the positive impact of these initiatives. The Latino Connection (TLC) based in Harrisburg, Pennsylvania, acquired another firm, enabling them to expand their services. The Capital Region Economic Development Corp. (CREDC) provided crucial support, thanks in part to SSBCI funds.
Washington, D.C. invested $40 million of its SLFRF funds in the DC's Bridge Fund 2.0, benefiting small businesses in the community, including Peruvian Brothers, a Latino-owned business that has expanded from a food truck to multiple food trucks and stalls.
The Asian Financial Corporation in Philadelphia received funding from the Emergency Capital Investment Program and created Small Business Booster Loans (SSBL) to support underserved business owners. The SSBL program has provided loans to various Latino-owned businesses, helping them to grow and prosper.
