Hispanic entrepreneurs optimistic about growth, lean on strong support systems.
Owners of Hispanic small businesses are incredibly optimistic about the year to come—much more so than their non-Hispanic counterparts. According to the inaugural Bank of America Hispanic Small Business Owner Spotlight, they are significantly more hopeful about revenue and hiring plans in 2017—which, as the fastest-growing segment of the small business sector, further cements their role as a critical driver of local economies and growth.
The study, which focuses on the aspirations and pain points of Hispanic small business owners across the country, found that 71 percent of Hispanic entrepreneurs expect their revenue to increase in 2017—20 percentage points higher than that of non- Hispanic respondents (51%). In addition, more than half of Hispanic entrepreneurs plan to hire more employees over the next 12 months, compared to one quarter of non-Hispanic small business owners. The long-term view also looks promising, with 76 percent predicting business growth over the next five years, compared with 55 percent of non-Hispanic small business owners.
“For our community of Hispanic small business owners, the American dream of prosperity through hard work is alive, real and inspiring,” said Elizabeth Romero, Small Business Central Division executive, Bank of America. “They see opportunity for themselves, as well as their families, and are leveraging personal networks and communities to help them realize their dreams. Even in the face of the same challenges and economic concerns that affect all small business owners, they are proving to be not only resilient, but incredibly bullish about their future plans and prospects for success.”
“Hispanic-owned small businesses are a vital driver of economic growth and American jobs. The Bank of America findings show that trend is on track to continue in 2017. Research such as this is important in highlighting the critical contributions that Hispanic-owned businesses are making to build and sustain prosperity for families and communities across the country,” said Javier Palomarez, president and CEO, United States Hispanic Chamber of Commerce.
Aggressively Planning for Growth
Sixty-eight percent of Hispanic small business owners have applied for a loan at some point during the lifetime of their business, compared with 48 percent of their non-Hispanic counterparts. Of those who have applied for a loan, 86 percent of Hispanic entrepreneurs were approved, similar to the approval rate reported by non-Hispanic small business owners (85 percent). Looking ahead, Hispanic small business owners are nearly four times as likely as their non-Hispanic counterparts to have plans to apply for a loan in 2017 (35% vs. 9%). Despite this, 51 percent believe there is a lending gap for Hispanic versus non-Hispanic small business owners, with slightly fewer (49%) saying the disparity doesn’t exist.
Stronger Ties to Family, Friends and Community
Hispanic entrepreneurs are more likely to look to family and friends not only for financial investments, but also for help with running their business. Sixty-six percent of Hispanic entrepreneurs have received financial gifts or loans from family and/ or friends at some point to help fund their business—29 percentage points higher than their non-Hispanic counterparts (37%). When it comes to additional forms of family support, Hispanic small business owners scored higher across the board than non-Hispanic entrepreneurs on:
• The influential role that family plays: 55 percent say their family plays an influential role in their business decisions, versus 39 percent of non-Hispanic entrepreneurs.
• Help with running the business: 63 percent say their family helps to run their small business, versus 54 percent of non-Hispanic small business owners.
• Financial, emotional or operational assistance: 93 percent say they receive financial, operational and/or emotional assistance from their family, versus 83 percent of non-Hispanic small business owners.
In addition, Hispanic small business owners are more than twice as likely to say they will pass their business on to a family member (42 percent vs. 18 percent of non-Hispanic small business owners).
Community also plays a key role for Hispanic entrepreneurs, as 69 percent say community is important to their individual business’ success (vs. 47% of non-Hispanic small business owners), and 77 percent support local nonprofits or charities (vs. 67% of their non-Hispanic counterparts).
When asked about the single biggest business challenge they face, Hispanic small business owners are split. Twenty-three percent cite maintaining a work-life balance as their top concern, followed by finding qualified candidates (19%), access to loan funding (17%), understanding regulations and policies (17%) and managing the day-today of their business (11%). Only 3 percent cite a language barrier as a challenge.
Although Hispanic small business owners are optimistic about 2017 revenue, hiring, and long-term growth, they are also highly concerned about a number of economic issues. Health care costs are the top concern for 71 percent of respondents—the same top concern for non-Hispanic entrepreneurs (75%). However, Hispanic entrepreneurs are significantly more concerned about:
• The strength of the U.S. dollar (62% of Hispanic vs. 51% of non-Hispanic small business owners).
• Corporate tax rates (61% vs. 49%).
• Interest rates (61% vs. 45%).
• Commodities prices (59% vs. 47%).
• Credit availability (55% vs. 34%).
For a complete, in-depth look at the insights of the nation’s Hispanic small business owners, read the 2017 Bank of America Hispanic Small Business Owner Spotlight at bankofamerica.com.