“A lot of it has
to do with the size
of the company.
are not willing to
take on the risk
of these smaller
Another key finding in the study:
A surprising 86% of immigrant-owned
firms with at least $1 million in annual
revenues are owned by millennials
(under age 34) who came to the U.S. as
children. The authors refer to this group
as “DACA comparable” — those who are
likely to be eligible for the Deferred Action
for Childhood Arrivals immigration
program, which delays deportation for
undocumented immigrants who came to
the U.S. as children and grants them the
right to study or work. (Survey participants
were not asked about their immigration
status, so there is no way to know what
percentage of respondents are actually
Why might this group of young
immigrants be overrepresented among
successful immigrant Latino business
owners? The authors point out that they are
more likely to speak English fluently and to
have higher education degrees and strong
social networks, all of which can play a role
in building a successful business.
Also, for many young immigrants,
starting their own business may make more
sense than working for someone else, due
to employment paperwork requirements.
“Although employers may not knowingly
hire an undocumented immigrant without
work authorization,” the study notes,
“federal and state laws do not require proof
of immigration status for an individual to
start a business.”
Latina entrepreneurs play an important
role in creating companies, the study found.
Latinas now own 44% of Latino businesses.
From 2007 to 2015, nearly half of the growth
in new Latino businesses came from firms
started by women. That compares with
much lower growth rates for female white
(13%) and black (20%) entrepreneurs. While
the growth is impressive, the firms started
by Latinas tend to be small. Only 30% of
the Latino firms with $1 million or more in
annual revenue are owned by women.
Demographics bode well for continued
entrepreneurship among Latinos, who
make up the youngest racial or ethnic
group in the U.S. One in three are under
the age of 18 and 25% are millennials. “The
bottom line,” says Oyer, “is that there’s a lot
of potential activity in the Latino business
THE FUNDING GAP
One factor hampering expansion of these
businesses is limited access to capital.
“It’s all about the financing,” Oyer says.
“There’s a real funding gap for this group.”
In particular, national banks are a smaller
source of funding to Latino businesses
than to entrepreneurs from other ethnic
groups. Only 12% of Latino firms employing
more than one person received bank loans,
compared with 18% of white-owned firms,
15% of Asian-owned firms, and 14% of black-owned firms.
“A lot of it has to do with the size of the
company,” says Orozco. “National banks
are not willing to take on the risk of these
In addition, many of the Latino business
owners surveyed as part of the study
reported that they feel unqualified to
apply for a bank loan at a national bank.
As a result, some may not be submitting
requests for a loan.
The study also found that loans
guaranteed by the U.S. government’s Small
Business Administration are accessed by
Latino entrepreneurs at even lower rates
than borrowing from national banks.
So how do Latinos fund their businesses?
By tapping friends and family, finding
angel investors and venture capital, and
using their credit cards, Orozco says.