Biz2Credit Quantifies Challenges Faced by Latino Small Business Owners and Entrepreneurs in Securing Financing

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Analysis Examined Average Annual Revenue, Credit Scores and Operating Expenses

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Latino entrepreneurs face greater scrutiny from banks and often have to turn to alternative lenders that charge much higher interest rates.

Latino entrepreneurs face challenges in securing financing and are more likely to borrow money from high interest, non-bank lenders, according to a study released today by Biz2Credit.com that looked at annual revenue, credit scores, age of business (in months), and operating expenses.

Average annual revenue for Latino-owned businesses was $69,518.56, while for non-Latino-owned businesses, the figure was $86,501.47. Meanwhile, the average credit score for Latino-owned businesses was 611.7, compared to 622.3 for all others. Average operating expenses were lower at $20,981.19, contrasted with $29,455.54 for non-Latino businesses.

"Even when the age of business -- how long a company has been in operation -- was the same, the average revenue and credit scores for Latino-owned companies were often lower than those of non-Latino businesses," said Biz2Credit CEO Rohit Arora, one of the nation's leading experts in small business finance. "The result is that Latino entrepreneurs face greater scrutiny from banks and often have to turn to alternative lenders that charge much higher interest rates."

The top five states for Latino-owned small business loan applications -- California (20.3%), Florida (20.2%), Texas (14%), New York (11.7%), and New Jersey (4.2%) -- represented more than 70 percent of the loan requests made by Latinos in the past two years.

For this analysis, Biz2Credit defined "small businesses" as companies having fewer than 250 employees or less than $10 million in annual revenues. Biz2Credit will host a webinar on Tuesday, Sept. 30th at 3:00 p.m. (EDT) detailing the results of its report with some of the nation's top experts in small business finance and Latino entrepreneurship:

  • Anita Campbell (moderator), founder of Small Business Trends, a top resource for entrepreneurs
  • Rohit Arora, CEO of Biz2Credit, one of the nation's top experts in small business finance
  • Hector Barreto, Chairman of The Latino Coalition and former SBA Administrator (2001-06)
  • Paul Quintero, CEO of microlender Accion East and Online

"The young generation of Latinos -- both immigrants and first or second generation Americans -- are very entrepreneurial," said Hector Barreto, Chairman of The Latino Coalition. "Where I see a need for improvement is that we need to mentor them better, to create role models in the community and help them take their companies to higher levels. I'd also like to see more Latinos enter the booming e-commerce and technology sectors in Silicon Valley and elsewhere."

"Many Latino businesses are home-based, which saves a lot of money on rent and reduces operating expenses," added Arora, who oversaw the research. "In any ethnic community, often family-run, they many times do not run a formal payroll. Frequently, they are less integrated with the formal economy and often conduct cash transactions. The owners may not have business credit cards or lines of credit. Latinos are hardworking, but many are not running large, profitable businesses as yet."

About the Biz2Credit Latino Small Business Credit Study
Biz2Credit analyzed the financial performance of more than 1,000 Latino-owned businesses with less than 250 employees and less than $10 million in annual revenues from across the country that have been in operation for more than 1 year, as well as startups. For a link to the findings, click https://www.biz2credit.com/research-reports/challenges-faced-by-latino-small-business-owners.

About Biz2Credit
Founded in 2007, Biz2Credit is a leading credit marketplace connecting small and medium sized businesses with lenders, service providers, and complementary business tools. The company matches borrowers to financial institutions based on each business’s unique profile -- completed in less than four minutes -- in a safe, efficient, price-transparent environment. Biz2Credit’s network consists of 1.6 million users, 1,300+ lenders, credit rating agencies such as D&B and Equifax, and small business service providers including CPAs and lawyers.

Having arranged $1.2 billion in funding throughout the U.S., Biz2Credit is widely recognized as the #1 online credit resource for small business loans, lines of credit, working capital and other funding options. Follow on Twitter @Biz2Credit, and http://www.facebook.com/biz2credit.

About The Latino Coalition
The Latino Coalition (TLC) was founded in 1995 by a group of Hispanic business owners from across the country to research and develop policies relevant to Latinos. TLC is a non-profit nationwide organization with offices in Southern California, Washington, DC, and Mexico. TLC addresses policy issues that directly affect the well-being of Hispanics in the United States. TLC’s agenda is to develop initiatives and partnerships that will foster economic equivalency and enhance overall business, economic and social development of Latinos. For more information, visit http://www.TheLatinoCoalition.com.

About Accion East
Accion East is a nonprofit micro lender that provides lending and financial education to entrepreneurs nationwide. By sparking ideas and empowering self-starters, Accion helps local businesses and communities grow by driving job creation and retention with each microloan. Since opening its doors in 1991, Accion has provided more than $132 million in capital to entrepreneurs, creating and saving over 73,500 jobs within local communities.

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