Senate Democrats

Hispanic Small Businesses: Diversity, Economic Growth, and Job Creation in America

America’s small businesses are the backbone of our economy, helping to keep the country competitive through innovation and new ideas. Democrats recognize that one of our nation’s greatest assets is our diversity. Investing in minority-owned businesses, therefore, helps to increase the value of that asset and to promote economic growth and job creation.

Hispanic small business enterprises are growing. Over the last ten years, minority-owned business enterprises accounted for over 50 percent of the two million new businesses started in the United States, crossing every industrial sector from financial services and health care to construction and transportation. Today there are more than four million minority-owned companies in the country with annual sales totaling $694 billion. Between 1997 and 2002, the number of Hispanic-owned firms increased by 31 percent. (SBA Office of Advocacy, 4/2007)

Hispanics or Latinos constitute the largest minority business community in the United States, owning 6.6 percent of all U.S. firms. There are 1.6 million Hispanic-owned firms in the United States, supporting 1,536,795 employees.

A state-by-state report on the Hispanic small businesses is attached in Appendix A.

Minority-owned firms, however, make significantly less than their non-minority counterparts. The average gross receipts of minority firms were $162,000 – considerably lower than the $448,000 average gross receipts of non-minority firms. On average, for every dollar that a White-owned firm made, Hispanic-, Native American-, and Asian-owned businesses made 56 cents; Black-owned businesses made 43 cents; and Pacific Islander-owned firms made about 59 cents, according the Small Business Administration (SBA) (SBA Office of Advocacy, 4/2007).

Hispanic-owned firms receive a disproportionately low percentage of government-backed business loans. Hispanics represent 14.8 percent of the U.S. population. (Census Bureau, 5/2007) Government-backed small business loans to Hispanics, however, have remained stagnant over the last seven years, despite the fact that they comprise the largest group of minority business owners. Last year, Hispanics received about ten percent of 7(a) loans – the government’s largest loan program for working capital – and only seven percent of total dollars lent. (SBA)

The Small Business Administration should be a resource for minority-owned firms. The SBA is supposed to reach out to more minorities, women and other underserved communities to market their financing, contracting, and training programs. For the last seven years, however, the Bush Administration has not made helping underserved communities a priority.

The continuing disparity between the number and earnings of minority firms in the United States and the continuing barriers many minorities face as they seek to start or expand a business demonstrates the need for targeted programs at the federal level for minority entrepreneurs. Despite signs that small businesses are facing increasingly difficult market conditions, President Bush’s Fiscal Year 2009 budget proposal for the SBA raises fees on loans, provides no funding for microloans, fails to invest in more contracting oversight, and cuts funding for key business assistance programs like Women’s Business Centers and Small Business Development Centers. 

Appendix A

Hispanic-Owned Small Businesses

State

# Small Businesses

Jobs

Income

Hispanic-Owned
Small Businesses

UNITED STATES

26,800,000

58.6 million

$992.5 billion

1,600,000

Alabama

368,500

826,200

$10.6 billion

2,500

Alaska

67,300

132,700

$2.4 billion

1,200

Arizona

473,000

1,000,000

$15.1 billion

35,100

Arkansas

247,700

499,800

$6.0 billion

2,100

California

3,675,700

6,900,000

$151 billion

427,700

Colorado

550,100

991,900

25.4 billion

24,100

Connecticut

347,600

774,800

$18.8 billion

9,400

Delaware

76,300

180,000

$2.5 billion

900

District of Columbia

65,200

207,200

$4.2 billion

2,200

Florida

1,942,200

3,100,000

$39.2 billion

266,700

Georgia

859,500

1,600,000

$25.6 billion

18,300

Hawaii

117,200

268,900

$3.1 billion

3,100

Idaho

151,300

284,700

$4.5 billion

2,800

Illinois

1,121,300

2,600,000

$42.5 billion

39,500

Indiana

486,400

1,300,000

$14.7 billion

5,500

Iowa

261,800

660,400

$6.4 billion

1,500

Kansas

246,900

609,800

$8.8 billion

4,200

Kentucky

346,200

759,200

$8.5 billion

2,100

Louisiana

364,900

895,600

$10.6 billion

7,600

Maine

154,000

302,700

$3.4 billion

700

Maryland

536,200

1,100,000

$16.8 billion

15,400

Massachusetts

651,100

1,500,000

$24.8 billion

15,900

Michigan

849,500

2,000,000

$28.4 billion

9,800

Minnesota

504,000

1,200,000

$13.1 billion

4,000

Mississippi

216,700

473,000

$5.8 billion

1,300

Missouri

508,900

1,200,000

$14.5 billion

3,700

Montana

115,700

224,700

$3.1 billion

1,000

Nebraska

161,800

400,700

$5.0 billion

2,000

Nevada

215,800

453,100

$6.7 billion

9,700

New Hampshire

145,900

311,500

$4.7 billion

900

New Jersey

828,400

1,800,000

$34.9 billion

49,800

New Mexico

158,200

338,700

$4.6 billion

29,700

New York

1,925,100

3,900,000

$85.4 billion

163,600

North Carolina

766,500

1,600,000

$19.1 billion

9,000

North Dakota

63,100

167,700

$1.7 billion

200

Ohio

920,500

2,400,000

$26.9 billion

7,100

Oklahoma

332,000

656,000

$16.4 billion

5,400

Oregon

350,500

771,400

$10.3 billion

6,400

Pennsylvania

1,006,900

77,800

$39.9 billion

11,000

Rhode Island

101,800

252,900

$2.8 billion

3,400

South Carolina

352,900

780,800

$8.1 billion

3,000

South Dakota

79,100

195,700

$2.3 billion

400

Tennessee

531,200

1,100,000

$23.3 billion

4,300

Texas

2,093,400

3,900,000

$122.6 billion

319,300

Utah

236,000

467,200

$7.0 billion

5,200

Vermont

80,300

162,800

$1.7 billion

500

Virginia

643,600

1,500,000

$20.7 billion

19,000

Washington

578,300

1,300,000

$19.4 billion

10,300

West Virginia

125,300

313,600

$3.6 billion

600

Wisconsin

447,200

1,300,000

$12.1 billion

3,800

Wyoming

61,900

129,000

$2.4 billion

1,300

Source: SBA Office of Advocacy, 2007. Minority-owned business data are from 2002, the most recent data available from SBA and the Department of Commerce. Statewide figures are from 2006, the most recent data available from SBA and the Department of Labor.

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