(photo credit: Rich Young)
We’ve known for a while now that Latinos in California make up a population juggernaut – there are approximately the same number of Latinos as whites in the Golden State now – but thanks to a new study from the California Hispanic Chamber of Commerce and the Haas School of Business of UC Berkeley, we now know that they make up an economic juggernaut too.
Hispanic-owned businesses contribute a whopping 650,000 jobs to the California economy, according to the study, bringing $100 billion to the economy annually.
“The Hispanic-owned business sector is absolutely vital to the California economy,” said Mark Martinez, President of the California Hispanic Chamber of Commerce told California Forward.
Right now the sector currently accounts for nearly 17 percent of all businesses in California. But given the surge in population, Hispanics are expected make up an increasingly larger share of business owners.
Hispanic-owned businesses make up the fast growing segment of the small business sector, launching at a rate nearly twice the national average. And Hispanic women, not men, are driving the rapid rise in entrepreneurship. Latina entrepreneurs are starting businesses six times the national average.
Despite this promising upward trend, aspiring Latino entrepreneurs face major obstacles to kickstart and expand a business. According to the report, limited access to capital continues to pose a significant challenge for Hispanic business owners in California.
Access to working capital can mean the difference between success and failure of a new business. But as a result of the financial crisis, banks pulled back from small business lending.
As the tight credit market has dried up capital streams, Hispanic business-owners are significantly more likely to be discouraged from borrowing for fear of rejection. In fact, according to a recent study by the Small Business Administration, Latinos are three times more likely than whites not to apply for a loan because they’re afraid of being turned down.
Small businesses are the engines of job creation and economic growth. Reducing barriers to obtaining capital ensures aspiring Latino entrepreneurs continue to start and grow the businesses that will reinvigorate California’s sluggish economy. That’s why the California Economic Summit is working to expand access to capital to ensure Hispanic-owned businesses thrive.