The average revenue of Latino owned businesses has increased to $479,413 in 2019 from $327,189 in 2018, which is a steep improvement of 46.5% from the previous calendar year. The rise has been monitored and recorded by an annual study done by Bizz2Credit. The number of credit applications also increased by 23% from 2018 to 2019.
The study examined the primary financial information given by 3,000 Latino owned businesses on Bizz2Credit’s online platform. It also gave the information that the average credit scores dropped from 594 to 588 in the same period of time. Businesses owned by Latinos have grown by 31.6% from 2012. Cost management is a big challenge for these young, on the rise firms, which is a possible reason for the dip in credit scores.
Manuel Chinea, COO of Popular Bank, had the following conclusion. He said, “The growth of Latino businesses is undeniable and will undoubtedly increase as this important group becomes a larger section of the population. By 2050, Latinos are expected to comprise almost 30% of the population, compared to 18% today. We see first-hand the enormous contribution these businesses make to our economy and communities, and Popular Bank works with them as the complexity of running their business increases.”
Accommodation and food industry remains the largest category of businesses owned by these Latinos, and they represent close to 18% of all the companies participating in the survey. Services and construction followed at 17% and 15% respectively. Retail trade had a healthy 10% while transporting, and warehousing had a share of 8% of the business.
The average annual revenue stood at $479,413 for the Latino companies while the Non-Latino companies had an average of $590,110 as annual revenue in 2018-18. The average operating expenses also increased from $140,806 in 2018 to $215,846 in 2019. The average operating expenses were 43% of the revenue in 2018, and it increased to 45% in 2019. Non-Latino firms also observed an increase in operating costs from 38% in 2018 to 40.6% in 2019.
The lowest number of loan applications came from New Jersey (5%), followed by Florida and New York at 6% and 7% respectively. Texas had 20% of loan applications while California had the highest number at 23.5%
The drop in credit scores is a bit concerning, and it is an indication that business owners might be using their own credit cards in order to fund the firms if they did not qualify for loans. With a score of less than 600, it is a bit difficult to get SBA or traditional bank loans. When situations like these arise, the firm owner looks towards non-bank lenders like merchant cash advance companies in order to fulfil their short term and long term needs.
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