Hispanic Entrepreneurs Significantly More Optimistic About Growth Prospects, Lean on Strong Support Systems of Family, Friends and Community
Owners of Hispanic small businesses are incredibly optimistic about the year to come – much more so than their non-Hispanic counterparts. According to the inaugural Bank of America Hispanic Small Business Owner Spotlight, they are significantly more hopeful about revenue and hiring plans in 2017 – which, as the fastest-growing segment of the small business sector, further cements their role as a critical driver of local economies and growth.
The study, which focuses on the aspirations and pain points of Hispanic small business owners across the country, found that 71 percent of Hispanic entrepreneurs expect their revenue to increase in 2017 – 20 percentage points higher than that of non-Hispanic respondents (51 percent). In addition, more than half of Hispanic entrepreneurs plan to hire more employees over the next 12 months, compared to one-quarter of non-Hispanic small business owners. The long-term view also looks promising, with 76 percent predicting business growth over the next five years, compared with 55 percent of non-Hispanic small business owners.
“For our community of Hispanic small business owners, the American dream of prosperity through hard work is alive, real and inspiring,” said Elizabeth Romero, Small Business Central Division executive, Bank of America. “They see opportunity for themselves, as well as their families, and are leveraging personal networks and communities to help them realize their dreams. Even in the face of the same challenges and economic concerns that affect all small business owners, they are proving to be not only resilient, but incredibly bullish about their future plans and prospects for success.”
“Hispanic-owned small businesses are a vital driver of economic growth and American jobs. The Bank of America findings show that trend is on track to continue in 2017. Research such as this is important in highlighting the critical contributions that Hispanic-owned businesses are making to build and sustain prosperity for families and communities across the country,” said Javier Palomarez, president and CEO, United States Hispanic Chamber of Commerce.
Sixty-eight percent of Hispanic small business owners have applied for a loan at some point during the lifetime of their business, compared with 48 percent of their non-Hispanic counterparts. Of those who have applied for a loan, 86 percent of Hispanic entrepreneurs were approved, similar to the approval rate reported by non-Hispanic small business owners (85 percent).
Looking ahead, Hispanic small business owners are nearly four times as likely as their non-Hispanic counterparts to have plans to apply for a loan in 2017 (35 percent vs. 9 percent). Despite this, 51 percent believe there is a lending gap for Hispanic versus non-Hispanic small business owners, with slightly fewer (49 percent) saying the disparity doesn’t exist.
Hispanic entrepreneurs are more likely to look to family and friends not only for financial investments, but also for help with running their business. Sixty-six percent of Hispanic entrepreneurs have received financial gifts or loans from family and/or friends at some point to help fund their business — 29 percentage points higher than their non-Hispanic counterparts (37 percent). When it comes to additional forms of family support, Hispanic small business owners scored higher across the board than non-Hispanic entrepreneurs on:
In addition, Hispanic small business owners are more than twice as likely to say they will pass their business on to a family member (42 percent vs. 18 percent of non-Hispanic small business owners).
Community also plays a key role for Hispanic entrepreneurs, as 69 percent say community is important to their individual business’ success (vs. 47 percent of non-Hispanic small business owners), and 77 percent support local nonprofits or charities (vs. 67 percent of their non-Hispanic counterparts).
When asked about the single biggest business challenge they face, Hispanic small business owners are split. Twenty-three percent cite maintaining a work-life balance as their top concern, followed by finding qualified candidates (19 percent), access to loan funding (17 percent), understanding regulations and policies (17 percent) and managing the day-to-day of their business (11 percent). Only 3 percent cite a language barrier as a challenge.
Although Hispanic small business owners are optimistic about 2017 revenue, hiring, and long-term growth, they are also highly concerned about a number of economic issues. Health care costs are the top concern for 71 percent of respondents – the same top concern for non-Hispanic entrepreneurs (75 percent). However, Hispanic entrepreneurs are significantly more concerned about:
GfK Public Affairs and Corporate Communications conducted the Bank of America Hispanic Business Owner Spotlight survey between August 7 and October 4, 2016 using a pre-recruited online sample of Hispanic and non-Hispanic small business owners. GfK contacted a national sample of 1,000 small business owners in the United States with annual revenue between $100,000 and $4,999,999 and employing between 2 and 99 employees, as well as 348 interviews among Hispanic small business owners, 100 of whom were primary Spanish speakers. The final results were weighted to national benchmark standards for size, revenue, and region, and, for the Hispanic augment, whether the respondents were primarily English-speaking or Spanish-speaking. Previous waves of the Small Business Owner Report survey were conducted by telephone. Best efforts were made to replicate processes in sample, weighting, and method.
Bank of America is one of the world's leading financial institutions, serving individual consumers, small and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 46 million consumer and small business relationships with approximately 4,600 retail financial centers, approximately 15,900 ATMs, and award-winning online banking with approximately 34 million active accounts and nearly 22 million mobile active users. Bank of America is a global leader in wealth management, corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 3 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in all 50 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and more than 35 countries. Bank of America Corporation stock (NYSE: BAC) is listed on the New York Stock Exchange.
Reporters May Contact:
Don Vecchiarello, Bank of America