Latino Small Business Owners Skew Younger

Latino-owned small and medium businesses (SMBs) are growing rapidly, according to a new McKinsey & Co. report. Latinos start more businesses per capita than any other U.S. racial or ethnic group. In 2023, they created 36% of new businesses in the states—nearly double their representation in the overall population. According to the U.S. Census Bureau, 19% of the U.S. population is Latino or Hispanic, and that number is expected to grow to 28% by 2060. Still, Latino-owned SMBs comprise only 7% of total small-business firms with employees, and 17% of non-employer firms (which have no employees and are mostly sole proprietorships).

However, 99% of Latino-owned businesses are considered small businesses. A supportive environment, McKinsey said, could pave the way for the creation of more than 600,000 new businesses, potentially bringing in about US$1.2 trillion in revenue and creating 5 million to 6 million jobs in the coming decades. 

Latino SMBs’ owners also skew younger, which McKinsey said offers great opportunities for long-term business growth. Additionally, the education level of these young entrepreneurs continues to increase with 20% of Latinos nationwide achieving a bachelor’s degree.

Still, Latino SMBs have more challenges than non-Latino SMBs scaling up enterprises, hiring and retaining talent, and gaining access to funding, McKinsey reported. For example, in 2023, Latino-owned businesses accounted for 15% of credit applications on online lender Biz2Credit, up from 12% in 2022. Additionally, the average credit score of Latino business owners improved from 632 in 2022 to 647 in 2024, a sign that these businesses are becoming more financially stable and more creditworthy, McKinsey said.