Despite being the fastest-growing segment of the U.S. small business ecosystem, Latinos continue to struggle to secure capital from national banks.
That’s according to the State of Latino Entrepreneurship 2020 research study from the Stanford Latino Entrepreneurship Initiative.
“Over the last five years we’ve really been able to dig deep into the challenges facing the Latino segment,” said Marlene Orozco, lead research analyst of the Stanford Latino Entrepreneurship Initiative.
Stanford’s report found that only 20% of Latino-owned businesses that applied for national bank loans over $100,000 obtained funding, compared to 50% of White-owned businesses. When looking at loans of all sizes, the percentages change, but not the gap: among Latinos, 51% received loans versus 77% for Whites.
Driven by this discrepancy, Latinos have been more likely to seek and receive funding from sources that expose them to more personal financial risk.