How does New Mexico rank for minority-owned businesses?

What are the top states for minority-owned businesses?

According to a new study from Lending Tree, an online lending marketplace, Hawaii, Nebraska and Maryland are the best places for minorities to do business.

But so, too, is New Mexico, which ranked No. 8 in the Lending Tree study.

“I think that’s the worst we’re going to be,” said Ernie C’deBaca, president and CEO of the Albuquerque Hispano Chamber of Commerce, noting New Mexico is a majority-minority state with about 50% of the population identifying as Hispanic or Latino. “I think more and more we’re going to see our ranking increase.”

The study, which analyzed data from the U.S. Census Bureau’s 2022 Annual Business Survey, looked at five key metrics:

• The percentage of businesses that are minority-owned in a given state
• The percentage of minority-owned businesses operating for at least six years
• The percentage of minority businesses with at least $500,000 in annual revenue
• The percentage change in the number of minority-owned businesses
• The ratio of minority-owned business pay to average pay

According to the study, New Mexico’s minority-owned businesses comprise 25% of the state’s overall businesses. While ranked No. 8, it fared better than other states in that category's top 10; Alabama ranked No. 5, and New Hampshire and Virginia two tied for No. 6.

Some New Mexico officials, however, questioned if just one in four businesses are minority-owned.

Of the top 10 in that metric, New Mexico also fared relatively well overall. The 25% of minority-owned businesses, according to the study, puts them fourth in the metric right behind Maryland (25.4%), Hawaii (51.5%) and the District of Columbia (28.6%).

States outside the top 10, like No. 14 Florida at 28.3% and No. 24 California at 35.8%, did, however, have higher percentages of minority-owned businesses.

Gabriela Marques, director of the New Mexico Minority Business Development Agency, which helps local businesses with services for understanding procurement to forming business plans and social media strategies, said she thought it would be higher.

She said the MBDA puts out fact sheets showing the small business landscape. A 2018 fact sheet, the latest to date, shows minority-owned firms made up 39.2% of all firms in New Mexico.

“Maybe the data has changed a little bit, but yeah, it just feels like 25% is a big drop,” Marques said. “I don’t know how the census information was gathered — if someone is selling something on their own, if they would respond to the Census saying that they do have a business, right? But anyway, yeah, I would assume it (would be) a higher number.”

In another metric, the percentage of minority-owned businesses operating for six or more years, New Mexico ranked second-best with 61.6%. The Land of Enchantment was only bested by Nebraska at 74.3%, according to the Lending Tree study.

She said that percentage makes sense, considering that in New Mexico, generational and cultural identity is tightly woven into business, too.

“I think that culture and that legacy and that sense of generations also transfers to businesses,” she said.

Elsewhere, about 45.5% of minority-owned businesses in the state had more than $500,000 in annual revenue and a 71.2% ratio of pay relative to all other businesses, the Lending Tree study shows.

Growth in minority-owned businesses in New Mexico, according to the study, also stood at 1.8% — the second-lowest of the states in the top 10 behind Hawaii, which is actually trending in the opposite direction.

Marques said she isn’t sure how correct the growth percentage may be for minority-owned businesses in a majority-minority state, considering the anecdotal perspective that she has worked with many businesses coming out of the COVID-19 pandemic.

“I don’t want to go against the data, of course,” she said. “But just from my anecdotal impression and working with businesses, I would assume it’s a higher number.”

C’deBaca, however, said the growth may reflect Hispanics’ tendencies to recover slowly coming out of crises.

“We always lag in New Mexico after things like recession and I think even COVID,” he said. “…That might be the issue there because they just didn't have the money to do it. You know, they didn’t have access to capital.”

But C’deBaca, who largely works with Albuquerque’s Hispanic population, said the tides are shifting when it comes to the importance of Latinos to the U.S. and state economies.

He noted that over the past couple of decades, it has been said that Latinos were largely uneducated. Well, he said, they’re getting educated now — representing one of the largest cohorts of enrollment in postsecondary education. That bodes well for reaching new ways of funding businesses led by Latinos.

“For the most part, small Hispanic businesses — which there are a lot of them — are family-run. It’s friends and family that helped finance (those businesses),” he said. “Now that they’re becoming more sophisticated, I think you’re going to see they’re going to have the ability to access capital at a greater rate.”

Like C’deBaca, Marques sees a bright future for New Mexico’s minority-owned businesses.

“These rankings show that we can always improve and that we’re working towards doing that for New Mexico,” she said. “(This is) a great place for minority-owned businesses to thrive and succeed.”