Americans began new businesses at record pace in 2021. Here’s how they’re doing.

Americans applied last year to start a record 5.4 million new businesses, with Hispanic Americans applying at the fastest rate in more than a decade and 23% faster than pre-pandemic levels, the White House touted in April.

But inflation surged to the highest level in a generation and remains the single most important problem for 29% of small businesses surveyed in August by the National Federation of Independent Business.

Though that’s eight points lower than July’s highest reading since the fourth-quarter 1979, many small business owners still struggle to stay afloat but find fewer options than most businesses.

“A bank won’t even talk to me,” Chef Wanda Blake, owner of Wanda’s Cooking in Oakland, Calif. said. “I have no collateral. And to get a bank loan, they would have to go through my credit history. A bank’s not set up to identify with me as a person and what I want to do.”

Who are small business owners?

There were 30.2 million small U.S. businesses in 2018, according to the Chamber of Commerce. Of those, 22 million were individually operated, meaning they have no other employees other than the owner.

Women owned 11.6 million, or 38.7%, of small businesses and minorities owned 8 million, or 26.5%. Veterans owned 2.4 million, or about 8%, the Chamber said.

Women of color are the fastest growing entrepreneurs, increasing at 4.5 times the average rate, said Luz Urrutia, chief executive at Accion Opportunity Fund, which provides financial support, counseling and networking for small businesses that advances racial, gender, and economic justice.

Why do small business owners suffer more?

Soaring inflation eats into already slim profits. Between July 2021 and July 2022, overall profits fell about 4% overall for small businesses despite an 87% surge in revenues, according to a survey of 550 small business leaders by Kabbage, part of American Express, released last month.

Even grimmer, 75% of respondents reported feeling impacted by inflationary pressures and 56% expected pressures to last at least a year until summer 2023.