Entrepreneurship cools in Puerto Rico: fewer new businesses launch, but fewer close too

The pace at which Puerto Ricans are launching their own businesses cooled sharply in 2025, according to the Global Entrepreneurship Monitor (GEM) Puerto Rico 2025 report, presented on August 14 at the Popular Center in Hato Rey by a team of researchers from the College of Business Administration at the University of Puerto Rico, Río Piedras Campus (UPRRP) ¹². The Total Early-Stage Entrepreneurial Activity Index (TEA), which measures how many people are starting or have just started a business, fell from 24.3% in 2024 to 15.6% in 2025, a drop of nearly ten percentage points in a single year ¹³.

The decline is no isolated surprise, researchers say: it coincides with the winding-down of several economic stimulus programs activated after the pandemic and recent hurricanes, funds that for years served as a cushion for anyone wanting to launch a business. With less money available and the cost of living still high, many who two years ago would have jumped into entrepreneurship are now thinking twice ². Lead researcher Theany Calderón Abreu, along with Arleen Hernández Díaz, Jairo Ayala Godoy and Segundo Castro-Gonzáles, presented the findings as an important snapshot of the opportunities and challenges of entrepreneurship in Puerto Rico ¹³.

The numbers tell a two-sided story. On one hand, fewer people are launching businesses; on the other, fewer businesses closed too: the closure rate dropped from 5.7% in 2024 to 2.6% in 2025 ¹³. That suggests the businesses that survive are doing so more carefully, not that the ecosystem collapsed. But when someone does close up shop, the leading reason is no longer lack of startup capital, it is lack of profitability: 28.1% of those who discontinued operations in 2025 attributed it to the business simply not generating enough profit to stay afloat ¹². Fear of failure remains a massive barrier and has barely budged since 2020: 43.2% of respondents said fear of failing would stop them from starting a business ¹³. The rate of established businesses, those operating for more than three-and-a-half years, stood at 4.4% ¹. Seven out of ten entrepreneurs said the lack of salaried job opportunities, not a business idea they had long wanted to pursue, is what pushed them into entrepreneurship ¹³. On financing, most still rely on personal savings and credit cards to get started, not bank loans or investor capital ¹. The gender gap also persists: 27.2% of women expressed interest in entrepreneurship, but only 13.9% actually followed through, compared to 17.5% of men who did launch a business ¹³.

What it means for you

If you are thinking about opening your own business in Puerto Rico, this report is a wake-up call to plan with your feet on the ground. The underlying message is not "don't start a business," it is "don't start one without a clear profitability model." The drop in business closures shows today's entrepreneurs are being more careful about timing their launch and managing cash flow, which is exactly the discipline the study says is often missing. If your business depends on a federal or state funding program staying active to survive, now is the time to look at diversifying your income before that money runs out.

How to do it / Checklist

1. Before you register the business, calculate your real break-even point: how much you need to sell every month just to cover fixed costs, not counting your own salary.
2. Avoid relying only on savings or credit cards for startup capital. Visit the Department of Economic Development and Commerce (DDEC) or the Economic Development Bank for Puerto Rico (BDE) and ask about micro-loan lines with preferential rates for small businesses.
3. Seek free mentorship at the Puerto Rico Small Business Development Center (PR SBDC) before you invest your first thousand dollars.
4. If fear of failure is holding you back, start small: validate the idea with a minimum viable product or a pilot sale before committing significant savings.
5. Track real monthly profit, not gross sales, starting from month one. Lack of profitability, not lack of sales, was the number one reason for closure in 2025.
6. If you are a woman and feel the capital-access gap has held you back, look into gender-specific programs offered by the Puerto Rico Chamber of Commerce or the Centro Unido de Detallistas (CUD) for women entrepreneurs.

What's next

The GEM Puerto Rico team, based at UPRRP's College of Business Administration, plans to publish a more detailed sector-by-sector and region-by-region breakdown in the coming months, along with specific recommendations for the Legislative Assembly on simplifying access to capital for small businesses ¹. The full report, running more than a hundred pages of data, is already available on the GEM Puerto Rico website for anyone who wants to dig into the numbers before making a business decision ¹. The next GEM measurement cycle will take place in 2026, and researchers say they will be watching closely to see whether this slowdown was a temporary blip or the start of a new normal for anyone on the island who wants to be their own boss.