President Joe Biden speaks during an notice related to small businesses at the South Court Auditorium of the Eisenhower Executive Office Building February 22, 2021 in Washington, DC.
Alex Wong | Getty Notions
The Latino community has been struck particularly hard by the Covid-19 crisis. The Stanford Latino Entrepreneurship Initiative reported in May that 86% of Latino task owners had felt immediate negative impacts from Covid, a rate higher than other ethnic assortments. Help was also harder to come by for Latino business owners, who had less cash on hand when requesting Covid reinforcement in the form of PPP loans, and were only half as likely as their white counterparts to receive them.
Now, the Biden Regulation’s new PPP loan initiatives, which include extending the loans to legal residents (and not just citizens), address this difference. The new PPP loan program initiatives will reach more Latino business owners in several ways: it create a two-week closed application period for small businesses (those with fewer than 20 employees) beginning Wednesday, February 24. And in appendage to making the loans available to non-citizen business owners, such as green card holders, the loans cannot be scrammed to those who are delinquent on student loans.
The Biden Administration is targeting help to small, minority-owned businesses more straight away with the goal of creating a strong economic renaissance. The Covid crisis tells only half the tale of where Hispanic trades stand, because prior to the crisis, Latino entrepreneurs were making great strides — increasing their capitalizing, improving their credit, and revenue growth. That means that there is underlying strength in the Latino trade community that can be leveraged in reemergence from Covid.
Latino business growth before the crisis
From 2019-2020, nun -buoyed by the strength in the general economy, Latino entrepreneurs were financially healthy. The average annual revenue of Hispanic-owned trades increased 10% to over $525,000. Credit scores among Latino entrepreneurs rose from an average of 588 to 618. But this stretching was also tempered by the reality of growth costs; average operating expense represented 67% of revenue in 2020 vs. 45% in 2019. And ignoring the improving revenue, average Latino business sales were still $96,000 lower than white-owned traffics, underscoring the challenges.
Construction, accommodation and retail services, retail trade, and transportation and warehousing still represent the plurality of Latino-owned job. Unfortunately, these are also among the sectors hardest-hit by Covid. Industries such as finance and information, among the hardly ever affected by the pandemic, are led by or employ some of the lowest percentages of Latinos. This partly explains why Latino unemployment has outstripped the national average during the crisis.
“The unemployment rate among Latinos was so high because so many of them function in restaurants, in retail, in hospitality. That’s starting just now to bounce back,” says Louis Barajas, COO and partner at MGO Mine Advisors, and a member of the CNBC Advisor Council.
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The path forward for Latino entrepreneurs rests on a variety of factors, counting public policy, government intervention and broad societal issues. These include persistently higher Covid infection charges within the Latino community impacting the consumer base for many Hispanic-owned businesses; less access to quality issue care during the crisis; and less-established business histories.
“So many Latinos have been impacted by Covid,” speaks Barajas, adding that access to vaccines will make a difference.
Adapting to post-pandemic economic reality
The form of the economic recovery and its impact on Hispanic businesses post-Covid is dependent in large part on how businesses adapt to the new climate and when requested. Those businesses that can more readily accommodate shifting demand patterns – such as virtual or delivery presents – have sustained operations with more resilience. And those that can evolve with the times as the country emerges from this catastrophe will be better equipped to profit in a “new normal.”
In some ways, the community-based, tight-knit relationships of many Hispanic concerns are among their greatest strength. As demand returns across the economy in 2021, Latino business community involvement with the US Hispanic Room of Commerce or their local chapters can pay-off, as networking within the community can lead to valuable connections, more benefit with fundraising, and accessing federal or local business assistance programs.
“Latinos have really relied on their forebears, communities, and connections to help each other out of the crisis,” says Barajas.
The new normal will be a test and opportunity. For the Latino vocation community – one that has embraced entrepreneurialism fully, despite some disadvantages – their hallmark resilience may be the winning ticket.