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Latino businesses face barriers to COVID-19 relief funds

Woman behind food service counter and customer.
Minnesota's Latino-owned businesses report challenges, and optimism, as they cope with COVID-19.

For Latino-owned enterprises in Minnesota, COVID-19 has erected many of the same barriers other owners face, but they’re dealing with added disparities in their access to state and federal relief programs for business.

Those were among the findings in a study released this week by Hispanic Advocacy and Community Empowerment through Research (HACER). Rodolfo Gutierrez, the organization’s executive director, said that 2021 will be a critical year for Latino businesses in both the metro area and Greater Minnesota.

“This research showed us the economic importance Latino-owned businesses have in small towns and the metro area, and the importance of continuing working towards creating structures that promote BIPOC-owned businesses in our region,” Gutierrez said.

Study includes rural and metro

The study was carried out by HACER in collaboration with University of Minnesota Extension researchers, who analyzed survey results in autumn 2020. In the resulting report, Impact of COVID-19 on Latino-Owned Firms in Minnesota,  the 54 survey respondents were split almost evenly between the metro and Greater Minnesota. The research is believed to be among the first in the nation to describe the impact of COVID-19 on rural Latino businesses. Earlier studies include those released by Stanford University and American University, respectively detailing national impacts and those in the greater Washington, D.C. area.

A higher percentage of Hispanic businesses reported a significant decrease in revenues compared to Minnesota businesses overall. One-fifth of respondents expected to close within six months if conditions persisted. Extension analysts estimated the respondents' total financial losses stemming from COVID-19 at $1.3 million, with restaurants and professional and technical service sectors experiencing the largest total decreases in revenue. By mid-year, the respondents' workforce had been cut by about a third, to 218 full-time and 101 part-time employees.  

Disparities in access to funding

Some of the most disconcerting findings described disparities in access to relief funds. Forty-five percent accessed federal Payroll Protection Program funding, with 36 percent receiving emergency federal loans. Both levels of participation are significantly lower than Minnesota state averages. Additionally, a significant number of respondents were unaware of tax credits and other IRS relief coordinated by the Minnesota Department of Employment and Economic Development.

Latino business owners frequently reported difficulty locating consistent application materials in Spanish. In addition to language barriers, businesses reported having difficulty establishing ties with lenders during a pandemic—or that banks with whom they had a relationship were struggling to figure out some of the relief package components. Overall, Latino businesses in Greater Minnesota reported more difficulty accessing programs.

One respondent shared, “There isn’t culturally relevant information offering aid to businesses in southeast Minnesota, and the majority of small businesses do not register with the chamber of commerce or with associations that offer some sort of guidance.”

About a third of the respondents indicated they were not sure how long they’d remain solvent, a notable concern to researcher Jennifer Hawkins, a University of Minnesota Extension community economics educator.

“It is estimated that there are more than 1,000 Latino-owned businesses in Minnesota, employing around 8,000 people. While many are optimistic about the future, responses indicate an opportunity for increased coordination of pandemic response efforts for Latino businesses,” Hawkins said.

Read a summary of the report.

Contacts: Rodolfo Gutierrez, rodolfo@hacer-min.org, and Jennifer Hawkins, 651-408-5477 or hawki044@umn.edu

Allison Sandve, Extension news media manager, ajsandve@umn.edu, 612-626-4077 (office) or 651-492-0811 (mobile).
Contact Extension Communications at extnews@umn.edu.

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