Immigrant-Owned Businesses Feel the Pandemic Pain
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How many Latino-owned small businesses applied for PPP during the pandemic?
Here's your money briefing for Friday, July 31st. I'm J.R. Whelan for The Wall Street Journal. About 80% of all small businesses applied for Paycheck Protection Program funds during the pandemic. But only about a fraction of those applications came from Latino immigrant small business owners. And that could have consequences.
Around 80% of Latino-owned businesses make less than $250,000 a year. If they cannot even get help from the government, they're in a worse position than most other business owners.
So what's keeping Latino business owners from getting subsidies? Reporter Inti Pacheco will join us with answers after the break.
Why did so few Latino immigrant business owners seek government assistance?
About 1 in 10 small business owners in the U.S. are Latino immigrants, yet less than one-third of all Latino business owners applied for government assistance in the wake of the pandemic. Reporter Inti Pacheco has been reporting on the story, and he joins us now. So, Inti, what gets in the way of immigrant-owned businesses accessing loans like the Paycheck Protection Program?
Immigrants usually don't have the banking relationships that other businesses do. So that gets in the way of just going to a branch at a bank and having all the financial statements or all the paperwork that they need. For example, we heard that one person went to get help, but then found out that he needed to have his business registered and he didn't. He didn't have a business bank account. And then there's more obvious problem of the language barrier with, you know, sometimes these loans, the applications are not in every, they're not available in every language. And so an immigrant will have a harder time applying for something with a form that they don't know how to fill out.
Some of these businesses qualify for funds, but they don't even apply.
How do banking relationships and paperwork block immigrant-owned businesses from PPP?
Is there some sort of information gap?
Yeah, more than an information gap, I think a lot of immigrant business owners are just discouraged. You know, they'll just not even try. They won't apply. They won't even try to get the right information. They'll just say, oh, because I'm an immigrant, it'll be harder. So I won't try. Again, there's supposedly this like a distrust from financial institutions. And so they don't even feel that they qualify. And that's why they don't apply.
Now, what's the issue if it's a family run business?
Well, for example, in the two cases that I looked at, these two women run their business with help from all of their relatives. And so they don't have like a formal payroll. And in the case of the PPP loan, that's exactly what it was for, for payroll. So if you don't have an established payroll, you couldn't get that loan.
These funds can mean the difference between keeping a business alive for, you know, when things reopen... or having to shut things down permanently.
Well, yeah, especially because I mean, one of the other data points that we have is from a survey by a fintech company called Camino Financial.
Why do family-run Latino businesses struggle to qualify for payroll-based loans?
It showed that around 80% of Latino owned businesses make less than $250,000 a year. So that just shows you that these aren't like huge businesses. This is like the restaurant on the corner or like a small store. It's like really small stuff that doesn't make a lot of money. So if they cannot even get help from the government, they're in a worse position than most other business owners.
How much do Latino-owned businesses contribute to the economy?
They're the highest number of immigrant businesses across the country. Latino owners are. They've actually grown much more than any other category of business owners. They've grown by 36 percent in the past. Well, actually, from 2008 to 2018, as opposed to, for example, U.S. born owners that showed almost no growth whatsoever. So there was a study in 2018 by the Small Business Administration's Office of Advocacy, and they were saying that out of all business owners in the U.S., 10 percent are owned by Latino immigrants and that those operations generate about $36.5 billion in business income.
Now, how about unauthorized immigrants who own businesses?
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Chapters
4 chapters
1
How many Latino-owned small businesses applied for PPP during the pandemic?
0:05–0:52
2
Why did so few Latino immigrant business owners seek government assistance?
0:52–2:03
3
How do banking relationships and paperwork block immigrant-owned businesses from PPP?
2:03–3:20
4
Why do family-run Latino businesses struggle to qualify for payroll-based loans?
3:20–6:00
Speakers
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