COVID disrupted a Latino business boom — recovery should aim to restore it
Sometimes a catastrophe exposes what many have always known.
And catastrophe is an understatement for the true impact of the COVID-19 pandemic and devastation on our economy. For Hispanic business owners, the pandemic debilitated frontline workers in essential industries, hollowed families and communities, shuttered businesses and destroyed savings. And yet, many see COVID-19 as just another obstacle in a long history of disproportionate and unfair challenges faced by Hispanic business owners and entrepreneurs.
Even before the pandemic, only two out of every 10 loan requests made by Hispanic small business owners were approved, according to the Latino Business Action Network’s 2020 State of Latino Entrepreneurship Report, which also found that the odds of loan approval from national banks are 60 percent lower for Hispanic Business Enterprises when compared to non-minority counterparts. These inequalities are particularly heinous given that an estimated 25 percent of Hispanic businesses in America have been temporarily or permanently shuttered over the last year.
How is this possible? Not only is this a tragic inequity of enormous proportions — it’s also a massive financial mistake. Before the pandemic, Latinas were opening businesses at six times the average rate and the Hispanic population in general were opening businesses at three times the average rate. We are job creators. We are fueling the American economy.
It makes sense then why the Biden administration brought the full force of their leadership to the United States Hispanic Chamber of Commerce 2021 Legislative Summit this week. President Joseph R. Biden, Vice President Kamala Harris, Treasury Secretary Janet Yellen, Small Business Administration Administrator Isabella Casillas Guzman, Department of Homeland Security Secretary Alejandro Mayorkas and an array of congressional leaders and appointees were all on hand to acknowledge the importance of the Hispanic business community to restore vitality and establish equity in our convalescing economy.
America alone is home to more than 4.7 million Hispanic-owned businesses that, combined, contribute over $800 billion to the economy annually. The 61 million Latinos and Latinas in the U.S. account for a GDP of $2.6 trillion — ranking them as the world’s eighth largest economy.
We are ready to scale and grow. All we need is capital.
If Hispanic-owned businesses could access the capital they need to expand their business, there would be an additional $1.5 trillion generated for the American economy. For context, that amount of money would have funded over 78 percent of Biden’s American Rescue Plan or 50 percent of Biden’s proposed infrastructure plan. So how do we craft a landscape where Hispanic business owners and would-be business owners have a chance — the same chance — as their non-minority counterparts at succeeding in business? We start by playing fair.
We ensure that the Hispanic business community has a seat at the table as policies and programs are designed and implemented in Congress. We spearhead ambitious partnerships between the public and private sectors, interagency initiatives and innovative financial plans. We turn to Hispanic owned investment firms to hire asset managers and take a much closer look at how to advance social investing.
In short, we do whatever we can to galvanize policy leaders to act in support of Hispanic and minority-owned small businesses. To do anything less is to jeopardize America’s economic recovery — and future.
Ramiro A. Cavazos is the president & CEO of the United States Hispanic Chamber of Commerce.