By Tonya McMurray
Alice Rodriguez knows a
few things for certain. One definite is that “survival is in the DNA of
Hispanic businesses,” said the United States Hispanic Chamber of Commerce board
“There’s just something in the DNA where, even though you get knocked down, you get right back up and say, ‘Let me see what the opportunity is and let me jump into it,’” said Rodriguez, who is also head of community impact and managing director for JPMorgan Chase & Co.
That sense of resilience was tested during the COVID-19 pandemic, which hit the Latino community disproportionately hard. But as the country emerges from the epidemic, Latino-owned businesses are expressing significant confidence about the future, said Ramiro Cavazos, president and CEO of USHCC.
“We’ve gone through COVID, but we’ve also gone through other crises, and we’ve been the businesses that rebuilt our economy during the toughest of times,” he said.
Navigating the pandemic
According to the Pew Research Center, one-third of Latinos report that they tested positive or believe they had COVID; three-fourths know somebody who has been sick or died; 58% said someone in their household lost a job, was furloughed or took a wage loss as a result of the pandemic.
In addition, Cavazos said about a third of Latino-owned businesses closed either temporarily or permanently during the pandemic.
“The pain and impact on our communities have been felt more than on other communities because 86% of the people who work within the Latino community could not work from home,” he said. “They were on the front lines.”
The business impact on Latino businesses was also more severe because those businesses tend to fall within five sectors: retail, construction, manufacturing, restaurants and personal service. Those sectors — which accounted for 50% of revenue for Latino-owned businesses and 65% of all Latino employment — were the most likely to slow or shut down during the pandemic, U.S. Secretary of the Treasury Janet Yellen said at the USHCC’s 2021 Virtual Legislative Summit in March.
Another factor increasing the pandemic’s impact on Latino businesses is that many are small, family-owned operations that don’t have access to credit, a strong business network or a banking relationship. Latino-owned companies are two and a half times more likely than white-owned businesses to rely on informal funding sources, including help from family and friends, according to “U.S. Hispanic and Latino lives and livelihoods in the recovery from COVID,” a 2021 McKinsey & Co. report.
The lack of established banking relationships made it more difficult for Latino-owned businesses to apply for U.S. Small Business Administration Payroll Protection Program grants to provide needed capital during the pandemic because they were administered through local banks, Rodriguez said.
The USHCC prioritized helping Latino businesses and local Hispanic chambers of commerce understand and access available resources.
Cavazos said the USHCC helped more than 13,000 businesses access federal and private sector services and provided information on how to navigate the SBA PPP and Restaurant Revitalization Fund application processes. The national chamber also provided grants to small businesses and more than 260 local chambers to help them provide support to companies in their areas.
Businesses that were able to survive the challenges presented by the pandemic had a few key things in common, he said. First, they were able to innovate quickly and come up with new ways to do business amid shutdowns and social distancing. Second, they asked for help — whether that meant reaching out to their local chamber, the U.S. Small Business Administration or partners to renegotiate contracts and business arrangements.
A third common factor among businesses that survived was a strong focus on managing capital, Rodriguez said.
“The average small business had 27 days of cash reserve on hand at the beginning of COVID,” she said. “Obviously, that went fast. The businesses that survived jumped on PPP and renegotiating contracts. They looked at every penny on that income statement and asked, what am I going to do without?”
Capital, connection and capacity
With the end of the pandemic, Hispanic-owned businesses face many of the same challenges as other businesses, including hiring and worries about inflation. But they also face challenges of inequity in accessing capital and building wealth.
“The challenges really existed pre-COVID, and the last few months have just highlighted that and increased our sense of urgency to provide tools to help our Latino-owned businesses,” Cavazos said. “We want to provide capital that builds capacity and helps our members make the connections to secure more contracts and more business. With equity and diversity being a priority now for many corporations, we want to make sure Latino businesses are front-and-center where those opportunities are being provided.”
In addition to some of its more traditional business advocacy, the chamber is also focusing on the need for affordable housing.
“Affordability of housing in the past has not been seen as a business issue,” Cavazos said. “But housing is front-and-center now with workforce and access to capital. Housing is such a basic fundamental aspect of self-confidence.”
Rodriguez said affordable housing is critical because of its role in helping Latinos build wealth for their families. According to the McKinsey & Co. report, the median Hispanic and Latino family net worth is $20,700 compared to $171, 000 for the median white family. Homeownership rates for Hispanics and Latinos are 48.9% compared to 65.3% for the U.S. as a whole.
“Affordable housing is important because homeownership is a wealth-builder in this country,” she said. “And many Latinos use the equity in their homes to start their businesses. When they don’t have enough money from family and friends or a relationship with a banker, they use the equity in their home. So, that’s why we are advocating for good policy around affordable housing.”
Despite the challenges, Latino-owned businesses express the greatest optimism about the future out of all business owners, Cavazos said. And Latinos have traditionally been a significant factor in the labor market. While Latinos comprise 18.3% of the U.S. population, they have been responsible for 78% of the growth in the U.S. labor force since 2008, according to a recent report from the Latino Donor Collaborative, a nonprofit research organization that focuses on Latino issues.
“I’m hearing people say the economy is going to boom again,” he said. “A lot of innovation came out of COVID. Many of our members have said, ‘I survived COVID, and I’m a stronger, smarter business owner now.’”
To learn more about USHCC, visit ushcc.com.
To learn more about the U.S. Small Business Administration, visit sba.gov.
42nd Annual USHCC National Conference heads to Las Vegas in September
The United States Hispanic Chamber of Commerce will welcome business, government and academic leaders to its 42nd Annual National Conference in Las Vegas, Nevada, Sept. 26-28. Attendees can choose to attend in person or virtually.
“We’re excited that it will be in person for the first time in two years,” said Ramiro Cavazos, president and CEO of USHCC. “We’ve missed being able to connect in person. It’s part of our culture, and I think people are ready for that.”
Las Vegas seemed an ideal environment for the chamber’s return to an in-person conference given the importance of Hispanic businesses throughout the state of Nevada, he said. Latinos account for 30% of Nevada’s population, and the state has the sixth-largest share of Latino eligible voters nationwide.
The annual USHCC National Conference is the largest gathering of its kind in the Hispanic community, bringing together more than 1,000 community leaders, advocates, government officials, corporations, philanthropists, educators, students and entrepreneurs — along with the chamber’s network of more than 260 affiliated Hispanic Chambers of Commerce.
Throughout the three days, attendees will have access to more than 25 workshops, plenary sessions and keynote speakers highlighting the role of Latinos in the U.S. economy and culture. Speakers will include business experts and local, state and federal government officials.
To learn more about the 2021 USHCC National Conference, visit ushccconference.com.