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In the ashes of 2020, Manny Gonzalez has the distinction of guiding a small business through two drastic economic downturns.
The first came with the Great Recession beginning in 2008, nearly a decade after he opened his first Manny’s Tortas restaurant in Mercado Central, on Lake Street in Minneapolis. At the start of the Great Recession, Gonzalez operated three restaurants: one in Mercado Central, one in the Longfellow neighborhood of Minneapolis, and one in Midtown Global Market. The economic downtown of the late aughts prompted the closure of his Longfellow location. And in 2017, Gonzalez sold his Mercado Central location.
But he still cites 2020 as his worst year of business.
Statewide shutdowns and people’s overall hesitancy to dine at a restaurant during the COVID-19 pandemic led to a sales drop of 70-80 percent, Gonzalez said. Only a federal loan and his landlord’s willingness to cut vendors’ monthly rent in half saved Gonzalez’s restaurant from closing.
“I’m lucky that I’ll be able to survive,” he said, noting that four neighboring restaurants at Global Market went out of business recently.
Judging from a new survey released this week, Gonzalez may be right. COVID-19 is disproportionately impacting Minnesota’s Latino-owned businesses, like Manny’s Tortas, and business owners are having a tougher time securing business aid.
The survey, conducted by the University of Minnesota Extension and Hispanic Advocacy and Community Empowerment Through Research (HACER), found Latino business owners more likely to report significant burdens on their operations than business owners overall.
The survey received large responses from people in the restaurant and food industries, construction, and retail—all hit hard by COVID-19. About half the respondents worked in industries deemed “essential” during statewide stay-at-home orders. Some of these factors may explain why Latino businesses in the survey faced more challenges during the pandemic, according to the researchers.
Minnesota’s Latino business owners also applied for loans to financial institutions at a much higher rate than the state average—39 percent versus 8 percent. And less than half reported receiving help from the federal government’s pandemic response through the Paycheck Protection Program, compared to nearly three-quarters of business owners across Minnesota.
The disparities outlined in the report highlight the need to make loans and financial assistance more accessible to the state’s Latino business, said Juan Pablo Higuera, a research associate at HACER who worked on the survey.
“This report shows the importance of investing in the relationship between Latino-owned businesses and representatives from financial institutions,” Higuera said. “Because that relationship doesn’t exist.”
Minnesota is home to 9,000 Latino-owned businesses, or about 2 percent of the state’s businesses, according to the Latino Chamber of Commerce Minnesota.
The survey sought out responses from 250 people, most of them business owners, during the summer of 2020. Just over 50 individuals responded, with about half located in the Twin Cities metropolitan area and half in greater Minnesota.
The survey compared its responses to statewide data from the U.S. Census Small Business Pulse Survey.
A gap between Latino businesses and financial institutions
More than three-quarters of those who responded reported having trouble finding financial support since the start of the pandemic. Just 45 percent of respondents ended up receiving PPP aid. And 90 percent of respondents said they had trouble accessing information for government aid to their business.The most common problem they reported was finding out initial information about available programs.
John Pacheco, president of the Latino Chamber of Commerce Minnesota, said he’s been hearing this from his members throughout the year.
“The difficulties are that, number one, If you’re not a citizen, you don’t qualify for a number of the programs that are out there,” Pacheco said. “And it’s difficult to obtain the right paperwork and get it done. Some businesses may not have all of the right papers but they’ve done a lot of work and just haven’t been able to cross the finish line.”
Manny’s Tortas secured a PPP grant last year after Gonzalez’s sister and business partner, Vicky Gonzalez, followed the proper procedures to apply for the grant. The process took at least a month for her.
“She spent a lot of time getting everything in order,” Gonzalez said. “I know she sent out a lot of paper.”
The $40,000 from the loan saved his eight employees from losing their jobs. Many other businesses haven’t been as lucky, Gonzalez said, and he suspects that many of neighboring businesses didn’t apply.
A year of growth for Latino credit counselors
Curiously, the HACER survey found that not all Latino businesses suffered in 2020, and some even reported growth. Businesses that fared well came from the professional and technical sector of the economy. That’s largely because they could do their work remotely without much interruption, Higuera said.
Hispanic Solutions Group, a credit counseling organization based in Bloomington, saw more business in 2020 than in previous years since opening in 2016. The organization is geared toward Latinos who want to improve their credit scores.
Jessica Aliaga-Froelke, the company’s chief executive officer, said that recently many banks recently raised the minimum credit score for big purchases like buying a home. That stricter standard, along with the economic downtown, led to a quadrupling of clients, Aliaga-Froelke said.
“Overnight we had a big change,” she said. “People approached me because they needed help.”
Aliaga-Froelke said the influx of more clients, as well as the ease of working remotely, led to a good year. Her business, which currently employs seven consultants as subcontractors, is one of the 8 percent of respondents to the survey that reported growth for 2020. Just 4 percent of all Minnesota businesses reported growth in a U.S. Census survey.
HACER and the university now plan to get the report in the hands of policymakers across the state. Both HACER executive director Rodolfo Gutierrez and Pacheco said the study will ideally lead to policy changes. One such change: lobbying the state Department of Employment and Economic Development to establish programs that help immigrant entrepreneurs better access banks and lenders.