Latin X Heritage Month with multiethnic group of people together vector illustration design. concept: latinx mba
Sean Salas
By: seansalas
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LATINX MBA “Impact of COVID-19 on Latinx Small Businesses”: 8 key takeaways

Recently, LATINX MBA invited me to be part of a webinar to celebrate the Latin X Heritage Month. I was joined by very talented and brilliant Latinx MBA students, and we discussed the importance of the Latinx small business community. 

Our LATINX MBA panel discussion mostly revolved around the structural impediments around Latino businesses, most specifically about access to capital and education.

Fortunately, these problems can be addressed. It takes time and it may be difficult, but Latinx MBA students have the unique power to create a brighter economic future for Latinx business owners.

latinx mba, camino financial

8 key takeaways of the LATINX MBA webinar

Latinx MBA students have an amazing advantage: they see this community both from the inside and the outside. This gives them the tools they need to help Latinx business owners. 

These are the main takeaways from the LATINX MBA webinar “Impact of COVID-19 on Latinx Small Businesses.”

1. The truth about the size of Latinx businesses

The average size of a Latino owned business generates around $210k in revenue per year. Let’s compare that to other businesses: the average size of a non-Latino owned business generates about $600k a year. Roughly, Latinx businesses are a third of the size of a non-Latino owned business.

Most Latinx entrepreneurs don’t have small businesses, they have microbusinesses. 

This information can give Latinx MBA students the tools to create structural solutions for the economic problems faced by this particular market.

Average Self Reported Annual Revenue of Latinx Businesses

Average Self Reported Annual Revenue of Latinx Businesses, concept: latinx mba

2. Latinx business owners and behavioral issues


  • Around 800,000 businesses in the US are owned by undocumented immigrants
  • Between 80 and 120 billion dollars in revenue are generated by undocumented-owned businesses
  • Undocumented business owners pay their share of taxes based on the revenues above

Here’s the twist: they are not receiving benefits in return because they are undocumented. 

All this leads to Latinx owners (mostly first and second-generation immigrants) taking financial shortcuts. One example is having informal employees to soften how many taxes are paid. 

Now, don’t get me wrong, I’m not demonizing these behaviors, they have their reasons to exist. 

These prevalent behaviors stem from where people come from (different cultures), how they’ve been treated, a lack of trust in the financial system and the government, and, quite frankly, believing that they are paying more taxes than what they think is fair.

If we want to change this, we need to change how the Latinx community is treated and the resources they can access.

3. COVID-19 and Latinx businesses

COVID and pandemic facts: 

  • 80% of businesses at one point in time experienced a decline in sales
  • 70% of businesses had to close at some point in time

These are scary statistics!

Right now, with a pandemic that doesn’t seem to be coming to an end, being a small business owner is very scary.

When it comes to government programs for COVID-19, according to LBAN, the approval rates were two times lower for Latino-owned employer businesses vs. White-owned employer businesses.

4. There is a lack of technical and financial support for Latinx SBOs


  • 71% of Latinx small business owners didn’t apply for a PPP loan.

It’s crazy that so many people didn’t even bother to apply for a loan that could help them survive a crisis. But why is that?

Of those that did not apply, 19% couldn’t do it because they required technical assistance (their preferred language is not English, which made this task almost impossible).

The other problem is that there is a size bias: the bigger a company is, the more formal their operations are, and the more chances they have to succeed with these applications. 

And let’s remember that Latinx-owned businesses are microbusinesses.

latinx mba

5. Credit Crunch and Capitalism

Latinx MBA students know well that during a credit crunch, you see a huge divergence in the socio-economic divide between those that have and those that don’t. 

The people that are taking the brunt of the credit crunch are smaller, younger companies, especially from a credit standpoint. 

The curve of COVID cases correlates very strongly with delinquency (delinquency is a technical term that defines people missing one day in their loan payment).

We must change this pattern. 

I know it’s a bold statement, but what I think needs to happen is that we need to rethink capitalism. We need to start designing Capitalism 2.0.

In order to reach this new Capitalism, we need to do our best to find solutions that harness the strengths of capitalism but mitigate these compounding impacts towards two extremes.

6. The resiliency of the Latinx community

COVID amplified pre-existing problems such as racial issues, and the economic divide. But that doesn’t necessarily mean that the Latinx community doesn’t have the grit to grind through difficult situations. Let me tell you something:

The Latinx community is incredibly resilient. And that gives me a lot of hope.

Of the businesses that closed during the pandemic—as of the beginning of June, —67% had already reopened. The outlook for the remaining 33% was that they were planning to reopen.

7. What the Latinx future looks like

The economy is slowly reopening. But what’s the forecasted outlook for the recovery of Latinx businesses?

  • Over 40% said that their business is doing better than before. 
  • 30% feel there hasn’t been any change to their businesses, good nor bad. 

Now comes the negative part. 

  • Roughly 20% said that their business is going to be smaller than before. That’s not good, but it could be worse.
  • And then, the remaining 10% said their business is unlikely to survive, it will close permanently.

It’s terrible that people in the Latinx community will go out of business. But, as we said, Latinos are strong, so this is not the end for them. 

What’s your outlook for the recovery of your business?

What’s your outlook for the recovery of your business?, latinx mba

8. The potential of Latinx business owners

Even during the toughest times and with the most limited resources (relative to other markets), the Latinx community can survive.

But what if we could empower them with capital? 

What if we could narrow that educational gap so that they could start formalizing their businesses and creating more jobs? 

As Latinx MBA students, you can help them do more than survive but thrive and grow

Latinx business owners have shown this amazing resiliency during COVID. But even prior to the pandemic, the Latino market was displaying incredible signs of growth. It’s a market that’s growing 4x times faster than non-Latino owned businesses.

1 in 4 entrepreneurs today are Latino.

latinx mba

Latinx MBA students are the future of Latinx business owners

The future is, in many ways, Latino. 

Latinx MBA students are lucky to represent a market that is going to encompass a huge part of the US. economic growth. We’re talking about the largest Latino economy in the world, in the US it generates 2.4 trillion dollars in GDP. 

Knowing this community is so resilient and that it can provide huge growth for the country’s economy should empower you to pour resources into helping this community and, in turn, empower them so that they can make this amazing future come true.

*Data, statistics, and graphics were taken from the Camino Financial Latinx Small Business Survey.

If you’d like to receive up-to-date information about the business world, as well as top-notch management resources, you should subscribe to the Camino Financial newsletter.


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