How Coronavirus Pandemic Affected Latino Companies

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coronavirus already a pandemic – WibestBroker

Companies from New York to Los Angeles are trying to minimize the damage caused by the coronavirus pandemic. It is not an easy task, as the pandemic created a lot of problems for the companies. Unfortunately, the situation regarding another round of stimulus for small business is quite complex. It is worth noting that, 5 million Latinos are at risk of bankruptcy. This information once more underlines the severity of the problem as companies are struggling to cope with issues.

Let’s have a look at the annual Latino Small Business Biz2Credit survey. As a reminder, Latinos were the fastest-growing cohort on Main Street, contributing 4% to U.S. gross domestic product (GDP).

It is worth noting that, Latino companies that applied for the Paycheck Protection Program suffered losses. For example, revenue declined by 21% from February through September, while their costs for PPE and other safety measures rose and this is not the end of the story. The costs continue to remain high.

Moreover, companies retrofitted their businesses to cope with the coronavirus pandemic. Consequently, expenditure exceeded their revenue in the summer. People should take into account that, Latino companies spent a lot of money to avoid the worst-case scenario and ended with a negative 11% margin. Furthermore, they are now cash-flow negative. Unfortunately, they are on the brink of going out of business.

Latino companies and main challenges

Importantly, companies in the Northeast and Midwest suffered serious losses. However, as the coronavirus spread across the country, other areas also saw losses. According to the information taken from the Biz2Credit research, non-Latino also suffered losses. Although their revenue remains slightly above break even.

It is worth noting that, for the study, Biz2Credit analyzed the financial performance of 35,000 companies, including 3,000 Hispanic-owned companies. The companies mentioned above submitted funding requests through the company’s online marketplace.

Interestingly, all companies included in the survey have less than 250 employees as well as less than $10 million in annual revenue. Moreover, the report covered small businesses across the country in a wide range of businesses, from start-ups to established companies.

Notably, construction is the largest category of businesses, representing nearly 17.8% of the Hispanic-owned businesses in the study.

Last but not least, before the pandemic, small firms owned by Latinos were already facing barriers to prosperity. For example, Latino-owned businesses are more likely to be start-ups, have higher credit scores. As a result, such companies have a limited ability to secure affordable capital.

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