Small business funding platform Biz2Credit announced on Monday that its annual Biz2Credit Latino-Owned Business Study for 2020 revealed that prior to the COVID-19 pandemic revenue growth of Latino-owned companies was up 10% over last year, but like most other businesses in America, their fortunes have declined dramatically since March.
Biz2Credit reported using February as a baseline, the analysts found that the sales of Latino-owned business dropped 42% in March and April and are down 21% during the 12-month period from Sept. 16, 2019 – Sept. 15, 2020. Even more troubling was the discovery that costs for Latino companies that applied for Paycheck Protection Program (PPP) funding have risen higher than their revenues in the ensuing months. While sharing more details about the study, Biz2Credit CEO Rohit Arora, stated:
“Many Latino-owned firms are spending more money than they are generating. Their costs, which now include spending on masks and sanitizing measures, now exceed their revenues,” said, one of the nation’s leading experts in small business finance. Latino businesses currently are spending more than they are bringing in, and their costs are higher than during the pre-COVID period. Meanwhile, sales are still down. If they remain cash flow negative, the future could be grim – especially if Washington delays passing a new stimulus package to keep the economy going.”
Biz2Credit’s study then observed that non-Latino-businesses have also struggled, although their revenues remained slightly above break even. Biz2Credit added:
“Research conducted by the Stanford Latino Entrepreneurship Initiative in May 2020 found that 86% of Latino business owners surveyed reported immediate negative effects of COVID-19. Nearly two-thirds of respondents said they would likely be out of business in six months if COVID restrictions remain in place. The Stanford Latino Entrepreneurship Initiative also found that Latino business owners are nervous that customers might not feel confident enough to come back and may not have money to pay for things.”