Facing soaring expenses and shrinking revenues, Latino-owned small businesses are reportedly among those most severely impacted by the COVID-19 health crisis.

According to the recent Biz2Credit Latino-Owned Business 2020 study, small business owners are navigating higher costs this year, with operating expenses making up an average of 67 percent, or $349,445, of all revenue. In 2019, the figure stood at 45 percent, or $215,846. Similarly, the study found the average annual revenue for these businesses was $96,106 lower than the average revenue of non-Latino-owned companies in 2019-20.

Amid these unique stressors, Latino-owned businesses must continue to seek dynamic and strategic financing to stay afloat.

In this episode of Driving Success Through the Pandemic, Popular Bank Chief Operating Officer Manuel Chinea and Latin Biz Today’sadvisory board member Elias Mendoza discuss options available for small businesses seeking infusions of capital and emergency funds.

From government programs to best practices, Chinea and Mendoza suggest how small businesses can weather immediate revenue losses and expenses.

Key takeaways include:

1. Recapping the Small Business Administration Paycheck Protection Program.

The Small Business Administration Paycheck Protection Program closed on August 8, 2020. Throughout its three rounds, PPP issued 5.2 million loans worth $525 billion before its discontinuation on August 8, 2020.

“One of the advantages of (PPP) is that if you, as a business, had the opportunity to apply and to get approved, you have the opportunity to have that loan forgiven,” said Chinea. “So truly, instead of this being a traditional loan, it can turn into capital for the business.”

While a fourth round of PPP may be in the cards as Congress works to reach an agreement on its newest stimulus package, many borrowers are now navigating the nuances and criteria of the forgiveness process.

2. Exploring additional small business lending programs.

While PPP garnered notable success, the program presented clear discrepancies. The full list of Paycheck Protection Program recipients released by the Small Business Administration shows that of the 14% of businesses that chose to identify race in their loan application, Latino-owned businesses received 7.0% of loans issued. Black-owned businesses received less than 2.0%.

This data strongly suggests that Latino- and minority-owned businesses are among those still most in need of funding, heightening the importance of still-available programs, including the Main Street Lending Program (MSLP).

Unlike PPP, MSLP does not forgive loans. However, the program does continue to offer qualifying small and medium sized businesses favorable borrowing terms.

While the program’s guidelines are continuing to change to meet small business needs, the MSLP currently offers loans as low as $100,000 and up to $300 million to businesses with up to 15,000 employees. The program has been extended and expanded multiple times to provide more small- and medium-sized businesses, as well as not-for-profits, the support to provide borrowers with greater flexibility in repaying the loans. 

3. Small businesses can look to their equity as a source of capital.

For entrepreneurs who are looking to take creative and strategic measures to secure capital funding, selling equity in your small business isn’t just a solution to creating funding. By bringing investors into your business, it can create valuable opportunities to build new and better relationships with customers and vendors.

“The markets are open. There are plenty of investors that are looking for opportunities to work with businesses,” said Mendoza.  “[They] are committed to not necessarily just taking capital for short-term purposes or short-term investor purposes, but really because a lot of the small businesses that we know, once the pandemic subsides, are going to have a great role in the new normal.”

While making the decision to sell off a percentage of your business is a deeply personal one, it can present opportunities that may result in an overall better operation.

Related content: 

Session 1: New Virtual Discussion Series Talks Small Business Solutions [Video]

Session 3: Ensuring Liquidity Amid Economic Volatility- Session 3 [Video]

Session 4: Identifying Business Opportunities and Strategies Around Covid Volatility [Video]

Session 5: Popular Bank and Latin Biz Today Talk Small Business Agility Amid Ongoing COVID-19 Disruption [Video]

Session 6: Covid Impact & Insights As Related to Industries- Session 6 [Video]