The Deepening Economic Divide: How The Pandemic Has Hurt Small Businesses

Worse, they also likely had less access to business expertise that lenders typically provide to small-business borrowers. At the very moment that minority-owned small businesses needed expertise, “that layer of advice and oversight is [often] missing,” Bradford says.

Those disparities extend well beyond the areas of finance and expertise. For example, because Black and Latino communities have suffered disproportionately high rates of COVID-19, workers from those communities may have been more likely to miss work, which can challenge employers with small staffs.

“If I have a lot of employees of color, there’s more likelihood that they will get sick or someone around them will get sick,” says Kristi Brown, a Black woman and owner of the restaurant Communion in Seattle’s Central District. “If I’m already a small business, when those people call out, I don’t have anybody to replace them.”

Similarly, because pandemic-related job losses fell heaviest in certain sectors — such as restaurants, construction and housekeeping — that employ large numbers of Black and Latino workers, companies that rely on those communities for customers often saw a big hit in sales.

At Chavez Auto Repair in Burien, business has fallen by 40% during the pandemic because a lot of customers, many of them Latino families, “haven’t been working,” says owner Jose Chavez.

He says it’s worse than during the Great Recession, when people still brought in their cars for repair and paid in installments. Now, Chavez says, many “are not coming in at all.”

Chavez has been able to hang on, in part by working longer hours. “Now that we’re going to have more daylight, I’ll work until 10 at night,” he says. But some smaller companies haven’t been able to cover rent or other basic expenses.

Burien Mayor Jimmy Matta and other local officials have scrambled to help struggling local merchants with measures such as expedited permits for outdoor restaurant seating.

But even as the broader economy steadily improves, Matta, who owns a small construction firm, worries that some policymakers may not realize that thousands of smaller companies still lack the resources to join the recovery.

“If we don’t get it right, we’re going to lose more businesses in our communities,” he says.

For now, at least, small businesses are getting a lot of attention.

A second round of federal PPP loans, including more than $4 billion already approved for Washington small businesses, is underway, and Congress just extended the application deadline to May 31. The new round reserves some funds for businesses in marginalized communities, and eligibility rules improve access for the very smallest companies and sole proprietors.

Starting this week, owners can also apply for a fourth round of Working Washington grants of up to $25,000 from the state commerce department.

Help is coming from other places, too. Universities and business organizations are sharing financial and other business advice with small businesses. Community groups are stepping up.

In South Park, for example, the SPMA has raised $20,000 for its temporary business plaza project and has a contractor ready to modify the cargo containers, says Arriaga Briones. She hopes to keep rents at $300 or less per month.

Although the SPMA still needs approval from the Parks Department (which is “preparing a detailed response to the SPMA proposal,” a department official says), demand for the venture is already high.

Many merchants “are ready to get into the space,” says Arriaga Briones, who had to temporarily close her own firm, a business consultancy, in August after some clients could no longer afford to pay.

Sometimes, help has come from unexpected quarters.

Haskins, at Rainier Health & Fitness, says a large number of gym members kept their memberships active even when the gym closed — and one member donated $10,000 “just to make sure our staff was taken care of.”

Another example comes from Carol Xie, a community engagement coordinator and case manager for a Seattle housing nonprofit whose family runs the Purple Dot Cafe in Seattle’s International District.

After learning that the restaurant was struggling last year, Xie, who is also a freelance photographer, put her social media skills to work. “I knew how to garner engagement and interest on social media platforms,” the 26-year-old says. “I was just thinking, ‘well, if I can get X amount of people interested in my personal life, let me try it for the restaurant.'”

The strategy paid off. Soon after Xie revamped the restaurant website and launched an Instagram account, her father, Jason Xie, reported that new customers came because they saw the restaurant on “in gram,” as he called it.

The strategy also helped Xie reconnect with her family’s business — a pattern she also has observed with some of her local peers.

Small business owners who are immigrants often prioritize the education and career goals of their children, who often aren’t so involved in the family business, Xie says.

The pandemic has changed that. Among Xie’s peers, many of “the kids that didn’t have much interaction or involvement with their families’ businesses are now stepping up to help them,” she says.

It’s “one of the silver linings out of this whole situation.”

Distributed by Tribune Content Agency, LLC.

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