While stay-at-home orders, quarantining and social distancing had an impact on virtually all businesses last year — especially those run by small business owners — Asian American businesses (including restaurants, stores, nail salons and other service industries) appeared to suffer the largest overall losses, according to a new study from the New York Federal Reserve and AARP.
Jonnelle Marte of Reuters has reported that “language barriers and a dearth of banking relationships made it difficult for some business owners to access government aid, even as they coped with an added layer of fear amid a surge in hate crimes linked to racist rhetoric that blames Asians for the coronavirus.”
Things didn’t start out that badly for many of these businesses, however. Marte reported that before COVID-19-related closures and restrictions, “9% of firms owned by Asian Americans were financially ‘distressed’ in 2019 — far lower than the 19% of Black-owned firms and 16% of Hispanic-owned businesses given that rating based on their profitability, credit score and business funding, according to New York Fed research. Among white-owned firms, the figure was 6%.”
But as the pandemic began, Marte said, “businesses owned by Asian Americans took a steeper hit early on in the crisis. By the end of March, sales for Asian American businesses were down by more than 60% from a year earlier, greater than the roughly 50% drop faced by other small businesses.”
Ultimately, an estimated 90% of small Asian American businesses included in the study lost revenue last year, greater than the 85% for Blacks, 81% for Hispanics and 77% for whites.
Sadly, these businesses were also unable to secure much of the government assistance provided as the pandemic hit its peak, she added. To make matters even worse, many Asian-owned businesses were also looted and destroyed.
“Minority-owned businesses were largely excluded from the first round of PPP loans issued last spring, according to research published in January by Robert Fairlie from the University of California at Santa Cruz and Frank Fossen of the University of Nevada,” Marte said.
While more support for minority-owned businesses did become available after the program was adjusted to include more participation from smaller and community-based lenders, the report said whether that help came too late, and whether the businesses that have survived up until today will ultimately be able to recover and become successful again, remains to be seen.