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UCLA LPPI Releases Report on Texas Ethnic Small Business Owners

The second report of the TEREP series sheds light on financial, technological, environmental, and pandemic challenges faced by ethnic-owned businesses in the state.

LOS ANGELES (November 14, 2023) – The UCLA Latino Policy and Politics Institute (UCLA LPPI) has released a new research portfolio focusing on ethnic small business owners in Texas. The second report of the Economic Recovery & Entrepreneurship Project (TEREP) provides insights on ethnic small business owners’ access to capital, use of digital technology and environmental sustainability practices, and experience of the impacts of COVID-19 and climate change on their enterprises. 

After conducting over 600 phone surveys with Texas small business owners and executives, this groundbreaking study has revealed several key findings:

• • Black- and Latino-owned businesses face more barriers than white-owned businesses to accessing financial capital. Black- and Latino-owned businesses were between two and three times more likely to report challenges to accessing capital compared to white-owned businesses (69%, 39%, and 23%, respectively).
  • Ethnic-owned businesses continue to fight an uphill battle to recover from COVID-19. A greater share of Black- (67%) and Latino-owned businesses (41%) than white-owned businesses (31%) anticipated a need for financial assistance or additional capital in the next six months.
  • Small businesses with a lower engagement in online technology for sales also had a greater probability of falling victim to cybersecurity attacks. Among owners who conduct business online, Black-owned businesses were more likely to report using an e-commerce website as their primary platform for online transactions compared to Latino- and white-owned businesses (47%, 29%, and 24%, respectively)
  • Ethnic-owned businesses were more likely than white-owned businesses to acknowledge the impacts of climate change. Over half of Black-owned and 43% of Latino-owned businesses were likely to report that they expect climate change to have an observable impact on their firm’s finances, as well as on their workers’ safety and health. While only 33% of white-owned businesses were likely to report.
  • Ethnic-owned businesses are actively engaged in environmental sustainability planning. Black- and Latino-owned businesses were more than twice as likely to report a greater intent to develop a sustainability plan in the future compared to white-owned businesses.

Economic burdens that small businesses face have tangible consequences that affect the viability of minority-owned businesses. Richard Lopez, the business owner of Performer’s Academy, shared his experience of facing financial challenges, stating, “We lost quite a bit of revenue during that COVID year (2020), so for me to maintain payroll, I needed to take out a loan because we didn’t know how long it would last or what was going on.” Lopez’s experience is just one example of the multiple firsthand accounts captured in the study.

“As ethnic enterprises continue to grow in number, it is imperative that they be incorporated equitably in economic development processes as well as environmental sustainability planning. They play a vital role in their communities through job creation, generation of revenue, and promotion of social and cultural diversity,” said Rosario Majano, Research Analyst for the project. “The racial and ethnic disparities that this research highlights are important for Texas policymakers to consider as the state continues to recover from COVID-19 and faces increasing climate disasters that most impact communities of color,” said Silvia R. Gonzalez, Director of Research. 

This report was made possible by the generous support of the Wells Fargo Small Business Philanthropy, and the James Irvine Foundation. Core operating support for the UCLA Latino Policy and Politics Institute is provided by the California Latino Legislative Caucus.

Read the full report here.

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About UCLA Latino Policy and Politics Institute 

The UCLA Latino Policy and Politics Institute addresses the most critical domestic policy challenges facing Latinos and other communities of color through research, advocacy, mobilization, and leadership development to expand genuine opportunity for all Americans.