A New Study Breaks Down Just How Badly COVID-19 Hit Minority-Owned Businesses

Sam Blake

Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake

A New Study Breaks Down Just How Badly COVID-19 Hit Minority-Owned Businesses
Photo by chris panas on Unsplash

A new study quantifying the impact of COVID-19 on American small businesses confirms what many have suspected. Black small business owners have been ravaged by the pandemic. They were nearly twice as likely to have shut down in the last several months compared to the national average. Latinx, immigrant and female owners have also fared poorly.


The research, published this week in a working paper by the National Bureau of Economic Research, examines data from the U.S. Census Bureau and U.S. Bureau of Labor Statistics to compare small business ownership between February and April of this year, with the onset of the pandemic falling squarely in the middle of that timeframe. In doing so, Robert Fairlie, economics professor at U.C. Santa Cruz and the paper's author, reveals how the virus' effects have damaged small businesses in different communities.

Data from the National Bureau of Economic Research

In the time period studied, the number of people who said the majority of their working week was devoted to their own business fell by 22%. Among black business owners, however, the decline was 41%. That number was 36% among immigrants; 32% among Latinx; and 26% among women.

The analysis does not break the data down by geography, but local experts see a direct connection to what's happened in the L.A. region.

Downtown L.A.-based Camino Financial, a financial services provider, recently published its own study on the current health of Latinx-owned businesses. It examined loan repayment data through May of this year, and found that Latinx businesses in California have had a 40% higher incidence of nonpayment compared to peer companies in Texas and Florida – two of the three other states besides California with the highest proportion of Latinx-owned businesses. The only other state seeing similar nonpayment rates is New York.

"There is a very strong correlation between the impact of COVID on businesses and the overall impact on the area itself," Camino Chief Executive Officer Sean Salas says. What's happened throughout the country is likely to be happening in L.A., he says. Perhaps more intensely, given that 40% of California's population is Latinx, and over 30% of the state's Latinx businesses are in Southern California.

L.A.'s black small business community was hit extremely hard, says Dr. Rhonda Thornton-Crawford, director of the USC Small Business Diversity Office. "Black business has been disproportionately distressed for far longer than the COVID-19 pandemic...We are again face-to-face with the reality of lack, loss, and limited opportunities."

Explaining the Inequity

"I've had perfect credit, I have a six-figure income, I have a degree from a great school. But institutions of all types would still see my name and discriminate," says Lilly Rocha, formally Liliana Patricia Rocha Castellar, Chief Executive Officer of the Los Angeles Latino Chamber of Commerce.

She's seen the pandemic hit her community hard.

"A lot of our smaller businesses...they're gone. They're done."

Latinx business owners have struggled to obtain emergency relief funds and leniency from landlords, among other hardships, Rocha says.

She and Salas both note that the initial implementation of the government-relief Paycheck Protection Program did a poor job of helping the businesses most in need. Some of the damage, however, has been mitigated since the program was expanded, they say.

But in explaining why minority-owned businesses have had less access to relief, Salas points to several factors that make these businesses vulnerable even in normal times.

First, Salas says that such businesses "over-index in operating informally structured companies as it relates to legal formation, cash flow management and other administrative-related tasks." This makes it harder for them to get financing at a level that aligns with their actual business needs, rather than based on what official records show. Undocumented-owned businesses are also more likely to be informal, cash-based companies due to owners' limited formal education and fear of deportation. (For what it's worth, Salas highlights his firm's estimate that, nationwide, approximately 800,000 undocumented-owned businesses generate around $100 billion in sales, "and get zero benefits in exchange.")

Data from the National Bureau of Economic Research

Minority and immigrant-owned businesses also tend to make less money and have been operating for less time on average, both of which, Salas says, exacerbate their vulnerability.

Jamarah Hayner, vice chair of the Greater L.A. African American Chamber of Commerce, adds that in the black community, "Historic problems like access to capital have been exacerbated... Most of our businesses are smaller and often family-owned, and we don't always have access to in-house or retained accountants and financial staffs, which make loan applications difficult to tackle. Further, we participate heavily in the restaurant, fitness and beauty industries, which were decimated during the shutdown. Lastly, black-owned businesses have found great success in the past decades in the manufacturing supply chain, so we've struggled as factories have shuttered."

What Comes Next?

"The next important question is whether the shutdowns of small businesses are temporary or longer term," Fairlie writes.

Salas sees the situation unfolding in three stages – relief, recovery, and reinvention – and notes that we're just entering the second stage.

"I think there's a silver lining in the reinvention to come," Salas says, pointing to four potential changes that could lay the groundwork for a more equitable future.

One is an accelerated adoption of financial technologies among Community Development Financial Institutions (CDFIs), which are meant to provide financial resources to distressed communities. In tandem, Salas says, the Community Reinvestment Act, a federal law meant to encourage lending to low-income neighborhoods, should be modernized. Its allocation of funding, for example, shouldn't be tied to banks' physical branch locations, which are increasingly closing down as the financial system digitizes.

Salas also points to the need for a realignment of incentives to drive investment from both banks and private investors.

"If we leave these businesses behind," he concludes, "over time it will come back and hurt us."

"Business leaders, businesses and communities must sit down and talk about a cohesive, concrete collective mapping of what is needed," Thornton adds. "The time is now."

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Standing Together Through the Flames

🔦 Spotlight

To our Los Angeles family,

This week’s wildfires have brought immense pain and hardship to our beloved city. Many of our friends, neighbors, and colleagues have faced evacuations, power outages, and the devastating loss of homes and livelihoods. Our hearts go out to everyone affected by this tragedy.

At dot.LA, we want to express our deepest sympathy to those suffering in this moment. We see your resilience and stand with you during this challenging time. This community has always been defined by its strength and compassion, and now is the time to come together in support.

If You or Someone You Know Has Been Impacted, Resources Are Available:

Evacuation Shelters:

  • Calvary Community Church: 5495 Via Rocas, Westlake Village, CA 91362
  • Ritchie Valens Recreation Center: 10736 Laurel Canyon Blvd., Pacoima, CA 91331
  • Pan Pacific Recreational Center: 7600 Beverly Blvd., Los Angeles, CA 90036
  • Westwood Recreation Center: 1350 Sepulveda Blvd., Los Angeles, CA 90025
  • Pasadena Civic Auditorium: 300 East Green Street, Pasadena, CA 91101
  • Pomona Fairplex: 1101 W McKinley Ave, Pomona, CA 91768
  • Stoner Recreation Center: 1835 Stoner Ave, Los Angeles, CA 90025

Animal Shelters:

Small Animals:

  • Agoura Animal Care Center: 29525 Agoura Rd, Agoura Hills, CA 91301
  • Baldwin Park Animal Care Center: 4275 Elton St, Baldwin Park, CA 91706
  • Carson Animal Care Center: 216 W Victoria St, Gardena, CA 90248
  • Downey Animal Care Center: 11258 Garfield Ave, Downey, CA 90242
  • Lancaster Animal Care Center: 5210 W Ave I, Lancaster, CA 93536
  • Palmdale Animal Care Center: 38550 Sierra Hwy, Palmdale, CA 93550

Large Animals:

  • Pomona Fairplex: 1101 W McKinley Ave, Pomona
  • Industry Hills Expo: 16200 Temple Ave, City of Industry, CA 91744
  • Antelope Valley Fair: 2551 W Avenue H, Lancaster, CA 93536
  • Los Angeles Equestrian Center: 480 W Riverside Dr, Burbank, CA 91506
  • Pierce College Equestrian Center: 7100 El Rancho Dr, Woodland Hills, CA 91371

Disaster Relief Information:

  • LA County Assessor: Information for property owners and FAQs about disaster relief.

Mental Health Support:

  • Los Angeles County Department of Mental Health: Crisis counseling and support for those affected. Access services through their website or call their hotline at (800) 854-7771.

Temporary Housing Support:

  • Airbnb: In partnership with 211 LA, offering free temporary housing for displaced residents. Spaces are limited; complete the form to be notified of availability.

Transportation Support:

  • Uber: Use promo code WILDFIRE25 for 2 free rides up to $40 each to/from active shelters.
  • Lyft: Code CAFIRERELIEF25 offers 2 rides up to $25 each for up to 500 riders, valid until 1/15.
  • Metro: Fare collection is suspended systemwide.

Staying Informed:

  • Watch Duty App: Provides real-time wildfire tracking, evacuation warnings, and updates.
  • Los Angeles Fire Department Alerts: Visit their website for the latest information on fire status and safety guidelines.

Safety Precautions:

  • Ready, Set, Go!: Personal Wildfire Action Plan by the Los Angeles County Fire Department.

To those in our community who are volunteering, donating, or offering aid in any form—thank you. Your efforts embody the spirit of LA: strong, compassionate, and unstoppable.

At dot.LA, we’re committed to amplifying stories of resilience and support. If you’ve seen inspiring acts of kindness or have resources to share, please let us know. Together, we can shine a light on the incredible ways this community is stepping up during these trying times.

In the days ahead, let’s hold tight to the bonds that unite us and remember that we are stronger together. The fires may scar the land, but they cannot dim the collective spirit of Los Angeles.

We’re here for you, and we’re with you.

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    A Strong Finish to 2024 for LA Tech: Crosscut Ventures Leads the Way

    🔦 Spotlight

    Happy Friday LA!

    As we close the book on 2024, Los Angeles has had a remarkable year in tech and venture capital. From groundbreaking funding rounds to industry-defining innovations, the city’s tech ecosystem has showcased its ability to adapt and thrive. Among the year’s final highlights was the announcement that Crosscut Ventures, one of LA’s premier early-stage venture capital firms, has added Jon Ylvisaker as its newest Partner.

    Crosscut Ventures’ Bold New Direction

    Announced in late December, Jon Ylvisaker’s appointment reflects Crosscut Ventures’ commitment to advancing its focus on the energy transition. Ylvisaker brings decades of experience in driving investments in energy technologies and digital infrastructure. As the founding partner and managing director of Yield Capital Partners, he led investments in startups and established companies shaping the future of sustainability. At Wolfacre Global Management, a Tiger Management hedge fund, he further honed his expertise in supporting impactful climate-focused solutions.

    Brian Garrett, Managing Director and Co-Founder of Crosscut Ventures, said, “Jon's extensive experience in climate and digital infrastructure investments, coupled with his impressive track record of bringing groundbreaking technologies to market, makes him the ideal partner to help lead our focus.”

    Since its founding in 2008, Crosscut has played a key role in shaping LA’s tech landscape. Ylvisaker’s addition reinforces the firm’s commitment to addressing global challenges like energy transition and sustainability, further solidifying its leadership in venture capital innovation.

    What’s Next for LA Tech in 2025

    The momentum from 2024 has set the stage for an even bigger year ahead. Entrepreneurs, investors, and innovators in LA are poised to take on new challenges and create meaningful change across industries.

    As we step into 2025, we want to thank everyone who helped make 2024 such a standout year. Here’s to another year of progress, innovation, and success. From all of us at dot.LA, Happy New Year!

    🤝 Venture Deals

    LA Companies

    • First Resonance, a company specializing in digital manufacturing software through its ION Factory OS, has raised a $20M funding round led by Third Prime with participation from Blue Bear Capital and others. This brings its total funding to $36M and will be used to accelerate product development, grow its customer base, and enhance support for advanced manufacturing sectors like aerospace, robotics, and clean energy. - learn more
    LA Venture Funds
    • Finality Capital Partners led a $17M Seed funding round for ChainOpera AI, a California-based company developing blockchain networks for AI-powered agents and applications, to accelerate product development, expand its team and enhance its blockchain and AI integration capabilities. - learn more

    LA Exits

    • Thirteen Lune, an inclusive beauty e-commerce platform, has been acquired by SNR Capital, marking a significant milestone in the platform's mission to amplify underrepresented beauty brands while fueling its next stage of growth. - learn more
    • Ergobaby, a leading brand in juvenile products known for its high-quality baby carriers, has been acquired by Highlander Partners. The acquisition aims to bolster Ergobaby’s growth, expand its product offerings, and strengthen its position in the parenting solutions market. - learn more

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    Salt AI’s $3M Bet, Snapchat’s Creator Cash, Rivian’s EV Tech, and ŌURA’s $200M Win

    🔦 Spotlight

    Happy Friday, LA - let’s dive right in to this week’s highlights:

    Salt AI, a forward-thinking AI startup based in Los Angeles, has secured a $3 million seed funding round led by Morpheus Ventures with participation from Struck Capital, among others, to tackle the complexity of managing workflows.Salt AI's blog details how its platform centralizes tools like CRM systems, project management software, and data trackers into one interface, eliminating inefficiencies and freeing up teams to focus on meaningful work. With new funding in hand, Salt plans to scale its platform and expand its reach, a move that underscores how AI can solve everyday business challenges.

    Image Source: Salt AI - Aber Whitcomb

    While Salt AI focuses on the workplace, Snapchat is doubling down on creators, with its latest updates introducing revenue-sharing opportunities and direct monetization features. The company’snewsroom update outlines how enhanced analytics will help creators better understand their audiences and sustain their work. The platform's latest updates introduce revenue-sharing opportunities and direct monetization features, along with analytics that give creators deeper insights into their audience. By making it easier for creators to grow and sustain their work, Snapchat positions itself as a key player in the creator economy, offering features that rival platforms like YouTube and TikTok.

    Image Source: Snap

    On the roads, Rivian is redefining what it means to drive an electric vehicle. The company’s latest software update includes advanced route planning, energy management tools, and customization options that make every trip more intuitive and efficient. Additionally, Rivian has introduced new entertainment features, including Google Cast, YouTube, and SiriusXM, as featured in Rivian’ssoftware spotlight, enhancing the in-cabin experience for drivers and passengers alike. This isn’t just about convenience; Rivian is showing how thoughtful software design can elevate the entire EV experience, blending practicality with sophistication.

    Image Source: Rivian

    ŌURA is making headlines with a fresh $200 million Series D funding round, with participation from Fidelity Management & Research Company and Dexcom, which now values the company at $2.55 billion. This investment, as reported byBusiness Wire, highlights the growing demand for wearable health technology and positions ŌURA as a leader in the space. With its sleek design and emphasis on actionable health insights, the funding will enable ŌURA to expand its reach and further integrate wearables into daily health management, strengthening its position in the competitive health tech market. With this funding, ŌURA aims to reach more users and expand its capabilities, further embedding wearables into daily health management.

    Image Source: ŌURA

    Stay tuned as Salt AI, Snapchat, Rivian, and ŌURA continue to evolve, offering us new ways to work, connect, and live better.

    🤝 Venture Deals

      LA Venture Funds
        • Undeterred Capital participated in a $7M Seed funding round for Portal, a Watertown, Mass.-based biotech company specializing in advanced intracellular delivery technology to drive innovations in biological research and cellular therapeutics. - learn more
        • Vamos Ventures participated in a $7.9M Series A funding round for Culina Health, a Hoboken, NJ-based company that provides personalized, science-based virtual nutrition care by connecting patients with registered dietitians, with plans to use the funds to expand its offerings for dietitians and patients, implement AI-driven tools to enhance care efficiency, and strengthen its leadership team through key hires. - learn more
        • Humans Ventures participated in a $3.8M Seed funding round for Hamming.ai, a San Francisco-based company specializing in automated tools for testing and optimizing voice agents, with plans to expand its platform, enhance reliability and perform, and accelerate product development. - learn more
        • Fifth Wall led, with participation from Starshot Capital and others, in a $9.5M Series A funding round for Mojave, a Sunnyvale, CA-based company developing energy-efficient commercial air conditioning technology. The funds will be used to accelerate the adoption of its innovative systems and reduce energy consumption in the cooling industry. - learn more
        • ReMY Investors participated in a $17M Series B funding round for Scripta Insights, a company that leverages data analytics to help employers and healthy plans reduce prescription drug costs, with the funds aimed at expanding its platform and scaling operations. - learn more
        • Mantis VC participated in a $16.5M funding round for Nuon, a company specializing in Bring Your Own Cloud (BYOC) solutions that streamline AI, data, and infrastructure software deployment. The funds will support product development, readiness for general availability in 2025, and efforts to expand customer acquisition. - learn more
        • B Capital participated in a $102M Series C funding round for Precision, a company developing minimally invasive brain-computer interfaces to treat neurological disorders, with plans to use the funds to expand its team, advance clinical research, and refine its AI-powered brain implant for helping users with severe paralysis operate digital devices using their thoughts. - learn more
        • The Games Fund led a $3M Seed funding round for Dark Passenger, a Poland-based game studio founded by veterans of The Witcher 3 and Cyberpunk 2077, to create an unannounced, innovative, first-person multiplayer PvPvE stealth-action game set in a distinctive universe inspired by feudal Japan and martial arts cinema. - learn more

            LA Exits

            • Calliope Networks, a generative AI company providing licensed media content like movies, TV shows, and news, has been acquired by Protege to strengthen its platform’s capabilities in advancing AI development. - learn more

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