Stabilizing Latino entrepreneurs amid federal policy volatility

Latino entrepreneurs in the United States are starting new businesses and expanding existing businesses in record numbers. Between 2017 and 2022, Latino-owned employer businesses (those that employ at least one person) grew in nearly 90% of U.S. metro areas (Map 1). In 2022 alone, more than 465,000 Latino-owned employer firms employed over 3.5 million people and generated over $653 billion in total revenue. Their contributions to jobs, wages, and revenue are vital to local and national prosperity. 

Yet this growth is unfolding amid a policy-driven economic crisis. Sudden changes in trade, immigration, and federal programs are creating whiplash for the entrepreneurs and communities that form the backbone of America’s local economies. When tariffs change month to month, when immigration raids empty entire business corridors overnight, and when long-standing federal contracting and credit programs are dismantled, small firms—especially Latino-owned ones—are left to absorb shocks with little warning or support. These policy swings can upend payrolls, leases, and hiring plans as abruptly as a natural disaster.

That is why we should treat this moment as both an emergency and an inflection point. Like disaster-preparedness systems that help cities recover after hurricanes or wildfires, the U.S. needs stronger economic resilience infrastructure to help local businesses weather policy-made crises. Latino entrepreneurs have shown extraordinary persistence and creativity through past disruptions, but resilience should not rely on grit alone.

This report traces how policy volatility erodes stability, how geography shapes exposure to these shocks, and what states, cities, philanthropy, and the private sector can do to respond. Some actions can offer immediate relief, such as helping businesses survive the next disruption, while others can build the foundation for long-term resilience and growth.

When Latino-owned businesses are destabilized, the fallout reaches far beyond their communities. These are American firms that anchor local supply chains, drive innovation, and generate jobs nationwide. Strengthening their stability strengthens the entire U.S. economy.

Policy volatility comes with hidden costs for Latino entrepreneurs

Latino entrepreneurs are navigating what can be described as a new era of policy volatility—a pattern of rapid, unpredictable changes in government rules, enforcement priorities, and program funding. These swings take many forms: abrupt tariff shifts, sudden immigration raids, and federal program disruptions that cascade through small business corridors overnight (Table 1). Most Latino-owned firms are small by federal standards, which makes them especially vulnerable to these shocks.

Tariffs, which are essentially taxes imposed on goods as they cross international borders, have been announced or revised more than 50 times between January 2025 and August 2025, altering prices on imports ranging from food and steel to electronics (Figure 2). For small firms, these shifts translate into two immediate channels of harm: 1) higher input costs, as equipment and materials grow more expensive and suppliers renegotiate contracts; and 2) softer demand, as rising consumer prices reduce purchasing power and delay investment.

In an August survey by Small Business Majority, 81% of small business owners expressed concern about tariffs. Nearly 60% said they were already facing higher costs, and many reported taking or considering actions such as raising prices (31%) or delaying expansion (27%).

One analysis found that a typical small business importing products faced more than $90,000 in tariff costs between April and July 2025, alongside average revenue losses of roughly 13%. Manufacturing and construction—industries that employ millions of Latino workers and represent thousands of Latino business owners—are among the most tariff-sensitive sectors, facing cost increases of 2% to 4.5% on imported inputs.

Immigration enforcement surges are creating labor and demand shocks that spread through corridors

Immigration enforcement has also intensified in both scale and visibility, emptying business corridors and destabilizing sectors with large shares of Latino workers and owners, such as construction, food processing, and service industries. These actions do not just target individual workplaces—they also disrupt entire local economies. Local chambers of commerce warn that such patterns create economic aftershocks: workers stay home, customers avoid public spaces, and employers cut shifts or delay hiring. Over time, fear functions like an economic shock: It suppresses spending, interrupts labor supply, and weakens local tax bases.

Because Latino-owned businesses are concentrated in sectors sensitive to both tariffs and immigration enforcement (construction, food services, retail, and trade), they are especially exposed to this volatility (Figure 2).

The restaurant and food service industry clearly captures this dynamic. Latinos make up 27% of the sector’s workforce and nearly 40% of all cooks. These businesses rely on predictable costs, reliable supply chains, and steady consumer demand. When that stability breaks, whether from a tariff or a raid, the impact is swift. A single change in federal policy can cascade down to the neighborhood level through higher prices, delayed shipments, shorter hours, and lost jobs.

A recent survey underscores the toll. Latino-owned businesses saw the steepest revenue declines of any demographic group, with 62% noting revenue drops in recent months and 35% reporting reductions in employee headcount. The same survey noted a possible correlation between these declines and the intensification of immigration enforcement, which directly affects both workers and customers.

Federal retrenchment has led to liquidity shocks from dismantled scaffolding

At the same time as Latino entrepreneurs face rising costs and labor uncertainty, they are also contending with reduced access to the very programs designed to stabilize small and Latino-owned firms. Recent administrative actions and proposed cuts threaten the infrastructure that underpins small business lending, contracting, and technical assistance.

This March, the Small Business Administration (SBA) announced plans to eliminate 43% of its workforce and shutter regional offices in major cities. It has also cancelled federal contracts for minority- and women-owned firms at a disproportionate rate. Meanwhile, programs that help small firms navigate federal contracting (such as the SBA’s 8(a) and Empower to Grow initiatives) and financing programs (such as the State Small Business Credit Initiative) now face growing uncertainty amid broader budget and staffing cuts.

At the U.S. Treasury Department, these risks have already materialized. During the government shutdown, the administration laid off the entire staff of the Community Development Financial Institutions (CDFI) Fund, effectively gutting a bipartisan program long recognized for channeling affordable capital to underserved entrepreneurs and communities. The CDFI Fund—which historically supports community lenders through a mix of tax credits, grants, and bonds totaling billions of dollars each year—has helped capitalize 4.3 million small businesses and manage more than $300 billion in loans. Its dismantling will severely constrain financing for many Latino-owned firms, which often turn to CDFIs, including for microloans, after being denied loans elsewhere. While a federal judge has temporarily blocked the administration from firing thousands of federal workers, the move revealed just how vulnerable key community finance programs are to administrative disruptions.

Together, these rollbacks erode a critical source of stability just as small businesses face rising costs from tariffs and uncertainty tied to immigration enforcement. They turn what might have been temporary policy shocks into another layer of structural barriers by reducing access to credit, weakening local lending ecosystems, slowing recovery from future crises, and ultimately constraining the ability of Latino entrepreneurs to grow the businesses that sustain local and national economies.

Policy volatility is national in origin but local in impact

The consequences of policy volatility are likely to depend on where entrepreneurs are rooted, the depth of local trade ties, the intensity of immigration enforcement, and the strength of state and civic scaffolding. States deeply integrated into global supply chains or actively cooperating with federal immigration authorities may face sharper disruptions, while those with stronger coordination or protections may be better positioned to buffer against shocks. In short, volatility may not strike evenly—it likely maps onto the geography of exposure and capacity across the country, producing clusters of heightened risk for Latino-owned firms (Table 2).

Trade and tariff exposure creates shocks that reveal local dependence on global supply chains

While all states face some degree of disruption from increased tariffs, the severity varies depending on factors such as industrial composition, exposure to global supply chains, and reliance on imported goods. A recent analysis found that states with deep ties to global trade (such as Georgia, New Jersey, South Carolina, and Texas) and those with manufacturing-intensive economies (such as Indiana, Kentucky, Michigan, and Tennessee) are among the most vulnerable to fiscal and economic disruption when tariffs rise.

Across these eight trade-exposed states, roughly 80,000 Latino-owned employer firms operate in the metro areas driving Latino business growth, showing how national policy shocks can reverberate through the very communities powering regional economies.

Texas, as the nation’s leading trading state, most clearly demonstrates this exposure. Accounting for roughly 16% of total U.S. trade, Texas faces a high sensitivity to tariff swings. In April, the Federal Reserve Bank of Dallas reported that business uncertainty surged to near pandemic-era levels by spring 2025, with half of surveyed firms citing tariffs as a top concern and reporting higher costs, weaker demand, and delayed investment. By mid-summer, those concerns had become reality: Texas job growth turned negative in June, construction activity fell across every category, and executives described the business climate as “impossible to plan” for. As inventories depleted and new tariff costs flowed through, contract values in construction dropped about 25% from January 2025 levels. Hospitality and service sectors, which are already strained by immigration-related labor shortages, reported parallel showdowns.

This disruption is not confined to corporate balance sheets—it reaches deep into the state’s entrepreneurial backbone. Texas is home to some of the country’s most vibrant Latino business hubs. Of the 10 U.S. metro areas with the highest share of Latino-owned employer businesses, six are in Texas: Rio Grande City-Roma, Laredo, Eagle Pass, McAllen-Edinburg-Mission, El Paso, and Brownsville-Harlingen. Across the state’s metro areas where Latino-owned employer businesses grew between 2017 and 2022—including Houston, Dallas, San Antonio, and El Paso—there were roughly 63,000 Latino-owned employer businesses. Given Texas’ deep exposure to global trade and its concentration of Latino-owned firms, it will be important to monitor how sustained tariff volatility shapes both local supply chains and labor markets—pressures that are now being compounded by intensified immigration enforcement.

Immigration enforcement and the geography of fear and cooperation

The effects of immigration enforcement depend not only on federal priorities, but also on how closely local governments cooperate with federal agencies. As of October 2025, U.S. Immigration and Customs Enforcement (ICE) had 1,033 active 287(g) agreements across 40 states, with another 59 pending. These agreements deputize local law enforcement to perform certain federal immigration duties and expand enforcement capacity well beyond ICE’s own staff.

In states such as Florida, Texas, and Georgia, where dozens of local agencies participate, this cooperation amplifies enforcement reach and deepens the resulting fear-based economic effects (Map 2). By contrast, states where state law and policy prohibit 287(g) agreements—such as California, Illinois, and Oregon—still face federal operations, but often take active steps to stabilize local economies and maintain community trust.

Florida, which is home to some of the nation’s largest concentrations of Latino-owned businesses, illustrates how intensified immigration enforcement can reverberate through local economies, especially in states that combine deep trade integration with widespread 287(g) cooperation. Nationwide, Florida accounts for roughly 31% of all 287(g) agreements (the highest share of any state), and Miami-Dade County now has more residents with pending deportation proceedings than any jurisdiction in the U.S., with over 146,000 cases as of August 2025. In May 2025, the state conducted Operation Tidal Wave, a six-day joint mission involving state and federal law enforcement agents that resulted in more than 1,100 arrests—the largest single-state, one-week immigration operation in ICE’s history according to the agency. The sweep came just months after the governor required all county jails to cooperate with ICE and announced that sheriffs in all 67 counties, along with many city police departments, had signed 287(g) agreements, effectively extending federal immigration enforcement authority statewide.

The economic stakes are high. In Florida metro areas where Latino-owned employer businesses grew between 2017 and 2022—including Miami, Orlando, Tampa, and Jacksonville—there are roughly 91,000 Latino-owned firms. On the ground, the fallout has been immediate. In Homestead and the Redlands, nursery owners and farmworker advocates described a climate of fear that kept employees home, delayed deliveries, and left small farms partially idle. Some nurseries suspended operations altogether as labor shortages deepened. In Central Florida, restaurant owners reported similar losses: In Orlando, the Mexican Consulate and local advocates estimated that revenues at some eateries had fallen by roughly 40%, with staff quitting out of fear of detention.

Even states without formal cooperation agreements are feeling the aftershocks. In Los Angeles County, the Coalition for Humane Immigrant Rights documented more than 470 enforcement actions between June and July 2025, with 76% occurring in Latino-majority ZIP codes. Civil rights advocates describe these raids as de facto racial profiling, intensified by the Supreme Court’s Noem v. Vasquez Perdomo decision, which effectively gave federal agents discretion to detain individuals based on appearance or language. Los Angeles County is a major hub of Latino entrepreneurship, home to roughly 39,000 Latino-owned employer firms in 2022. That scale means immigration enforcement does not just disrupt families—it also spills over to local economies, affecting business owners, workers, and supply chains across entire industries.

In October 2025, Los Angeles County declared a local state of emergency in response to the financial fallout from these raids, granting officials temporary authority to speed contracting and hiring, direct rent-relief funds, expand legal aid, and seek state and mutual aid assistance. County leaders described the measure as both symbolic and practical—a recognition that widespread immigration enforcement has destabilized households and small businesses enough to require an emergency-level response. The declaration underscores how local governments are increasingly treating federal immigration actions as economic crises that demand rapid stabilization measures.

In Chicago, a similar pattern of disruption is unfolding, though without the same formal declaration. Heightened immigration enforcement has already dealt a heavy blow to Latino business corridors. The metro area is home to roughly 17,000 Latino-owned employer firms as of 2022, many clustered in neighborhood commercial strips that serve as both cultural anchors and local economic engines. In Little Village, a historically Mexican American neighborhood, business leaders report revenues falling 20% to 50% following heightened enforcement. Others report foot traffic down by half and multiple shop closures in Little Village and across Latino-majority corridors in Pulaski Road, Aurora, and Elgin. Even street vendors—long the cultural and economic lifeblood of Latino neighborhoods such as Little Village, Pilsen, and Back of the Yards—are staying home. In response, the Street Vendors Association of Chicago launched a $300,000 emergency fund to assist vendors who have lost income or stayed home out of safety concerns.

Similar mutual aid efforts have surfaced in Los Angeles County and elsewhere, underscoring how immigration enforcement waves are suppressing micro-enterprise activity and eroding trust in local markets.

Federal retrenchment is reshaping the local scaffolding that sustains Latino entrepreneurs

Federal volatility also plays out unevenly across places through the institutions meant to help small businesses weather economic shocks. One key pillar of that support, the SBA, is now under strain. Cuts to staff, programs, and regional capacity are not merely bureaucratic—they weaken the local ecosystems that connect Latino entrepreneurs to credit, contracts, and technical assistance.

In March 2025, the SBA administrator announced reforms that included a citizenship verification requirement for loan applicants and the relocation of six SBA regional offices in sanctuary cities. The targeted offices—Atlanta, Boston, Chicago, Denver, New York, and Seattle—have long anchored federal small business programs in some of the country’s most diverse and entrepreneurially active metro areas. Together, those five metro areas alone account for more than 70,000 Latino-owned employer firms, underscoring how the SBA’s withdrawal effectively reduces federal visibility and support in communities driving small business growth. The location of these offices matters. Regional hubs are often the front doors for small enterprises seeking federal loans or counseling; when they relocate, entrepreneurs lose the local relationships and institutional knowledge that help translate federal programs into real financing and day-to-day guidance.

Taken together, these patterns reveal that policy volatility is not only sectoral but spatial, as Table 2 above shows. Tariffs, immigration enforcement, and program retrenchment may originate in Washington, D.C., but their consequences unfold locally, reshaping which places can adapt and which fall behind. For Latino entrepreneurs, the geography of volatility increasingly determines not just where they do business, but whether they can survive and grow at all.

What states and cities can do now to stabilize local economies for Latino entrepreneurs

The cumulative impact of recent federal policy changes amounts to nothing short of an economic crisis for Latino entrepreneurs—one that demands the same level of planning and coordination as any other emergency. When crises hit, the difference between a temporary setback and a full-scale collapse often comes down to liquidity: bridge loans, emergency grants, and flexible funds that reach entrepreneurs before losses cascade. Yet most places still treat these tools as one-time fixes, not standing infrastructure.

The good news is, across the country, local leaders are already showing what both short- and long-term responses can look like—i.e., how to mobilize quickly in a crisis and how to build resilience for the future.

California’s recent actions offer a glimpse of what effective crisis response could look like. When federal immigration raids emptied business corridors, Los Angeles County activated a small business relief fund providing up to $5,000 to affected firms. The California Community Foundation also launched a fund for frontline groups aiding vendors, workers, and small businesses disrupted by enforcement. These local relief efforts build on lessons from the pandemic, which showed that rapid response is possible when cities and philanthropy already have systems in place to move money quickly.

But even then, many communities across the country learned during the pandemic that the real challenge was not raising funds—it was coordination. Cities and foundations often lacked the tools or partners to deploy capital fast enough. The Los Angeles model, and others like it, show how states, cities, and philanthropy can turn those lessons—including those from other emergency situations, such as the January 2025 wildfires—into lasting infrastructure. These financial “shock absorbers” can deliver aid through trusted intermediaries—not months later, but in real time.

The Los Angeles County declaration takes that logic one step further by institutionalizing emergency response as economic policy. While earlier relief funds demonstrated that local actors can mobilize quickly, the declaration formalized that approach by invoking emergency powers to release rent relief, legal aid, and direct assistance for families and businesses affected by immigration raids. By treating the fallout of federal enforcement as an economic emergency, county leaders reframed rapid response as a matter of public governance rather than ad hoc charity. States and major metro areas could adopt a similar approach by establishing economic emergency protocols or standing authorities that activate flexible aid, expedited contracting, and coordinated recovery efforts when policy shocks destabilize local markets. Such mechanisms would ensure that communities are not forced to rebuild ad hoc every time federal volatility strikes.

Chicago offers another model—one aimed at long-term resilience. Through funder collaboratives such as We Rise Together and the Fund for Equitable Business Growth, philanthropy, financial institutions, and business-support organizations are working together to expand capital and capacity for small firms across the region. While these initiatives were not created for emergency response, they demonstrate how pooled capital and coordinated infrastructure can lay the groundwork for faster recovery when crises hit. As volatility deepens, these same networks could evolve into emergency infrastructure, able to pivot from steady investment to rapid deployment when federal shocks disrupt local economies.

These models offer a roadmap for readiness. Cities, states, and partners are at different stages of readiness. Some are focused on building rapid-response tools, others on investing in long-term resilience. The following ideas offer practical options for both.

To close the gap between reactive relief and readiness, states, metro areas, philanthropy, and the private sector can start by laying the groundwork for systems that strengthen short-term response and long-term stability. Many of these steps begin with design and coordination, even when full implementation requires longer-term planning.

• Lay the groundwork for corridor stabilization reserves, or flexible pools that cities and community foundations can deploy quickly to small businesses in commercial corridors.
• Design revolving resilience funds, or pooled capital vehicles that automatically replenish and activate during federal or global disruptions, and blend state treasuries, philanthropic capital, and private guarantees to sustain CDFIs and local lenders.
• Authorize emergency lending authority within state and regional development agencies, allowing them to issue microgrants or bridge loans during policy and trade disruptions.
• Invest early in digital support and modernization to help small firms adopt e-commerce, digital payment, and online visibility tools to strengthen corridor resilience—building on lessons from the pandemic, when Latino entrepreneurs used technology to adapt and stay operational.

Moving capital fast: Coordination as immediate response

When volatility hits, speed and coordination matter as much as capital. Latino entrepreneurs, especially those operating informally or across language barriers, often miss out on federal relief programs when delivery depends on standard bureaucratic channels rather than trusted intermediaries such as chambers of commerce, community lenders, and local business navigators. The fastest way to close that gap is through coordination: linking money, information, and trust.

Cities, counties, and states can stretch every relief dollar further by building systems that connect capital to communities quickly and transparently. They can:

• Establish rapid-response stabilization systems that combine microgrants, business navigators, and real time data to identify affected corridors and deliver aid within days.
• Deploy community navigators and legal volunteers in Latino business districts to connect firms to relief funds, legal help, and credit access in real time, or conduct “Know Your Rights” workshops that help employers and workers continue operating amid enforcement pressure.
• Build bilingual information hubs and alert systems to inform business owners about policy shifts, available resources, and legal protections.
• Run “shop local” campaigns that mobilize residents to support affected corridors and keep cash circulating locally.
• Reform procurement processes to expand contracting opportunities for Latino- and minority-owned firms, ensuring public dollars stay rooted in local economies.
• Encourage the private sector and nonprofits to expand contracting opportunities for Latino entrepreneurs and local suppliers.
• Urge local funders, including those supporting economic development priorities, to make aligned, transparent pledges to direct capital toward Latino entrepreneurs and suppliers.
• Collect and coordinate local data and forecasting by partnering with universities, regional Federal Reserve branches, chambers, and community groups to track corridor-level impacts of policy volatility and guide targeted investments.

Cross-sector collaboration as response infrastructure

Effective response depends on collaboration across government, philanthropy, and business. The Street Vendors Association of Chicago’s emergency fund—created after federal immigration raids—shows how quickly communities can mobilize, but also how fragile those safety nets remain without public partnership. Lasting readiness requires formal collaboration and shared capacity across sectors. When public, private, and civic partners coordinate in advance, they can move money, information, and relief far faster when crises hit. To make cross-sector cooperation a standing part of local economic infrastructure, partners can:

• Create standing “resilience collaboratives.” Quarterly cross-sector tables of state, county, and city economic officials, chambers, CDFIs, foundations, and anchor employers can monitor risks, align communications, and coordinate rapid responses.
• Align civic and philanthropic partners—from chambers to foundations—to coordinate messaging, avoid duplication, and ensure assistance reaches informal or microbusinesses that are often left out of official programs.
• Launch corridor stabilization or cultural-commerce funds that pair small business lending with cultural events and public-realm improvements to sustain neighborhood vibrancy.
• Develop corporate-CDFI matchmaking platforms to link large companies’ supplier diversity goals to local Latino firms, with CDFIs financing and preparing these businesses to fulfill contracts.
• Encourage community foundations to act as fiscal anchors, blending public accountability with philanthropic speed to distribute pooled recovery funds efficiently during crises.
• Expand anchor institution local sourcing pledges by hospitals, universities, and major employers to guarantee baseline demand for local and Latino-owned businesses, keeping procurement dollars circulating in vulnerable corridors.

Cities, states, and local partners cannot do it alone. Philanthropy and the private sector both play critical roles in stabilizing communities when federal policies create economic shocks. Philanthropy can fill public gaps by co-funding recovery grants, providing flexible operating support to intermediaries, and investing in research, storytelling, and data that elevate Latino entrepreneurs’ contributions. They can also help reclaim the narrative by funding local voices and initiatives that make visible the economic fallout of federal enforcement and trade policies, helping the broader public understand how these shocks affect communities and local economies. The private sector can partner with CDFIs to guarantee credit, offer pro bono expertise, and help small suppliers digitize operations.

Members of Congress also have a role to play, even without new legislation. They can use their oversight and convening power to press federal agencies to keep small business programs intact to make them more flexible and responsive during crises. They can champion better data on Latino entrepreneurs and the local effects of immigration enforcement and trade policy, ensuring that the economic stakes are visible in federal decision-making. And through hearings, district events, and public statements, they can help reframe the national conversation from one focused on enforcement to one centered on economic resilience and shared prosperity.

These cross-sector investments are not just about recovery—they’re about building readiness. When public agencies, funders, and businesses align around shared infrastructure and information systems, relief can reach entrepreneurs in days instead of months, and local economies can weather national volatility with greater stability and confidence.

Conclusion

The forces reshaping the economy—tariffs, immigration crackdowns, and federal retrenchment—may begin in Washington, D.C., but their impact is felt block by block. They ripple through payrolls, storefronts, and supply chains, testing the resilience of Latino entrepreneurs who power so many of the nation’s local economies. These are American businesses driving innovation, jobs, and growth nationwide, and when they are destabilized, the damage reverberates through the broader U.S. economy. For these business owners, volatility is not theoretical—it is lived reality that exposes how fragile and uneven our systems of support have become.

Yet stability is within reach. It begins with design and intention: treating liquidity as essential infrastructure and trusted networks as the conduits that keep small firms alive when national systems falter. When capital moves quickly and partners act together, collapse can be prevented. State and local leaders now face a choice: Continue reacting to each shock or build the scaffolding that makes resilience routine.

The tools already exist; the task now is to connect them so that when the next disruption arrives, Latino entrepreneurs and the economies they sustain are not merely surviving volatility, but shaping what comes after it.