Yet while the Covid-19 pandemic has sparked a boom in small business for many communities, AAPI business owners and AAPI people in general have faced unique challenges, including higher rates of discrimination and, more alarming, violence in recent years. That’s in addition to a funding gap that leaves many AAPI struggling for loans and other sources of money critical to their operations. 

As we celebrate Asian American and Pacific Islander Heritage Month, we take a look at the importance of AAPI entrepreneurship in the U.S. as well as their challenges. And we offer some ideas for supporting

AAPI-owned businesses

“Everyone has a part to play in assisting AAPI small businesses, not just during AAPI Heritage Month, but throughout the year,” says Chiling Tong, president and chief executive officer of the National Asian/Pacific Islander American Chamber of Commerce and Entrepreneurship (National ACE), based in Washington, D.C. “Whether you’re a large corporation or a fellow small business owner, sharing your support of the AAPI business community by using your networks and platforms is a great way to build advocacy and awareness for this important community.”

AAPI-owned Businesses in the U.S. 

There are more than two million Asian-owned businesses, making up nearly 8 percent of businesses in the U.S., according to the most recent data from the U.S. Census Bureau. Combined, these small businesses earn revenue of $700 billion annually and employ around 3.5 million people, according to business consultancy McKinsey.

Approximately 40 percent operate in the accommodations and food industry, while 25 percent in the retail sector, and 6 percent in professional, scientific, and professional services, according to the National Coalition for Asia Pacific American Development (National CAPACD). 

At the same time, there are over 50 distinct ethnicities and languages with a total of more than 100 native dialects represented in the AAPI community. “Not all resources may be accessible to every language,” says Tong. “This makes it difficult for members of the AAPI business community to get access to the information they need to continue operations, or even open a new business with every competitive advantage.” 

The funding gap for AAPI-Owned Businesses 

Nearly two thirds of AAPI-owned businesses report not receiving federal and local aid because they simply didn’t think they would be eligible, according to a recent survey by a survey by National ACE. AAPI small business owners also report being unaware about these aid programs, or ran into snags in applying for help from governmental agencies, or had difficulty checking off the boxes to meet eligibility, according to other research.

For example, during the first year of the pandemic, 58 percent of AAPI entrepreneurs reported that they had difficulty accessing federal, state, and local relief programs targeted to support small businesses. Of the $800 billion in federal dollars provided as a lifeline to small business owners through the federal Paycheck Protection Program (PPP), a scant $7.7 million went to AAPI-owned businesses. 

Additionally, Asian-owned businesses tend to make up large portions of industries that were disproportionately hit by the pandemic, according to McKinsey, comprising 26 percent of accommodations and food service businesses, 17 percent of retail trade, and 11 percent of education-services businesses.

In fact, the number of actively run AAPI-owned businesses decreased by 26 percent from February to May 2020, according to research from the National Institutes of Health, compared to an 11 percent decrease for actively run White-owned businesses. (Black-owned and Latinx businesses also experienced 41 percent and 32 percent decreases respectively.)

One reason may be the spike in hate crimes targeting the AAPI community. Nearly 11,000 hate incidents were committed against Pacific Islanders and Asian Americans nationwide between March 19, 2020 and December 31, 2021, according to recent research from the nonprofit Stop AAPI Hate.

“There’s been an escalation of violence incited, from hate speech to physical attacks, that has rendered fear among AAPI businesses, making it even more difficult to navigate through the already trying times of the pandemic,” says Nahida Uddin, a spokesperson for the National Coalition for Asian Pacific American Community Development (National CAPACD).

And the problem may be continuing to have a negative influence on day-to-day business activities, says Tong. “Asian American and Pacific Islander business owners are under additional stress as a result of this issue, which creates tension and presents a significant barrier,” Tong adds.

Investing, donating, and shopping

Here are a few ways to support AAP-ownedI businesses. 

Spend money directly with AAPI businesses. Consider scouring your favorite arts, culture, or food websites to see if they’ve published recent roundups of AAPI establishments in your city. You can also check out AAPI small business guides curated by Dwell, New York Mag, or Cold Tea Collective, or Etsy’s Editors’ PIcks of AAPI small businesses on the shopping platform.

Visit your local Chinatown, Little Tokyo, Thai Town, or make it a destination spot during your travels. Besides legacy businesses, such as the traditional Chinese restaurant with rows of roasted Peking duck dangling in the windows, or the imported toy and trinkets kiosk, make a point to also visit brick-and-mortar establishments sprouting up by newer generations of AAPI business owners. “I would love more awareness of Asian American design as a category,” says Jeff Lien, who co-founded design store Chunky Paper in Los Angeles’ Chinatown.

Donate. Do your part in supporting AAPI businesses by donating to nonprofits that assist small business owners, such as National ACE or the National CAPACD. 

Consider giving money to crowdfunding campaigns for entrepreneurs who are starting new ventures or growing current ones. For example, platforms such as IFundWomen of Color allow AAPI-owned businesses run by women to launch fund-raising campaigns from a pool of small investors. 

Partner with fellow business owners. If you’re a business owner, look for ways to support AAPI businesses through collaborations. “By promoting fellow AAPI businesses to your own consumers, it is a great way to cross-promote shopping local and spending local for the small business community as a whole,” says Tong. 

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While it’s not entirely clear why the income gap is so huge among Asians in America, it may be related to the group’s diversity: There are 23 million Asians in the U.S. representing more than 20 countries. 

For starters, almost a third of Asian Americans in the U.S. live in multigenerational households. Since income data is typically collected according to households, income might appear higher among Asian American households in the U.S. than a single-family one, says Pamela Capalad, a certified planner and CEO and founder of Brooklyn, N.Y.-based Brunch & Budget. That income might include a grandparent who receives Social Security benefits, and a teen who has an after-school gig, points out Capalad.

What’s more, many Asians come to the U.S. so they can send money home to support their families. So while they might make more, their wealth might be less. Last, the education levels among Asians vary greatly in the U.S.

“There are a lot of Asian Americans who came here as professionals, and there are a lot of Asian Americans who came here as refugees,” Capaland says.

And with that in mind, the financial planning needs of Asian Americans may be different and more complex than for other groups. Spending behavior and cultural differences may play a role in how Asian Americans can narrow the income gap and build generational wealth. 

Here are some things to consider:

Create a savings account specifically for the family. There is often an expectation in Asian American families to help aging parents or relatives who need financial assistance. Creating a family savings fund can help protect your own financial health. “When you’re a first generation with a professional salary, and your parents are immigrants, you’re most likely in that in-between generation of needing to take care of the generation before you,” Capaland says.

She recommends creating a savings fund just for your family, and unexpected family expenses, and making it part of your budget. That way, you won’t be caught off guard, and you won’t be eating into your own attempts to save and invest.

Know where homeownership fits into your financial goals. Asian Americans typically favor the idea of buying a home and real estate, says Danqin Fang, a senior financial advisor at the Coral Gables, Florida-based wealth management firm Evensky & Katz/Foldes Financial. It might be because it’s a tangible item that represents security, and there might be pressure from parents to purchase a house. Asian Americans typically think of homeownership not as an investment that you buy and sell in a few years, says Capalad. They tend to think of buying a “forever” home, something you hold onto for 40 or 50 years, then pass along to your children. If that’s the case, think about how that plays into your financial plans, and consider other investment opportunities.

Get hands-on with your family’s estate planning. Among the Asian American community, there tends to be a cultural aversion to estate planning, says Andrew Wang, a managing partner at the Mendham, N.J-based financial planning firm Runnymede Capital Management. “Many older Asian Americans especially tend to avoid the topic of death,” Wang says. “Sometimes, it’s superstition. Other times, the younger generation has difficulty bringing up the subject while maintaining respect for the older generation.”

As your parents’ financial plans can greatly affect your own, make sure you’re familiar with your parents’ financial planning strategy. “You have to have your own estate plan in place,” says Capalad. “But let’s also make sure your parents have one.” Otherwise, after your parents’ pass, their assets could get lost in an abyss of probate court and legal fees.

Learn about investing. While it’s baked deeply in many Asian Americans to “save, save, save,” sometimes it’s not clear what one is exactly saving for, or why they need to save, says Fang. Once you’ve got your rainy day and emergency funds all set, then it may be time to put your money to work. A good place to start is to learn of ways you can build wealth, for example by investing, instead of letting money sit in a bank account. 

Saving might feel like the safe thing to do, and it’s the thing that’s guaranteed, adds Capalad. “Not understanding the stock market or not understanding what investing is really prevents people from doing that.”

Capaland recommends learning the basics about investing, for example what it means to invest in the stock market, principles of long-term investing, and how investing can help grow wealth over time.With Stash, you can start investing small amounts of money and saving towards your long-term goals.¹ Stash allows you to invest in stocks, bonds, and exchange-traded funds (ETFs). When investing, consider the Stash Way®,investing small amounts of money regularly in a diverse portfolio.

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