Editor’s note: This article reflects reporting and firsthand accounts from business owners, residents, and national media.
Small businesses are built on predictability—knowing when customers will show up, when employees will feel safe coming to work, and when communities will continue to function as they always have. In recent weeks, that predictability has been shaken in parts of Minnesota and across the country, as increased immigration enforcement activity has begun to ripple through local economies.
How ICE Activity Is Disrupting Small Businesses
Ben Johnston, COO of Kapitus, a small business lender and marketplace, has been closely watching the impact. He says the heightened presence of ICE (Immigration and Customs Enforcement) agents and the social unrest surrounding it is creating real disruption for small business owners—particularly those operating in immigrant communities or relying on immigrant labor.
“A heavy ICE presence and the resulting social unrest,” Johnston explains, “is creating a challenging situation for small business owners. With reports of businesses being raided and employees being detained, businesses are exposed to significant disruption.”
Johnston notes that when people are afraid to leave their homes—whether to work, shop, or dine out—the effects cascade quickly. Customers disappear. Employees stay away. Entire neighborhoods slow down. And yet, paradoxically, he adds, many business owners are still pushing forward. Kapitus saw December become its largest-ever month for loan applications from Minnesota, a signal that optimism and determination persist even amid uncertainty.
That tension—between resilience and disruption—is at the heart of what small businesses are navigating right now.
Labor Shortages Are Adding Pressure for Small Employers
What’s happening inside storefronts and neighborhoods is inseparable from what’s happening in the labor market. And here, Johnston says, the pressure is building. He explains:
“The unemployment rate rose from 4% in January to 4.6% in November, and we expect it to continue rising in 2026, despite a reduction in the immigrant labor pool. Despite the rise in the unemployment rate, labor markets remain tight, meaning small businesses are struggling to find quality candidates at prices they can afford. This is especially true for part-time and seasonal employees.
“The tight labor market is being exacerbated by a crackdown on undocumented immigrants and the revocation of work visas for asylum seekers. It is estimated that approximately 5% of the U.S. workforce is undocumented, more than all unemployed workers in the country today. A significant loss of undocumented labor would create a labor shortage, limiting services and pushing the overall cost of labor considerably higher nationwide.
“As the administration continues its crackdown on undocumented immigration and moves to limit applications for legal immigration, we expect to see further constraints on the overall size of the U.S. labor pool. Immigration has historically helped fill the gap between economic demand for labor and the available labor supply from U.S.-born citizens. Restrictions on immigration would curtail this supply, driving up labor costs for local small business owners and wages for employees.”
What This Looks Like on the Ground for Local Businesses
Statistics can explain why the system is strained. But to understand how it feels, you have to look at what’s happening on the ground—inside restaurants, shops, and homes.
A woman living in a Minneapolis suburb told me that her 80-year-old neighbor’s regular cleaning lady and crew stopped coming. She’s trying to find someone else, but the cleaning businesses owned by white women were charging quite a lot per hour now, since they’re in demand, and the Hispanic cleaners are in hiding.
ICE activity in a city affects large employers, small businesses, consumers, and entire neighborhood economies. An Asian American (who requested anonymity) also lives in a suburb of Minneapolis and is sometimes reluctant to leave her home. She says, “In light of the chaos happening in cities where ICE is enforcing its operations, even though I am a U.S. citizen, I feel uneasy running errands or going out to dinner with friends. I’m worried that an overworked and overstressed ICE agent might detain me instead of checking my ID and letting me go. And even if my identification is verified, it doesn’t mean I won’t face the same scrutiny every time I leave my home.”
More and more often, even consumers who are willing to go out are finding fewer places to go. Amy Brendmoen, the former president of the Saint Paul City Council, told me that in the past few weeks, she’s gone out to lunch, “only to find a hastily made sign on the door saying the restaurant is ‘closed indefinitely.’ I worry about the business owners, their cooks, their servers, their dishwashers, as well as the food distributors, linen providers, the cleaners, and how these closures will trickle down and hurt our community and our economy.”
The economic impact on small businesses and the neighborhood economies they support cannot be overlooked. Minneapolis resident Sawyer Neske, the owner of Zimmerman’s Dry Goods in Saint Paul told me, “We are a print shop, and we can spread messages quickly and broadly on the t-shirts we print. I have been happy to connect with new artists and customers who are working to spread awareness about what is happening in our federal government.”
Neske notes the community is rallying around its residents. “There is no silver lining to this,” he says, “but our community is strong. People are working hard to protect our neighbors and communicate what is happening in our neighborhoods. We are printing t-shirts that bear messages we support.”
But he admits the negative impact on small business owners is very evident. He says, “There have been ICE agents posted outside of businesses on our block, intimidating workers and customers. We have been able to stay open during this time, but many non-white business owners have had to close their stores due to the fear of putting their employees or themselves at risk.”
Fear Is Changing Consumer Behavior—Even Among U.S. Citizens
As fear spreads, behavior changes—even among U.S. citizens, long-time residents, and the small business owners themselves.
On X, a Twin Cities resident responded to a post about a Mexican restaurant in a Minneapolis suburb being closed, and wrote, “The one I patronize [has not been] open since the day 15 to 20 armed ‘agents’ in paramilitary gear amassed in the parking lot.”
Another X user agreed, writing, “Yep, this happened in Chicago too. Restaurants were closed. Entire neighborhoods were closed.”
The Asian American woman I spoke to says her fear level is rising. “The recent violence against U.S. citizens and lack of accountability is deeply concerning and raises questions about whether this may become a sustained pattern of operation for months to come.”
And it’s not just her. More and more consumers are afraid to leave their homes to go to work, shop, eat out, or just run errands. Last week, Mark Bruley, the police chief of Brooklyn Park, a Minneapolis suburb, told reporters he’d gotten “endless” complaints from local residents (American citizens) saying ICE and the Border Patrol were stopping them without cause and demanding they “show their papers,” to prove they are “legal.”
A National Pattern, Not an Isolated Incident
What’s unfolding in Minnesota isn’t isolated. National reporting confirms that similar dynamics are playing out elsewhere—and at a scale that’s hard to ignore.
The New York Times reported that “hundreds of businesses closed their doors” for the general strike held in the Twin Cities on Friday, January 23. It was estimated that upwards of 50,000 people took to the streets of Minneapolis, protesting what many say is the invasion of their cities.
Most of the closures were voluntary, with people telling the Times that “losing a day’s revenue was worth the cost to be part of the effort to end the immigration enforcement.” Allison Kirwin, the owner of Al’s Breakfast in Minneapolis, told the Times, “There’s a time to stand up for things, and this is it. If it takes away from a day of our income, that is worthwhile.”
The Times noted that many small businesses in the Twin Cities “sat empty, with some posting signs in their windows expressing solidarity,” like the one spotted at Roots Roasting in Saint Paul saying, “General strike. No work, no school, no shopping, ICE out.” And the one at Spyhouse Coffee, saying it was closed to “Stand in solidarity with our community and other businesses.” According to the Times, “the same was true for just about every coffee mainstay in the Twin Cities.”
Marcus Parkansky, the owner of Misfit in Minneapolis, remained open, telling the Times he was “participating” in the strike by offering free coffee, pastries, and espresso shots, and that “What we want to see is for the shenanigans to stop.”
Broader Issues Impacting Small Businesses
Kapitus’s Johnston views what’s happening through a broader, economic, nationwide lens. He says, “For small business owners, 2025 was a year consumed by the promise of change and the fear of what that change would bring. The year began with the Trump Administration’s return to power and optimism that low taxes and lighter regulation would deliver an economic boom. While the Administration delivered on [that] it also delivered a volatile tariff strategy, a crackdown on undocumented immigration, and little change to the affordability issues troubling consumers. The net result has been anxiety for consumers who feel they are falling behind and for small business owners who depend on consumer spending to drive revenue.”
A Personal Reflection
For years, when I was the editorial director of Entrepreneur magazine, we cautioned small business owners against sharing their political views publicly. The concern was practical: alienating customers could hurt the business.
Looking back, I’m not sure that advice fully accounted for moments like this.
As restaurant owner Allison Kirwin (mentioned above) told the Times, “There’s a time to stand up for things.” I think that time is now. Her sentiment has stayed with me. Not because it’s dramatic—but because it’s pragmatic. Silence, too, has consequences. And for many small business owners, neutrality no longer feels possible when employees, customers, neighbors, and local economies are directly affected.
When Business Owners Decide to Speak Up
That question—whether speaking up helps or harms a business—is one many owners are grappling with right now. I recently reached out to Sia Ray, owner of the Folk & Fire Apothecary in Washington state, after seeing her candid posts online.
Sia told me, “I’ve always been fairly vocal about what I believe in, both through my online apothecary and in everyday life. A big part of that is because I teach herbalism in person here on Bainbridge, in a style called wildcrafting. We’re often out in the woods together. Being open and loud about my values lets students know they’re safe to learn with me, both physically and emotionally. And of course, seeing each other at rallies or in allied community spaces reinforces that trust and alignment.”
She says, “I want to make sure that I’m speaking out instead of staying silent—especially because I am in the herbalism community, which has learned so much from Black, Indigenous, and Brown herbalists, who are the most impacted in this time.”
Sia is clear-eyed about the trade-offs. Being outspoken, she says, has likely cost her some customers—but it has also deepened trust with those who remain. Transparency, in her view, isn’t a marketing strategy; it’s a safety signal. It tells customers, students, and community members where she stands—and who she stands with.
Not every small business owner has the same flexibility or privilege to make that choice. Many are simply trying to keep their doors open, protect their employees, and get through the day. But what’s becoming increasingly clear is that the economic impact of fear doesn’t stop at the margins. When people are afraid to show up—to work, to shop, to live—small businesses feel it first.
Sia and I agree that transparency matters. Being a genuine small business owner helps you stand out in today’s very crowded marketplace. Sia says, “Being transparent about my values, both online and in-person, has strengthened the relationships I have with students and customers who resonate with those values. And I am constantly horrified by what our leaders are doing to the humans who live here. I feel I have to speak up regardless.”
Small businesses have always been mirrors of their communities. Right now, those communities are under strain. How business owners respond—whether by staying quiet, speaking out, or simply bearing witness—will shape not only their brands, but the kind of local economies we carry forward.
This isn’t about politics. It’s about people. And for small business owners, the business has always been about the people.
Rieva Lesonsky is the founder of Small Business Currents, a content company focusing on small businesses and entrepreneurship. You can find her on Twitter @Rieva, Bluesky @Rieva.bsky.social, and LinkedIn. Or email her at Rieva@SmallBusinessCurrents.com.
Photo Creator: Lorie Shaull – Flickr, CC BY 4.0, https://commons.wikimedia.org/w/index.php?curid=182355054
