Economic hit to small businesses during Operation Metro Surge sparks call for state aid

Maysy Her said everything changed for Xieng Khouang Restaurant and Banquet Hall with Operation Metro Surge.

Fear took over and customers disappeared.

“Imagine working your whole life and being impacted by things completely out of your control. When it happens, we shouldn’t be forced to carry the burden alone,” she told the House Workforce, Labor, and Economic Development Finance and Policy Committee Wednesday.

She then apologized for her tears, adding, “I feel like I’m going to lose my business.”

Helping small businesses like Xieng Khouang is behind HF4477, which as amended, would establish a small-business relief fund for Minnesota business owners that experienced significant financial losses during “federal enforcement activity between December of 2025 and February of 2026.”  

Sponsored by Rep. Cedrick Frazier (DFL-New Hope), the bill would provide grants between $5,000 to $25,000 to businesses with less than $3 million annual revenue that experienced a 20% or more drop in business compared with the same period the previous year. Preference would go to businesses at risk of closure.

The bill, which includes fraud-investigation authority for the Bureau of Criminal Apprehension, does not specify an appropriation, though $100 million has been suggested.

No committee action was taken.

Supporters say Operation Metro Surge led to widespread fear, empty storefronts, and, in some cases, concerns about whether their businesses would survive. The Cities for Safe and Stable Communities coalition of 27 cities reported revenue drops of 50% to 100% for many businesses, calling the impact worse than the COVID-19 pandemic in some cases.

[MORE: Read letters and testimony here, here and here]

Business owners described immigration officers staging operations in their parking lot, the appearance of federal agents causing malls to empty, and an employee was arrested in their store, but later exonerated. One owner said that even though she is an U.S. citizen, she stayed home due to the risk of being detained and separated from her autistic child.

St. Paul Mayor Kaohly Her said the short-term shock to small businesses could cause long-term economic damage, with losses estimated at nearly $291 million for them in Minneapolis and St. Paul alone. A coalition of community development financial institutions warned of a potential 20% delinquency rate on $700 million in outstanding loans.

However, questions were raised about whether continued relief efforts can be sustained without broader changes to the state’s business climate, harkening back to the PROMISE Act first proposed in the wake of George Floyd’s murder.

Rep. Wayne Johnson (R–Cottage Grove) said entrepreneurs must have cash available to withstand two or three months of losses, but current mandates and taxes can leave businesses with too little financial cushion.

Rep. Dave Baker (R–Willmar) agrees that events like Operation Metro Surge put businesses in danger of going over the cliff, but so many state policies walked those businesses owners to the edge.