Can an immigrant obtain a business loan?
While immigrants, foreigners, and non-citizens can get approved for a business loan, they generally must be residing in the United States lawfully. For example, an immigrant who is in the country on a work visa or who has obtained permanent residency status may legally obtain a business loan.
However, the decision of whether or not to lend to non-citizens is up to each individual financial institution. It may require some extra research and additional paperwork to obtain your business loan as a foreigner or resident alien living in the United States.
While immigrants may face barriers to business success such as legal status, language difficulties, and access to financing - there are also plenty of resources available to help.
For example, a consultation with an immigration attorney can help you consider your options for starting a business while residing in the United States, and a variety of business organizations may offer classes to help you build your English proficiency.
What are the benefits of business loans for immigrants?
Business loans give immigrants and other business owners a way to start, maintain, and expand small businesses - even when they don’t have the resources up front to do so.
Financing can be used for many different types of business expenses from start-up costs to equipment purchases. Taking out a business loan is also a very convenient way to cover temporary gaps in cash flow or to pay for unexpected emergencies. Without access to financing, many small business owners would be forced to shut down when times get tough.
Types of business loans for immigrants
There are several different types of business loans that immigrants and other small business owners can access, here’s a quick run down.
- Term loans: Term loans allow business owners to access a lump sum of cash that is paid back in equal monthly installments with interest over a set repayment period (or loan term).
- Short term loans: Short-term loans are business loans that have a shorter repayment period, allowing the loan to be paid off much faster and costing much less in interest.
- Online business loans: Online business loans are increasing in popularity and becoming a very common way to finance your small business expenses. Online lenders can offer competitive interest rates, flexible loan terms, and quick approval times. To access some of the best small business loans online, visit PrimeRates.
- SBA loans: The Small Business Administration guarantees a variety of loan programs for business owners in the United States to take advantage of. While the SBA does not directly offer the loans itself, a network of banks have partnered with the SBA to fund these loan programs for small business owners. SBA loans are backed by the government. SBA loans can take a long time to get approved, but the wait can be well worth it for entrepreneurs who have struggled to qualify for financing elsewhere.
- Equipment loans: Equipment loans are designed to cover the cost of a major equipment purchases. Because they are secured by the equipment itself, these loans can be easier to qualify for than general business loans. Immigrant business owners who have had trouble qualifying for other types of loans may have better luck via a business equipment loan, although you may need to make a large down payment.
- Microloans: Business microloans are available in smaller amounts (ranging from $500 to $50,000). Microloans have several advantages including more flexible loan terms, shorter repayment periods, lower fees, and lower interest rates. Because they are offered in smaller amounts than other loans, microloans can be easier to qualify for, making them a great option for immigrant business owners. PrimeRates is a valuable resource for accessing competitive microloans for all of your business needs.
- Personal Loans: In a pinch, a personal loan can be used to cover business expenses. For new businesses that are less established, they may not have the financial backing to qualify for a business loan. A personal loan can be used for funding to get your business off the ground.
- Business credit cards & lines of credit: Consider opening a business credit card or line of credit for fast access to funds that can be used for recurring business expenses or financial emergencies. Many business owners prefer using credit to taking out loans.
Do business loan grants exist for immigrants?
Grants are another great way to obtain funding for a small business. These lump sum payments are typically offered through government agencies, non-profits, businesses, and community organizations and do not have to be paid back. Non-citizen business owners should consider the following grant programs:
- Wilson/Fish Alternative Program for Refugees: This program exists to "provide integrated services and cash assistance” to increase the business prospects of certain refugees. Eligible applicants include refugees of Amerasian, Cuban, or Haitian descent (or victims of trafficking) who were granted asylum and are now U.S. citizens. In addition, applicants must reside in Alabama, Alaska, Colorado, Idaho, Kentucky, Louisiana, Massachusetts, Nevada, North Dakota, South Dakota, Tennessee, Vermont, or San Diego County, California.
- Microenterprise Development Grant: The Microenterprise Development Program "helps refugees develop, expand or maintain their own businesses'' through training, technical assistance, microloans, and business grants.
- MBDA Grants: The Minority Business Development Agency (MBDA) helps minority-owned businesses obtain grant funding via local MBDA Business Centers. Grants are distributed annually with applications accepted in the spring or summer.
- USDA Grants: Although open to any eligible small business, the USDA Rural Business Development Grant program assists many immigrant-owned businesses. Applicants must be operating a business outside a population center of 50,000 or more.
- NASE Growth Grants: Small business grants of up to $4,000 are available for business owners of all backgrounds through this easy-to-access program.
- Grants.gov: The U.S. government runs a comprehensive and searchable database of grants offered to small business owners across the United States.
More resources for immigrants
There are a variety of government agencies and non-profit organizations that exist to help immigrant business owners succeed through entrepreneurial resources like business consulting, legal referrals, translation services and educational training.
Aspiring business owners should be sure to check out the following resources:
- Microenterprise Development Program for Refugees: The Microenterprise Development Program "helps refugees develop, expand or maintain their own businesses'' through training and technical assistance. As a division of the U.S. Department of Health and Human Services, the MDP provides grants for immigrants to start their own businesses. Microloans are also available in amounts of up to $15,000.
- Minority Business Development Agency: As a part of the U.S Department of Commerce, the MBDA focuses on connecting minority-owned businesses with capital, contracts and other assistance. Through local MBDA Business Centers across the nation, entrepreneurs and business owners can access information and resources.
- National Minority Supplier Development Council: The NMSDC exists to assist minority business owners of all backgrounds through a variety of financial and educational resources as well as events and networking opportunities.
- Small Business Administration: The SBA Learning Center is one of the best resources available for small business owners. This online portal offers a variety of free training courses while the 8(a) Business Development program helps minority-owned businesses gain better access to certain contracts.
- SCORE: SCORE exists to help business owners grow through a variety of resources including webinars, training workshops, mentorship programs, and educational blogs.
Tips for immigrants applying for a small business loan
Non-citizens, immigrants, and other foreign nationals residing in the U.S. may have a few extra hurdles to overcome, but you shouldn’t let this stop you from working your way towards small business success.
Simply keep the following tips in mind as you apply for your small business loan:
- Work on building your credit: In the United States, most applications for financing are based upon a number known as a credit score. Using your social security number or ITIN number, you’ll want to begin to establish a credit history before you apply for a small business loan. One of the easiest ways to do this is to obtain a secured credit card. Secured credit cards require a cash deposit that is returned at the end of the credit card agreement. As long as you make your monthly payments on time, you should be well on your way to building a good credit history.
- Obtain an ITIN: Some U.S. immigrants are able to obtain a social security number, but if not, you will need to have an ITIN in order to start and finance a small business in the United States. ITINs are issued to anyone who is required to pay taxes in the U.S. (such as a small business owner) but does not have a Social Security number. They are easy to obtain with a simple online form. You should also apply for an EIN for your business.
- Consult with an attorney: It’s recommended that all aspiring foreign business owners consult with a qualified immigration attorney to verify their options when starting a business in the United States. This will ensure that your business is operating lawfully.
- Write a business plan: Having a business plan is even more important for immigrant business owners. A well-written business plan should include sections on marketing, operations, and finances and will help you think through all of the various parts of your business. Most lenders will request one when you apply for a business loan.
- Gather your documentation: In addition to a business plan, most lenders will request other information about your business such as financial projections and tax records. Having this documentation ready to go can help you save time on your loan application whether you apply in person or online.
No matter what type of financing you choose for your immigrant-owned small business, a little bit of research can go a long way. Business loans, grants, and other financing options are available to business owners across the U.S. with just a few simple clicks online. To land the best deal on your business loan, consider getting prequalified with a few different lenders to compare interest rates and loan terms before applying.
Apply & compare rates with PrimeRates
Getting prequalified does not affect your credit score - but it can save you a great deal of money over the lifetime of your loan. Check offers online today at PrimeRates and receive your personalized loan offers in a matter of minutes. PrimeRates can help you access real offers that you’ll actually qualify for, thus helping you avoid misleading advertising. As an added bonus, checking offers at PrimeRates does not impact your credit score.
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