Top Loans and Grants for Immigrant Business Owners
August 25, 2022 | Last Updated on: February 1, 2023
August 25, 2022 | Last Updated on: February 1, 2023
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Starting a new business is a daunting process for immigrants, but achieving the dream of business ownership is possible for anyone willing to research and follow the proper steps. To learn those steps, it’s important to understand the rules and regulations for business owners in the United States (regardless of whether they are immigrants or U.S. citizens). We’ve broken down the process into some simple steps:
A business plan and company name are the primary steps required for immigrant entrepreneurs to turn their dreams into reality. This part of the entrepreneurship process shouldn’t be rushed as it sets the tone for your future as a small business owner in the United States.
A business plan can act as a guideline for your business goals—it’s not just a throwaway item that you create because lenders, investors, and government agencies require it. A complete business plan is written down, referenced, and updated frequently. It can help entrepreneurs by outlining the conceptual, marketing, and financial details of the business, including highlighting competitive companies in the same industry, so that employees are all working towards the same thing and have clarity on what they should be doing.
Once you’ve got a business plan, you’ll need to name your company and decide where you’re going to do business. Choosing a business name is simple, but it is important to select a unique name and register it with the proper authorities, like the Secretary of State’s office in your selected state. Things to consider when selecting which state to register in include:
Whether you’ve decided on a for-profit business or are looking to found a nonprofit organization, you’ll need to choose a business structure, obtain the proper identification numbers, and register your entity.
Most immigrant business owners choose a C-corporation or Limited Liability Company (LLC) as their preferred type of business structure because neither requires residency or citizenship.
To own and operate a business as an immigrant, there are two separate identification numbers you’ll need to apply for.
Once you’ve selected the state you’re going to do business in, chosen a business name, and obtained the proper identification numbers, you’ll register your business as a legal entity by filing an article of incorporation. This step requires a registered agent, physical address, and the EIN. Whenever possible, you’ll also want to collect a filing receipt to show that your business has followed the required steps.
The good news is that to own a business in the U.S. you do not have to be a citizen or even have a green card, but you will need an entrepreneurial visa. Visas are required for any immigrant who wishes to work in the U.S., but most immigrant entrepreneurs choose one of the following types of visas before starting their new business.
EB-1 Visa – The EB-1 entrepreneurship visa allows immigrant business owners to bypass labor certifications when looking for work, live in the U.S. with or without permanent employment, and obtain a green card faster than other types of visas. It is the most difficult to get because the EB-1 Visa is intended for individuals that can prove extraordinary ability in a field.
E-2 Visa – The E-2 visa is an option for immigrant investors that are originally from countries that fall under the Treaty of Trade and Commerce that want to live and work in the U.S. It allows the entrepreneur to legally work for the company they’ve invested in, travel to and from the U.S., remain in the U.S. under unlimited two-year extensions, and bring spouses or children to the U.S.
E-1 Treaty Trader Visa – The E-1 Visa is for nationals of a treaty country that want to work in the U.S and engage in international trade of goods, services, insurance, technology, and more. To qualify for the E-1 treaty trader visa the immigrant applicant will need to share the same nationality as the company and half of the business’s trade must occur within the U.S.
It is a common misconception that immigrants do not have access to small business financing options, but there are many grants, loans, and other sources of funding reserved just for the business needs of immigrant entrepreneurs. In the next few sections of this article, we explore some of those options in more detail.
Grants are different from loans because they do not need to be paid back. No matter your immigration status, it is always a good idea to search for available grants when considering starting a new business. There are many free resources available regarding small business grants through your state government department or websites like Grants.gov that help match individuals to available grant programs.
Immigrants that are permanent residents of the United States or those that have obtained the proper work visa can qualify for government grants for minority-owned businesses. A minority business enterprise (MBE) is a business where 51% of the company is owned by minorities and management and operations are controlled by the minority owner. While there are tons of grant programs available to immigrant business owners, we’ve highlighted a few common grants where MBEs can meet the eligibility requirements.
The Microenterprise Development Program was created to help refugees build, maintain, and expand their businesses. The program provides financial assistance and training to support immigrant business owners in the U.S. The short-term training program can teach entrepreneurs management skills, how to write a business plan, how to monitor cash flow, bookkeeping skills, and marketing and advertising tips. The program also provides business technical assistance and up to $15,000 in microloans.
The Program for Investment in Micro-Entrepreneurs (PRIME) is a program sponsored by the small business administration (SBA) that offers four federal grant programs to low-income entrepreneurs that lack the proper training and education necessary to expand their small business. The program helps individuals navigate the grant application process and work within their funding limits. Since there are multiple grants offered through PRIME, the eligibility requirements depend on the specific circumstances of the immigrant entrepreneur.
The U.S. Economic Development Administration (EDA) works with state agencies to create a list of grants available to small business owners. The programs work to create employment opportunities, provide technical assistance, and connect entrepreneurs with available grants. The agency focuses on connecting grant and loan providers to businesses in economically distressed communities.
There are many types of loans that immigrant entrepreneurs can use to cover startup costs, purchase commercial real estate or equipment, hire a staff, or for working capital. The best way to explore financing options is to contact a lender, like Biz2Credit, to see which loan programs may be a good fit for your small business.
SBA loans are a financing option backed by the U.S. Small Business Administration. The funds are issued by an SBA-approved lender and guaranteed by the government. There are many small business loans available through the SBA, including the SBA 7(a), 504 loans, Microloans, and Express loans. Repayment terms and conditions depend on the type of SBA loan. One of the SBA loan programs, the 8(a) Business Development program, works exclusively with economically or socially disadvantaged business owners.
A business line of credit can provide funding in as little as 1 -3 business days for approved borrowers and is a good fit for entrepreneurs with less than perfect credit scores. A line of credit is a type of revolving line of credit where the borrower is approved for a maximum loan amount and then can draw on the credit line whenever they need funds. Monthly payments are calculated on the amount of funds withdrawn, not the total credit limit.
A term loan is a type of small business financing where the borrower receives a lump sum of cash up front and then makes monthly payments for a predetermined amount of time. Interest rates for term loans are either variable, which adjust according to the market rate, or fixed, which remain the same over the life of the loan.
Traditional loans from a bank, credit union, online lender, or other financial institutions are not the only place immigrants can turn for financing options. Crowdfunding, credit cards, and working with the MBDA (Minority Business Development Agency) may provide an alternative solution to borrowing funds.
Crowdfunding works when an individual, or business owner, collects many small contributions from different investors or donors. Most crowdfunding is done using platforms like GoFundMe or Kickstarter. Contributors may expect nothing in return or invest funds with the understanding they’ll receive a reward. The terms of the crowdfunding campaigns are set upfront and partially determined by the platform you choose to work with.
Business credit cards are a great financing tool for new business owners or immigrants that have not yet established a credit history. They allow small business owners to make the business purchases they need while building the sort of credit they need to qualify for larger amounts of funding down the road.
The Minority Business Development Agency (MBDA) is a federal agency that works to help minority-owned businesses succeed by connecting the entrepreneur to grants, banks, investors, and mutual funds. The MBDA also helps minority-owned businesses secure contracts and increase incomes.
There are some great financing options available for immigrant entrepreneurs. The application processes for grants, loans, or crowdfunding platforms will vary, but most of them will require government-issued identification numbers and registration documents. Whether your business qualifies for a grant, loan, or both the best place to start is with Biz2Credit. If you’re unsure whether they’re a great fit for immigrant business owners, just ask Yousaf Razzak how Biz2Credit helped him get the funding he needed for his small business.