The Best Small Business Loans and Grants for Immigrants

Here’s a staggering stat: 48% of overall growth of U.S. business ownership in 2000 to 2013 was attributed to immigrant business owners. Pair that with the statistic that the percentage of self-employed immigrants in the U.S. more than doubled between 1994 and 2015, and it seems to follow that there’s limitless potential for the impact that immigrants can make on the small business landscape.^[1] And, luckily, there are resources to find small business loans for immigrants and grants for immigrants to start a business.

Once you know all about them, you’ll hopefully be able to fund your dream company.

If you’re looking for first-time help with small business loans and grants for immigrants, you might be feeling overwhelmed. Although business funding looks like it takes an expert to translate, we’ll give you information here that will get you started on the right track.

Many immigrant entrepreneurs find that cultural bias and language barriers often prevent them from easy access to business funding opportunities. Fortunately, you can find organizations that recognize the unique challenges in finding small business loans for immigrants. Plus, many lenders are beginning to tailor their loan products to better meet those needs.

Let’s take a look at some of these:

The Small Business Administration (SBA) is the government agency that supports small businesses in all ways—by matching them with resources, lenders, assistance, and more. And, along with backing loans issued through their lending partners to help bring down rates for business owners, they also help entrepreneurs in unique situations qualify for financing. That includes options for small business loans for immigrants in the form of SBA loans:

For naturalized citizens: You won’t be subject to any special restrictions or requirements for your SBA loan application if you’re a naturalized citizen—just make sure you note it on your SBA Form 1919.

For lawful permanent residents: Immigrants with Permanent Resident Cards are eligible for SBA loans. Because the SBA acknowledges that green cards can take a while, newly arrived immigrants can also apply with a valid immigrant visa and Customs and Border Protection stamp that proves legal residence.

For lawful non-permanent citizens: Although a government agency, the SBA does offer small business loan options for immigrants who are non-US citizens. The major requirement here is that non-citizen borrowers must be within the country lawfully with what the SBA calls “an appropriate work visa” with a current date.

For asylees and refugees: Immigrants who’ve sought asylum and refugee status are also eligible for SBA loans as long as they have lawful permanent resident status.

An exhaustive explanation of SBA loan eligibility for immigrants is available through the SBA—start at Page 110. You can also speak with a loan specialist to find out if your status qualifies you for one of these loans, which are among the best small business loans for immigrants available.

Regardless of your status, you should expect the SBA to thoroughly inspect your documentation—both your immigration paperwork, as well as lots of other necessary required documents. As it stands, SBA loans are the most paperwork-intensive loans out there. So, the application process is a long and arduous one—and your credit score and business history will play a large part in the approval process.

That said, the process is worth it if you have the time—the SBA offers some of the absolute lowest rates and longest repayment terms available. Plus, the resources that the SBA can connect you with as an immigrant entrepreneur could be invaluable for you.

When you imagine a business loan, you’re most likely thinking of a term business loan. In this financing arrangement, a lender approves you for a lump sum of cash up front with an agreement for you to repay the total amount—plus interest and fees—through monthly payments over a pre-established period of time.

These loans are generally issued through one of two primary sources: either your local brick-and-mortar bank or an online lending marketplace. Both can provide loan options, but you should be aware of a few additional factors.

In recent years, bank term loans have become increasingly difficult to obtain. The application process has become long and complicated while approval rates have declined. Unfortunately, immigrant entrepreneurs may face even greater challenges when applying in person through traditional banks due to language barriers and unnecessary cultural bias. For this reason, many entrepreneurs have found greater success working with funding specialists in the online marketplace to find small business loans for immigrants.

Like SBA loans, term loans are also desirable products. You’ll want to come in with a strong personal and business credit history to improve your chances for approval and a lower interest rate on any term loan.

A short-term loan is another version of the term loan we explored above—but, as the name suggests, with a much shorter borrowing period. These loans have a repayment term fewer than 18 months—often, less than a year. They require payments to be made weekly or even daily.

The good news? The credit requirements for short-term loans are not as stringent as those for regular term loans. If you haven’t had the time to establish much credit history since coming to the U.S., you might want to consider this funding path. Short-term loans can be a great starting option for those without substantial time in business or revenue history and who are struggling to find other small business loans for immigrants.

The downside is that the added stress of more frequent payments along with typically higher interest rates can be a challenge for a newer business’s budget or one with less-consistent cash flow. The next option could be a good one, too, if your cash flow is a consideration.

You can think of this type of financing as a hybrid of a business credit card and a business loan. A business line of credit is an arrangement in which a lender makes available a pre-approved pool of funds with a maximum credit limit. Once you as the borrower have been approved for a business line of credit, you can then draw funds from this pool as needed, up to your established credit limit.

The greatest benefit to a business line of credit is that you only pay interest on the amount you draw at any given time. This can be especially helpful if you’re not sure how much funding you’ll need or when you might need it—or if you simply need a plan in place for business cash flow emergencies.

Of course, the flexibility and convenience of a business line of credit does come at a cost. Interest rates will be higher than some other traditional funding tools. Even so, paying a higher rate only for funds you’re actually using may cost you less in the long run. And for immigrant entrepreneurs just starting out in business, this can be an excellent way to build a strong credit history.

If your business is very equipment-intensive, like a restaurant, beauty salon, or a manufacturing plant, for instance, you might want to go straight to equipment financing. This type of business financing could be could be especially attractive as a small business loan for immigrants who are newer businesses, because the collateral for securing the financing is built right into the loan. That means meaning you likely won’t have to put up any additional personal guarantee.

A lender will typically want a quote from equipment manufacturer, the equipment value, a history of your creditworthiness, and some of your other business documentation.

The term length of equipment loans is typically dictated by the expected lifetime of the equipment, so you’ll need to consider whether your equipment will be obsolete and need to be replaced before you would be able to make full repayment.

Generally offered through state governments or nonprofit organizations, grants for immigrants to start a business are available to individuals as well as groups. Business grants for immigrants are most appealing because, as a recipient, you won’t be liable to repay a debt.

But as you’ll expect, this element also makes applications for grants very competitive. So, finding one that fits your specific business needs, successfully getting through the application process, and then qualifying can be tough.

It’s worth the time and effort to research the right business grants for immigrants, though. If you can write a solid grant proposal and make your case, you could find yourself with a great kickstart for your company.

Here are a few business grants for immigrants and refugees worth considering, plus some resources to find others:

The Wilson/Fish Alternative Program is provided under the US Department of Health and Human Services, particularly the Office of Refugee Resettlement. Participants in the program are awarded assistance in the form of cash, medical help, English language training, and services. There is also a focus on job development, including assistance with access to business licensing, skills training, and more.

To be eligible for assistance, immigrants must show proof of immigration or a letter of asylum. See full details of eligibility here.

Also provided by the US Department of Health and Human Services, the Microenterprise Development Program was created to assist immigrants in starting new businesses or expanding existing businesses. This program specific provides training in important business skills such as business plan development, bookkeeping, management, and marketing.

The MDP provides grants for immigrants to start a business, but also has a small business microloan arm as well for small amounts up to $15,000 in some cases, including a revolving line of credit.

If you live in a more remote area of the country, you might be eligible for a rural business development grant provided by the US Department of Agriculture and Rural Development (and, no, you don’t have to be in farming).

This program offers small businesses (50 or fewer employees; less than $1 million in revenue) assistance with working capital, training, real estate, and other resources. Smaller requests are prioritized here. Check out more info here, plus eligibility areas.

Most of the information you’ll find on business grants for immigrants won’t be immigrant-specific, unless you’re specifically looking for assistance as a refugee or asylee. For that reason, you’ll want to look closely at your state- and government programs to see what kind of business development grant assistance they’re offering.

Additionally, explore these lists of business grants to see if any of them apply to you:

• Small business grants for entrepreneurs
• Small business grants and resources for black business owners
• Small business grants for women
• Resources for minority business owners

As you see, you’ll definitely have options to explore as an immigrant entrepreneur for both business financing and grants to start a business. There are a few other things you’ll want to consider, as long as we’re going through the list:

A business credit card is an important tool for every business owner—yes, even ones who have loans and grants. Here are a few reasons you might want to consider a business credit card to help finance your company:

1. You need financing quickly. Some business loan applications and grant applications take time—especially if you need to gather paperwork, or aren’t in a position to get instant approval.

2. You need to build credit history or time in business. Many business loan applications require a bit of history before they can deem you worth as an applicant. If you’re a newer business, a credit card could be your immediate answer while you get some time under your belt.

3. You need to improve your credit score. The best way to improve your credit score is to pay your debt bills in full and on time. And a business credit card will help you build or rebuild your credit.

Not all situations can be solved by credit cards, but here are three good examples of when a card could prove a smart business decision:

Some business credit cards offer long 0% introductory APR periods, which provide you with what’s effectively an interest-free business loan. A few cards offer these intro periods for a year.

Keep in mind, though, that a variable APR will set in after the introductory period ends based on the market Prime Rate and your creditworthiness. So, you’ll have to do an honest evaluation of your finances and make sure can repay the amount borrowed within the introductory period.

Our favorite of these cards is the American Express Blue Business Plus, which has a 12-month 0% intro APR period. Here are some details:

Depending on your credit score—or, perhaps, lack thereof—you might find that the small business loans for immigrants available to you aren’t what you wanted. Or, maybe, there just aren’t any on the table yet.

A business credit card that’s specifically made to help you improve your credit score will better position you for a small business loan—plus, give you some spending power in the mean time.

For this, we quite like the Capital One Secured Mastercard. This is a personal card, not a business credit card. You’ll need to build your personal credit score in order to get yourself eligible for the best small business loans for immigrants—especially those SBA loans. Here, you put a deposit up front, and by paying your bills in full and on time, you can create a strong credit history to position you well:

Imagine that you’ve just received a very big product order that’s going to make you money. But you don’t have sufficient cash on hand to purchase the raw materials and supplies you need to fill the order.

When taking advantage of the perfect business deal is a matter of just a few weeks’ advance of cash and you don’t have a business line of credit loan, using a charge card can be a great solution. With charge cards, there’s no spending limit set. The one trade off is that you’ll need to be certain you can pay off the balance in full by the end of the month.

If that sounds good to you, we recommend checking out these top three business charge card benefits for your business.

Finally, one more important option. According to the Small Business Administration, about two-thirds of immigrant-owned businesses get their start with savings from personal finances, friends, or family. So, when looking for business funding, don’t limit yourself to banks, financing companies, or grants.^[2]

Friends and family can help finance your business as an investment or as a loan, depending on the preferences of both parties. Just as you would with a bank or other lender, put the agreement in writing clearly so that all involved parties understand it. Once this is done, have all parties sign it. This will protect everyone involved in the business, no matter what the future holds.

As an immigrant, you might come up against a few extra challenges looking for small business funding. But, as the 0.62% of immigrants who start a new business each month should be able to tell you, ultimately, you can find the financing you need to realize your entrepreneurship dream.^[3]