Immigrant entrepreneurs make a significant impact in America, often overcoming obstacles and setbacks to build businesses that contribute trillions of dollars to the national economy each year.
About 3.2 million immigrants ran their own businesses in the U.S. 2017, according to the most recent data from bipartisan research organization New American Economy. Immigrants represent one in five entrepreneurs in America, generating $1.3 trillion in total sales and employing 8 million people in 2017. The New American Economy found that 45% of this yearâs Fortune 500 companies were founded by immigrants or their children.
Yet immigrants, who comprise nearly 14% of the U.S. population, often face hurdles other business owners donât: Language barriers, long waits for a green card or visa and difficulties finding financing at acceptable terms.
Among those business owners is Hilda Torres, executive director of My Little Best Friends Early Learning Center in Malden, Mass., a child care facility she founded with her cousin Gerardo Loza in 2012. Torres immigrated to the Boston area from Mexico in 1992 with her husband and two children, working as a beautician and volunteering at her childrenâs daycare.
âIt was really hard for me to communicate with anybody there. I didnât speak any English,â Torres said. âI got really attached to these kids and the director noticed I was really good at what I was doing.â
The director sent Torres to community college to learn English and Torres continued her education to become an instructor at the child care center. She eventually wanted to open her own facility to help working parents find affordable care for their children.
Her cousin had also immigrated from Mexico and offered to invest in My Little Best Friends with Torres. The business now has 33 full-time employees and 115 children from 2 months to 5 years old enrolled, Torres said, but growing the business wasnât easy.
âIt was difficult in the beginning because my English wasnât very good, and we didnât know anything about business,â she said. âLittle by little, we started just learning on our own. But we struggled a lot.â
A lack of business knowledge is not entirely uncommon among immigrant entrepreneurs, said Edwidge Lafleur, director of the eastern Massachusetts branch of the Center for Women and Enterprise. Many immigrants who come to the center donât understand how to write a business plan or manage their finances, or donât understand why these elements are an important part of owning a business.
âThey do have a sense of how to run a business, but donât have any real training,â Lafleur said. âThey definitely need to be able to understand the business concepts.â
Anyone who starts a small business typically faces challenges, but immigrants usually have an additional set of hardships, said Rashed Amine, employment and training coordinator at the Arab Community Center for Economic and Social Services (ACCESS) in Dearborn, Mich. Finding child care, transportation and employment are the main concerns for immigrants who are new to America. Amine said these are obstacles that often stand in the way of starting a business.
Immigrant entrepreneurs may encounter these additional challenges:
If youâre unable to converse in your native language, you would need to rely on someone to translate all written and verbal communication for you, Amine said. ACCESS offers free English as a second language courses and staff members work with entrepreneurs to translate business plans and financial statements back and forth between Arabic and English, Amine said.
âWe need them to understand and communicate that back to us,â Amine said. âThey need to be able to have a legitimate conversation about their business.â
Common immigration classifications in the U.S. include:
Thereâs nothing in the U.S. tax code that says you have to be a U.S. citizen or even hold a green card to start a business, but your immigration status could make the process more difficult.
Depending on your immigration status, you may not have a government-issued identification number. This could affect your ability to open a business bank account or hire employees, said Lafleur of the Center for Women and Enterprise in Massachusetts. However, there are alternative identification options, which weâll discuss in a later section.
Although the U.S. does not provide any type of âstartup visaâ to bring immigrant entrepreneurs to America, there are a couple of visa classifications that could be useful in starting a business. The EB-5 visa classification grants entry to investors in commercial businesses, and the O-1 visa allows temporary status for those who demonstrate an âextraordinary abilityâ in business, education, athletics or the sciences. These are just a few of the many types of visas.
When Torres opened My Little Best Friends, her cousinâs investment wasnât enough to get started. They were approved for a loan backed by the U.S. Small Business Administration, but it took a while to find the right bank.
âGetting a loan for a startup was really difficult. We went to seven banks and nobody wanted to believe in us,â Torres said. âWe felt discriminated against.â
Many entrepreneurs donât have enough seed money to get started, Lafleur said. Sheâs seen immigrant entrepreneurs struggle producing the necessary financial documents when applying for financing, often because they donât have the time or the knowledge to gather the information.
Lafleurâs experience is borne out by the research: Latino business owners, for example, struggle to find financing available at acceptable terms and tend to rely on informal financing from friends and family, according to the Stanford Latino Entrepreneurship Initiative (SLEI). Venture capital funding is also more difficult to obtain for minority and women founders.
âThey need to be able to express what they think their revenues will be, what their expenses will be and what their profit margins will be,â Lafleur said. âThe financial piece of it is extremely important.â
Starting a business as an immigrant entrepreneur requires a few extra considerations. Here are some steps to follow to begin.
Although immigrant entrepreneurs may have had successful businesses in other countries, they may not be aware of all thatâs required of business owners in the U.S., Amine said.
âThey need to know the laws that are established in this country and how things work,â Amine said.
Several masonry workers who attended a recent ACCESS workshop had already begun operating a business but hadnât registered the company and were working under their own names, Amine said. He explained that if an accident occurred and the business ended up in a legal matter, all the owners would be responsible without any protection from personal liability.
Registering your business is not always required, but would separate you from the company, depending on the structure you choose. A business structure or entity, such as a limited liability company or corporation, would protect you and other owners from being personally liable for the business. A sole proprietorship or partnership would not offer protection and would be better suited for low-risk businesses.
Typically, corporations, partnerships and LLCs need to be registered in the state where you conduct business. Sole proprietorships do not need to be registered, which could be appealing to entrepreneurs concerned about their privacy or immigration status, Lafleur said.
As mentioned earlier, a government-issued ID is required for several aspects of running a business. Any immigrant who is lawfully residing in the U.S. can request a Social Security card, either at the same time that they apply for a visa or after receiving it.
If you do not have a Social Security number, you could apply for an Individual Taxpayer Identification Number from the IRS, which would be an acceptable form of ID to open a checking or savings account. Nonresidents can apply for an ITIN, regardless of immigration status.
You could also use an ITIN to apply for an Employer Identification Number, or EIN. An EIN would be necessary if you plan to hire employees, as you would use the number to report employment taxes to the IRS.
Entrepreneurs should open a business bank account to keep personal and business finances separate. Having a business account would help you track your revenue and business costs independent of your personal income and expenses.
You may be able to open an account at a local bank or credit union that caters to immigrant business owners, such as Cooperativa Latino Credit Union in North Carolina. Those financial institutions may provide materials in multiple languages or employ bilingual staff members. They may also be a good place to turn to for financing, which weâll discuss more in a later section.
A business plan is a road map for your company and should detail each aspect of the operation, from customer research to marketing plans. When applying for financing, expect to turn over your business plan to lenders, who will use it to gauge the potential success of your business.
Oftentimes, immigrant entrepreneurs donât have time to spend writing a business plan, Lafleur said. However, the document is crucial when starting a business.
âThereâs a lot of resistance to writing a business plan,â Lafleur said. âBut thatâs what the banks want to see.â
A basic business plan should include the following information:
Presenting a business plan when you apply for financing would help you look professional as a business owner and could speed up the approval process, Torres said.
Once you have your ID number and business plan in place, you could start your search for financing. It could be difficult to get approved for startup financing, as lenders typically prefer borrowers who have been in business for two to three years, Lafleur said. However, the financing options below may be well-suited for immigrant entrepreneurs who need funding.
A number of financial institutions offer interest-free loans for business owners with cultural restrictions on borrowing, Amine said. In the Islamic community, for instance, it is frowned upon to take out a loan that must be paid back with interest, he said.
âThereâs a number of institutions that offer interest-free loans for one reason or another,â Amine said.
For example, the Jewish Free Loan Association offers interest-free small business loans to Los Angeles residents of all faiths. Eligible business owners could receive up to $75,000 to fund their venture.
The SBA microloan program provides small amounts of capital to underserved small business owners. Borrowers could receive up to $50,000 to start or expand a business. The program targets women, low-income, veteran and minority business owners. SBA-backed loans typically have competitive interest rates and favorable repayment terms. SBA microloans are not available to undocumented immigrants. The SBA requires nonresident applicants to submit a Social Security number, a permanent resident card or green card, or other documentation of legal status from the United States Citizenship and Immigration Services.
Local organizations may also offer microloans to immigrant-owned businesses in the community. For instance, New York-based Business Center for New Americans offers microloans from $500 to $50,000 with 3-year repayment terms.
Online crowdfunding platforms allow business owners to accept financial contributions from friends, family and members of the general public. Whether you have to repay funds or offer something in return would depend on the platform. GoFundMe lets you accept donations without providing anything in return. Others, such as Kickstarter and Indiegogo, may require you to offer a product or stake in your company in exchange for funding.
Like the Center for Women and Enterprise in eastern Massachusetts and ACCESS in Michigan, there are organizations across the U.S. that provide resources for immigrant entrepreneurs at the startup stage and throughout the life of the business.
âBeing able to educate that population, getting them to realize what the laws are, it takes a little bit longer than several weeks,â Amine said. âThatâs OK. Itâs not a rush to the finish line.â
Check out these few organizations and professionals you could turn to for business assistance.
Through a partnership with the SBA, Small Business Development Centers provide consultation and training to entrepreneurs in cities throughout the country. There are nearly 1,000 centers that are typically hosted by colleges and universities or state economic development agencies. The SBA also supports development centers for certain demographics, such as women and veteran business owners. Find your local center here.
Law firms or legal groups in your area may provide pro bono services to help immigrant-owned businesses for free. For example, Volunteers of Legal Service in New York offers pro bono legal work to immigrants through its immigration and microenterprise projects. The Immigrant Legal Resource Center is a national nonprofit that also provides assistance and education to immigrants.
Networking with other business owners in your community can prove beneficial, especially if you connect with fellow immigrant entrepreneurs, Lafleur said. Even when operating in different industries, entrepreneurs can often be resources for one another, she said. Some cities also have minority chambers of commerce.
Torres discusses her experience opening My Little Best Friends in Malden, Mass. at the Malden Chamber of Commerce, where she is second vice president, and periodically speaks to classes at the Immigrant Learning Center, which is also in Malden. She shares lessons sheâs learned while running the business, hoping to help prospective immigrant business owners find their own path to success.
âOne thing I always tell them is never give up,â Torres said. âIf you have a dream that you feel like you can accomplish, fight for it.â
<span class="fn" data-placement="bottom" data-content="
LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender.
” data-original-title title>Disclaimer
max loan amount
max loan amount
max loan amount
max loan amount
By clicking âSee Offersâ youâll be directed to our parent company, LendingTree. You may or may not be matched with the specific lender you clicked on, but up to five different lenders based on your creditworthiness.
This Cash Back Number May Surprise You
Best Travel Credit Cards With No Annual Fee
Getting Approved For 1 Of These Credit Cards Means You Have Excellent Credit
Credit Cards Charging 0% Interest until 2021