What financing options can immigrants use to start or grow a business in the U.S.?

Immigrant business owners have several avenues for obtaining funding for their enterprises. These options include Small Business Administration (SBA) loans, grants, crowdfunding and credit cards. There is funding out there, and with some research you will be able to find what you need. Let’s take a look at each of these options below.

SBA Loans

SBA loans are a popular and affordable option for immigrant business owners, but they involve some work. Interest rates, for instance, are lower in contrast with other kinds of loans. However, these loans require lots of paperwork. Give yourself plenty of time to prepare all of the forms.

The SBA wants to help immigrant entrepreneurs. Look at the detailed SBA immigrant eligibility rules that begin on page 110 of an SBA document.

Green card holders and work visa holders will usually be able to qualify, but make sure you read the guidelines first so that you do not have to delay the application process.

Government Grants

The Office of Refugee Resettlement runs the Wilson-Fish and Microenterprise Development programs. These are worth a look if you are a refugee, as they both offer financial help to get you started.

If you aren’t a refugee, there are still government grants to explore. New grants get posted all the time on Grants.gov. Make sure you check back frequently in case one that fits your company gets posted. Many people apply, so make sure you apply well.

Family can be another source. In many cultures, family members pool their money to help one of them launch a business. This tradition does not happen much in the United States, but there is no reason to give it up. Ask loved ones to help you if you are comfortable with it. The business will hopefully turn a profit soon.

Business credit cards can be a nice short-term source of startup funding. If you use them wisely they can be very helpful. Be sure to check your credit report before you apply. It is fairly easy to get approved if you have a strong credit score.

But they are not a long-term solution. When you are starting a business the last thing you need is high interest business credit card debt. Look for a business card with an introductory zero-percent interest rate.

Crowdfunding

Crowdfunding sites can make your business a reality in dramatic fashion. Consider Indian immigrant Hiral Sanghavi, who raised $11.5 million on Kickstarter and Indiegogo. Sanghavi raised that total from two separate crowdfunding campaigns. Results of that size are rare, but a good campaign can still surprise you.

The average raise on Kickstarter and Fundable is between $7,000 and $10,000. You don’t have to give up any ownership in your company in the process, making crowdfunding a low-risk option for immigrants.

Loans are another route, but if you have a thin US credit history, it could be hard to get a traditional bank loan. Microloans and short-term loans can be a good stop-gap, and there is less risk for the lender so they come with looser requirements.

They do have drawbacks. Microloans usually do not allow for more than $50,000 in funding, for example. Short term loans have a shorter term, which means you will make bigger payments from the start. That can squeeze your cash flow.

Whichever option you pick, building credit is hard, and there are cultural biases, which make raising money harder for you. Expect more paperwork, of course. Plenty of immigrant entrepreneurs have managed to overcome these obstacles and built businesses in the US. There are real options.

Every option is different, so learn the basics of them before making a decision. Only you or a trusted financial advisor can make that decision. Weigh your needs, the amount and the application process before you decide.