Starting and running a business in the United States is a challenge, even for citizens. While there are cultural and linguistic barriers that make it difficult to understand certain processes and requirements, actually starting a business is just as easy for those who don’t have a Social Security Number like US citizens do.
The problem and the real difficulty lies in the possibility of accessing capital. The truth is, the sources of capital are more limited to the undocumented: as we will see later, many financial institutions are reluctant to lend capital to undocumented immigrants without an SSN.
However, it’s not impossible, and there are financing opportunities for immigrants to turn their American dream into a reality. At Camino Financial we believe in you and your dreams, that’s why we make a daily commitment to help immigrants that have decided to start small businesses to create generational wealth.
In this article, you can learn everything about business loans for immigrants in the US and how this community can access capital sources to make their business thrive in this country.
The Importance of Small Immigrant Businesses in America
For decades, immigrants have driven the economy of the United States. Some figures prove it. A report by the New American Economy found that in 2017, about 3.2 million immigrants ran their own businesses, making up one in every five entrepreneurs in the country.
And there is more: between 2000 and 2013, 48% of the growth in ownership of US companies was attributed to immigrants. These data suggest there is a huge potential in the impact that this population can have on the foundation of small businesses, and on the economy of the country in general.
Despite these revealing numbers, if you are not an American citizen, it can be very hard to access capital to sustain and grow your business.
As an Immigrant, Can I Get a Business Loan in The US?
Yes, fortunately, there are organizations and companies that understand the challenges associated with being an immigrant entrepreneur in the US. They are aware of their potential, so they are willing and excited to work with them.
Both documented and undocumented immigrants can access credit. Depending on the lender, an immigrant will be asked to provide a form of identification (e.g. driver’s license), social security number, or Individual Tax Identification Number (ITIN) in order to receive credit. In some cases, your application should also be signed by a guarantor, if you don’t have a credit score yet.
Camino Financial is an alternative lender that offers business loans for immigrants even if they only have an ITIN.
Requirements to Apply for a Loan as an Immigrant
Lenders who are willing to extend business loans to immigrants may require applicants to prove they are legally living in the US. The most common requirements are:
- Certain types of Visa. Some lenders choose to lend to immigrants with different kinds of visas, such as TN, E, J-1, H1-B, and type O visa. (Not required by Camino Financial)
- A Social Security Number (Not required by Camino Financial, we accept ITIN)
Asking for a loan can be a challenge for immigrants without a Social Security Number. If this is your situation, you must request an ITIN (or Individual Taxpayer Identification Number) from the Internal Revenue Service. Keep reading to learn more about this taxpayer number.
Keep in mind the following: the requirements mentioned here refer only to the documents necessary to prove your identity. Any lender will require another set of requirements to access any form of business capital. This table summarizes the most common requirements for the most common types of business loans.
|💰||Accept ITIN?||No credit history accepted?||Type of payment||Annual Interest Rate||Loan amount|
|Camino Financial’s small business loan||✔️||✔️||Monthly||12-25%||$5,000 to $400,000|
|Other small business loans||❌||❌||Monthly||13%-71%||$5,000 to $500,000|
|Merchant Cash Advance||❓ Depends on the lender||❓ Depends on the lender||Daily||40-150%||$2,500 to $250,000|
|Line of credit||❌||❌||Monthly||7-25%||$10,000 to $100,000|
|SBA Loan||❌||❌||Monthly||7.5-10%||$500,000 to $5.5M|
What is an ITIN?
The Individual Taxpayer Identification Number, or ITIN, is issued to people who need an identification number as taxpayers, but who are not eligible to receive a Social Security Number.
To request an ITIN number you must fill out a form. Then, you must mail it, or process it in person at an IRS taxpayer help desk. You can also take it to an acceptance agent authorized by the Internal Revenue Service. Attached to the application form you must include proof of identity, like your passport or driving license. After submitting your application, you’ll receive a letter from the IRS with your ITIN number in about six weeks.
Camino Financial is one of the few lenders willing to grant you credit only with an ITIN. This is a great opportunity for undocumented immigrants who need to capitalize their businesses. If you only have an ITIN number and want to apply for a loan, read how to get ITIN loans to finance your business.
Do I Need a Credit History to Apply for a Loan?
In order to grant a loan, banks verify the credit history of the borrower, but this kind of background is impossible to prove in the case of business loans for immigrants. In other words, those who have never applied for a loan before or don’t have a credit card because they are new immigrants in the United States don’t have a credit history yet.
An immigrant in a new country must start building a credit history from scratch. That’s why it can be difficult to access credit, mortgages, or credit cards until you’ve worked in the country for several years and have proof of a stable income.
In addition, the higher the credit score, the better. You’ll have more chances of accessing a loan and receive more favorable terms and interest rates.
Building a credit history takes time. Follow these tips to achieve it faster:
- Open an account at the bank of your choice. In addition, apply for a secured credit card, in other words, a card backed by the funds you deposit into the account.
- Automate your payments. Pay all your bills automatically through your online bank account. This will ensure you always pay your bills on time, from public services to other types of credit.
- Make the best use of your credit card. If you have an international credit card issued in your country of origin, you may be able to ask the bank to issue you a US credit card.
- Request your landlord to report your rent payments. They can report your payments to Experian, one of the main credit bureaus.
Types of Business Credit and Loans for Immigrants
Those lenders that offer credit and business loans for immigrants have different options designed for your specific challenges and particular needs. You can use these loans for different purposes, from covering your basic needs to financing your own business. These are the most common business loans for immigrants:
1. Short-term loans
The time to repay a short-term loan, as the name suggests, is short: usually less than 18 months, and in some cases less than a year.
The requirements for this type of credit are not as strict as those for longer-term loans, making them a very good option for immigrants without a credit history.
Although they can be ideal for new entrepreneurs, frequent payments and higher interest rates can affect the finances of new companies that don’t have a stable cash flow.
2. Equipment loans
This financing alternative focuses on businesses with a high demand for equipment and tools, such as workshops, restaurants, manufacturing companies, or beauty salons.
These loans are very convenient for immigrants who are just starting their businesses since the collateral needed is the piece of equipment itself. This means you will not have to offer your personal assets as collateral.
To apply for an equipment loan you will have to submit a quote including the price of the piece of equipment you intend to buy, your credit history, and other business documents. The term of these loans is determined by the useful life of the equipment.
3. Merchant Cash Advances
Although it is not considered a loan in itself, with this type of financing, a company grants you access to cash. In return, you will have to pay a percentage of your sales made with credit and debit cards, plus a fee.
They are a quick way to get money to finance your business expenses in the short term. You don’t need to put up collateral or have a high credit score.
You can apply online. You’ll be required to submit a copy of your driving license, your bank statements, tax returns, and your credit score, among other documents.
Although the application and approval process is simple, cash advances are one of the financing products with the highest costs.
4. Personal loans
You can also use a personal loan to finance your business. As we have explained before, personal loans are a quick and easy alternative to obtain funds that you can invest in your company, although you should consider whether the amount of capital (which is usually quite less than in other types of financing) is enough to cover your needs.
What are the Best Lenders for Immigrants?
We have just seen the different types of credit that can best fit the specific situation of immigrants, but, where do you actually go to apply for a loan? In other words, as an immigrant, what are the best lenders for you?
1. Credit unions
These are a good option. They provide assistance to immigrants, who normally avoid turning to banks for their stricter requirements, including a Social Security Number. Besides other resources offered by credit unions, you can find business loans for immigrants: the requirements are usually basic, such as submitting your rent records or bills for public services, in addition to an ITIN.
2. Online lenders
These are another increasingly popular alternative. It can be a faster and more convenient option than a bank since its requirements are more flexible. It is possible to compare rates and request a loan from the convenience of your home and get an answer in a matter of minutes. Also, you can the funds directly into your bank account in a few days.
At Camino Financial the process is fast and completely online. You don’t need a Social Security Number: your ITIN is enough.
Business Grants for Immigrants
One way to access funding sources as an immigrant is through business grants. Usually, they are granted by non-profit organizations or state governments. Fundings can be used to start a business, and are available to individuals or groups.
These grants are more attractive than a loan because the beneficiaries do not have to pay back the money. But this also means there’s a lot of competition to access these financial aids and that the application process can be difficult.
Some of the business grants for immigrants are:
1. Powering Up LatinX Business (for businesses affected by COVID-19)
This grant was created to help Latinx business owners affected by the coronavirus pandemic. 500 lucky Latin businesses will not only receive personal coaching and business resources but a $5,000 grant.
To apply your business must be located in California, Texas, or New York.
This grant, offered by Ureeka, will receive applications until the 14th of October of 2020. You can learn more about the grant and apply, here.
2. Wilson / Fish Alternative Program for Refugees
This is an assistance program of the US Department of Health and Human Services, which promotes initiatives to provide employment, cash, and other assistance to immigrants in certain countries. These grants are delivered through the states, voluntary resettlement agencies, and nonprofit resettlement organizations. To receive assistance from this program, immigrants must prove their immigration status, or submit a letter of asylum.
3. Microenterprise Development Program for Refugees
This program is also run by the Department of Health and Human Services and was created to help immigrants start or expand their own businesses. In addition to providing money, this program also offers training in key areas for companies, such as accounting, marketing, and administration.
4. Rural business development grants
Administered by the US Department of Agriculture and Rural Development, this program focuses on rural areas, and on those who do not necessarily work in the agriculture industry. The program offers assistance through working capital, training, and real estate, among other resources. Only companies with less than 50 employees and whose income does not exceed $1 million can access this grant.
Camino Financial: your TOP Lending Alternative in the US
As you’ve seen, you always have alternatives. But we probably are the best one for you.
At Camino Financial we have experience working with immigrants. The process to apply for a small business loan with us is very easy: you only need to present your ITIN. In addition, you don’t need to put up collateral or have a credit history.
Our loans range between $5,000 and $400,000 to fit any of your business needs. Our loan terms range from 24 to 60 months, so you can choose the term you feel most comfortable with. One additional benefit of our loans is that after 8 months of making timely payments, you can graduate to another loan with better terms and interest rates. With advantages like these, it’s really possible to grow your business in the US.
Consider a Business Loan From Camino Financial
These are the steps to follow to apply for a business loan with us:
|1. Complete a very short online application. You will know instantly if you qualify.|
|2. A business loan specialist will contact you to match you with the type of loan that best suits your needs. During this stage of the process, you must authorize Camino Financial to download your most recent banking activity.|
|3. These are the other documents to submit: |
|4. Sign the loan contract and receive the money directly in your business bank account. You can receive the funds you need within two and 10 business days!|
Start growing your business with the help of a lender that understands you! We are willing to help you build your dreams, regardless of your immigration status.