Starting and running a business in the United States is a challenge, even for citizens. While cultural and linguistic barriers make it difficult to understand certain processes and requirements, starting a business can be complex 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 business financing. 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 immigrant business owners 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. A report by the New American Economy found that, in 2017, about 3.2 million immigrants ran their own businesses, that’s one in every five entrepreneurs in the country.
Plus, 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 country’s economy in general.
Despite these revealing numbers, loans for undocumented immigrants can be tough to access.
As an Immigrant, Can I Get a Business Loan in The US?
Yes! Both documented and undocumented immigrants can access credit.
Fortunately, some organizations and companies understand the challenges of being an immigrant entrepreneur in the US and are willing to work with them.
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) to receive capital. In some cases, if you don’t have a credit score yet, your application should also be signed by a guarantor.
Camino Financial is an alternative lender that offers business loans for immigrants even if they only have an ITIN.
Types of Business Immigrant Loans and Credit
The lenders that offer credit and small business loans for immigrants have different options. 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 for immigrants, making them an excellent 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 for immigrants 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, have an established credit history, and other business documents. The useful life of the equipment determines the term of this type of capital.
3. Merchant Cash Advances
Although it is not considered a loan in itself, you can receive cash with this type of financing. You’ll receive an advance on future sales made with credit and debit cards, in return, you will have to pay a percentage of those sales plus a fee.
They are a quick way to get working capital in the short term. You don’t need to put up collateral or have a high credit score. 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 extremely expensive, and the loan amount depends on your sales.
4. Personal loan
You can also use a personal loan to finance your business. As we have explained before, a personal loan is a quick and easy alternative to obtain funds to invest in your company. First, however, 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.
Also, a personal loan might not be the best idea if you need business financing, especially because the loan amount might not be enough.
You can also access business credit cards, even if you don’t have an SSN.
What are the Best Lenders for Immigrants?
We have just seen the different types of credit that can best fit your specific situation, but where do you actually go to apply for loans for immigrants? While there are multiple lenders and loan options, what is the best alternative for immigrants?
1. Credit unions
These are a good option. They assist immigrants, who normally avoid turning to banks because of 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 receive 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.
Requirements to Apply for Small Business Loans for Immigrants
Lenders who are willing to extend business loans to non-U.S. citizens may require applicants to prove they are legally living in the country. The most common requirements are:
- Certain types of Visa. Some lenders choose to lend to immigrants with different kinds of a valid visa, such as TN, E, J-1, H1-B, and O. (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 non-permanent residents without a Social Security Number. If this is your situation, you must request an Individual Taxpayer Identification Number from the IRS.
Keep in mind the following: the requirements mentioned here refer only to the documents necessary to prove your identity to access any form of business capital. This table summarizes the most common requirements for the most common types of business loans for immigrants.
|💰||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 for immigrants||❌||❌||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 non U.S. citizens who need to pay taxes but are not eligible to receive a Social Security Number.
To request an ITIN number, you must fill out a form and 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. You must also include proof of identity during the application process, like your passport or driving license. You’ll receive 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 business funding. 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 Score or Credit History to Apply for a Loan?
To grant a loan, banks verify the borrower’s credit history, 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 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.
- Review your credit report whenever you have a chance and correct any mistakes you find.
SBA loans might not be the best option for you. SBA loans are usually given only to a permanent resident.
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. 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. 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.
2. 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, such as accounting, marketing, and administration.
3. Rural business development grants
Administered by the US Department of Agriculture and Rural Development, this program focuses on rural areas and 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 whose income does not exceed $1 million can access this grant.
Camino Financial: the best loan for undocumented immigrants
As you’ve seen, there are many funding options. But we’re probably 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, have a strong credit score or have a previous credit history.
Our loan amount ranges between $5,000 and $400,000 to fit any of your business needs. Our repayment term ranges from 24 to 60 months, so you can choose the term you feel most comfortable with.
One additional benefit of our loans for immigrants 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. You must also 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 your business financing within 2 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.