SBA Loans for Immigrants

With approximately 18% of US businesses owned by immigrants, this population segment is a major contributor to the American economy.

However, securing financial backing through business grants, grants for immigrants to start a business, and SBA financing presents challenges to immigrants, especially during the initial stages.

Fortunately, several SBA loans offer funding opportunities to help immigrants establish a solid financial foundation and thrive in the long term.

Who Can Qualify for an SBA Loan?

According to Small Business Administration requirements, it is possible for immigrant entrepreneurs to qualify for a business loan, provided that very specific conditions are met.

“The SBA states that financing is available for businesses that are 51% owned and controlled by persons who are not citizens of the US, provided the persons are lawfully in the United States (e.g., not illegal immigrants),” Janover.co writes. “However, it’s up to the discretion of an individual lender whether they want to provide a loan to a non-citizen.”

Here are three examples of when someone may qualify for SBA financing even if they’re not a US citizen.

• They’re a lawful permanent resident (LPR) and have a green card
• They’re a non-citizen national
• They have a valid work visa or are legally authorized to have a business in the US

The bottom line is that as long as you’re not an illegal alien and have a detailed visa business plan, you have a reasonable chance of obtaining financing, even without official citizenship verification.

Note that minority business grant acquisition and SBA loan eligibility for immigrant small business owners are constantly changing, so we suggest reading a comprehensive guide like this for up-to-date information.

SBA 7(a) Loans

7(a) loans are among the most common SBA programs and can be a great entry point for an immigrant business owner.

You can use this type of SBA loan to obtain financing for a variety of purposes, including buying equipment, purchasing commercial real estate, generating working capital, and expanding your business.

The loan amount can range from $350,001 to $5 million, and the interest rate tends to be lower than many other traditional business loans for immigrants.

According to the SBA, “lenders and borrowers can negotiate the interest rate, but it may not exceed the SBA maximum.”

In order for non US citizens to obtain loan approval, they’ll need to provide extensive financial documents, a business plan, and in some cases, a personal guarantee on their SBA loan application.

Taxpayer dollars back these loans, so it’s critical that LPRs, non-citizen nationals, and visa holders have the correct documentation in order.

Also, note that every 7(a) loan is subject to an internal SBA audit to ensure it’s in compliance with regulations.

You can learn more about 7(a) loans here.

SBA Export Loans

There are two main types of SBA export loans, which are designed to provide financing for export-related activities.

First, there’s an Export Express loan, which offers a maximum of $500,000 and is the smaller of the two loans.

Like a 7(a) loan, the lender and borrower can negotiate the interest rate, but it typically turns out to be more reasonable than the interest rate found with most conventional loans.

As for collateral, you won’t typically have to put anything up if the loan is no higher than $50,000. However, collateral may be required if the loan exceeds that amount.

The other SBA export loan is the Export Working Capital loan. This is part of the Export Working Capital Program and is designed “for businesses that can generate export sales and need additional working capital to support these sales.”

This type of SBA assistance goes significantly higher with a maximum amount of $5 million and is intended for immigrant business owners who need serious financing for production and purchase orders.

If you’re looking for major financial firepower when exporting and have needs that extend beyond what an Export Express loan can offer, this is likely your best bet.

To qualify for the loan application, you must have a green card or be legally authorized to work in the US. You must also be directly involved in exporting activities.

You can find more details on both SBA export loans here.

SBA International Trade Loans

In the SBA’s own words, “Businesses can use International Trade loans to acquire, construct, modernize, improve, or expand facilities and equipment to be used in the United States to produce goods or services involved in international trade and to develop and penetrate foreign markets, and for working capital for export transactions.”

With this type of loan, entrepreneurs can get up to $5 million and use it to build or grow operations in an international market.

If you have existing connections with your former country and are looking to use them to fuel business growth, an SBA International Trade loan can be a great option.

Again, interest rates are reasonable and open to negotiation for your small business loan.

To qualify, you must have a green card or be a non-citizen national. You’ll also need to show the SBA a comprehensive international business plan and prove how you’ll use the funding to support development or expansion.

You can find a full overview of SBA International Trade loans here.

SBA 504 Loans

The primary purpose of a 504 loan is to fund the purchasing or construction of buildings, land, and new facilities, or purchase long-term machinery or equipment with a minimum lifespan of 10 years.

Besides that, you can use the money to improve “land, streets, utilities, parking lots, landscaping, and existing facilities.”

However, the money can’t be used for “working capital or inventory, speculation or investment in rental real estate, or consolidating, repaying, or refinancing debt that does not meet the definition of ‘qualified debt’ under 13 CFR 120.882,” the SBA explains.

If your primary goal is to purchase/improve land or property or invest in heavy machinery that you plan on using over the next decade, a 504 loan is an option to consider.

In terms of loan amount, the maximum is $5.5 million, with payback terms of up to 25 years. Like other SBA loans, you can expect lower-than-average interest with a 504 loan.

Just note that the qualification criteria are more stringent than many other SBA loans, and you’ll need to:

• Be a for-profit US business
• Have a robust plan
• Have business management expertise
• Have a tangible net worth of under $20 million
• Have an average net income of under $6.5 million after federal taxes for the prior two years before filling out your SBA form loan application

You can find more details here.

Microloans

As the name suggests, this involves small amounts of funding for an immigrant business owner. To quantify, the SBA offers up to $50,000 per loan, but the average amount is closer to $13,000.

While this won’t be viable if you need serious funding of six figures or more, microloans can certainly be helpful if you simply need a cash flow injection to get your business off the ground or to fuel minor growth.

Some common areas immigrant business owners use microloans for are supplies, inventory, equipment, furniture, fixtures, and working capital. Note that you can’t use microloans to buy real estate or pay off existing debts.

When it comes to interest rates, you’ll typically pay somewhere between 8% and 13%, which is a reasonable amount.

Qualifying for microloans is fairly straightforward, even for non American citizens and childhood arrivals. And there are much fewer criteria than the previous SBA loans. In many cases, no collateral is required, and you don’t even need to have an extensive credit history in the US.

You just need to be a legal permanent resident, have a solid operational plan, and have a reasonable credit history.

You can find a full rundown on microloans here.

Here are some helpful resources for obtaining financing through term loans and immigrant business grants.

• The Minority Business Development Agency
• The Community Development Financial Institution

Get FairFigure to Access More Business Financing

At FairFigure, our cofounders are from immigrant families, so we’re glad to support immigrant entrepreneurs on their quest to obtain the financing they need to thrive.

If you want to look beyond an SBA lender or traditional small business grants, FairFigure can provide you with access to financing through our EIN-only business credit builder card. There’s no FICO score, personal guarantee, or paperwork required.

That way, you can secure the capital you need while also boosting your business credit score. Get started here.