Financing Immigrant-Owned Businesses in 2018: California Minority Spotlight

Immigrants play a huge role in the U.S. economy. A recent survey found that immigrants make up 20.6% of the country’s entrepreneurs, even though they only account for 13.2% of the population. In fact, 44.6% of all new businesses founded in California between 2007 and 2011 belonged to immigrants.  As the next wave of immigrant businesses emerges, the Small Business Administration (SBA) 504 loan can help them expand their business models with accessible financing for the purchase of land, buildings and equipment or improvements to buildings they already own.

Who Are These Immigrant Business Owners?

Immigrants have always made an enormous contribution to American business. You can see this whether we are talking about famous entrepreneurs like Elon Musk, Sergey Brin, or immigrants’ son Steve Jobs, or discussing megalith companies like Uber and eBay. This is not just a modern phenomenon, either. Take historical figures such as in-laws Procter and Gamble, ATT founder Alexander Graham Bell, or pioneering banker and financier Amadeo P. Giannini, whose 1904 San Francisco-based Bank of Italy evolved into today’s Bank of America.

Research commissioned by the U.S. Department of Commerce’s Minority Business Development Agency found that about two-thirds of immigrant entrepreneurs start their businesses with their own money or financing from their families. More than half are married and own their own homes. Entrepreneurship rates increase with age and level of education. Immigrant small business owners do not differ strongly from non-immigrants in these characteristics.

As of 2016, there are 44 immigrants among the 87 founders of startups that have grown to a value of $1 billion or more. Another major study done in 2016 found that 40.2% of the Fortune 500 companies were founded by immigrants.

Financing Immigrant Business Expansion

The SBA acknowledges and appreciates the influx of entrepreneurship that immigrants bring to the small business community, and have designed accessible resources to help promote growth of immigrant businesses across the U.S. 

Immigrant small business owners can take advantage of training, mentoring and networking opportunities available to them through SBA Small Business Development Centers, or organizations like TMC Financing’s sister organization Working Solutions in the San Francisco Bay Area. Working Solutions provides microloans to small business owners participating in their programs. Immigrant business owners may also be eligible to participate in some programs for minorities, but it’s worth noting that eligibility rules differ between programs.

The Department of Health and Human Services’ Office of Refugee Resettlement offers programs for refugees, including a microenterprise development program, which are provided through local agencies. There is a refugee resettlement agency in practically all major U.S. cities, including over 25 in the state of California.

Once the business is up and running, and ready to expand on its success, the SBA also offers loans like the 504 loan, which can provide the next step in financing. By partnering with a conventional lender (a bank or credit union) and a nonprofit Certified Development Company (CDC), the 504 loan helps small business owners access affordable long-term financing to:

The borrower and the conventional lender decide on the conditions and term of that loan. The SBA portion of the loan can come to as much as $5 million, at a fixed, below-market rate with a long term (10, 20 or 25 years) and no balloon payment. Manufacturing projects that create one new job for every $100,000 borrowed can receive up to $5.5 million, as can projects that qualify for the SBA Green Energy Program.

The 504 loan is highly accessible to immigrants. Federal law requires that 51% of the small business receiving funding be owned by a U.S. citizen or lawful permanent resident (LPR), with no restrictions on the ownership of the remaining 49% of the company.

An Immigrant Success Story From TMC Financing

As the numbers show, many immigrants to the United States are highly talented individuals who bring valuable skills with them to this country. Igor Brovarny came to the U.S. from Ukraine seeking political asylum. With a degree in engineering and lengthy professional experience, Igor was hired by Elite E/M, a Santa Clara engineering and metalworking company, in 2008. In a mere five years, he bought his business’s location with the help of TMC Financing. Since 2013, the company has acquired 150 customers, including Tesla, Samsung and Agilent, and it provides a wide range of engineering products to them. TMC Financing also helped Igor purchase a 22,960-square foot warehouse to continue to grow his business.

You can find out more about how an immigrant business can receive a 504 loan from one of TMC Financing’s 504 loan experts. TMC is an SBA Premier Certified Lender and a high-volume loan provider. With over 35 years of experience, TMC can help you find the financing that is best for you and guide you through the 504 loan process. Contact TMC Financing today.

 

Barbara Morrison

Barbara Morrison

Barbara Morrison, a local small business advocate and civic leader, founded her first company TMC Financing in 1981. TMC is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs. TMC is also the No.1 SBA 504 hotel lender in the United States. Barbara is also the founder of Working Solutions, a Bay Area microlender whose mission is to provide micro entrepreneurs, particularly low-income individuals, women and minorities, with the access to capital and resources they need to start a successful business.
Barbara Morrison