December 4, 2019
By Caity Witucki
Contributing Editor, C-Suite Wednesday
C-Suite Wednesday – Preparing SBA Loans for Immigrants and Non-U.S. Citizens
Entrepreneurs are finding it increasingly important to seek out lenders who are properly aligned with their financial and professional goals. This is especially true for small business entrepreneurs in “difficult” situations, such as non-U.S. citizens and immigrants. Although SBA loans to non-U.S. citizens and immigrants perform well, foreign-born entrepreneurs often struggle to find lending institutions that have experience working with their specific circumstances.
In an article originally published on La Opinión, Luz Urrutia, draws on her own personal experience as a specialist in SBA lending for immigrant entrepreneurs. “We’ve maintained a 95% repayment rate for 25 years, and most of the 11,000 businesses my company has backed are owned by immigrants or run by the children of immigrants,” says Urrutia.
Although the process of preparing an SBA loan for a naturalized U.S. citizen is the same as preparing a loan for a native-born U.S. citizen, lenders need to keep in mind cultural differences that could affect how the business is operated. Furthermore, when lenders are assessing the character of immigrant entrepreneurs, they should consider the personality traits and unique experiences the borrower has as an immigrant.
If a borrower indicates on their SBA form 912 that they are not a legal permanent resident (LPR), the lending institution will need to take a few extra steps when preparing their SBA loan. If the applicant borrower has a green card, then the lending institution will need to obtain a copy of their (USCIS) Form I-551. However, if the borrower does not have a green card, the lender must determine the applicant’s status.
A non-green card holder may be eligible for SBA financing if they have one of the following statuses:
- They are a documented alien admitted to the U.S. for a specific purpose and for a temporary period of time.
- They have been granted asylum or they hold temporary refugee status.
- They are subject to the Immigration Reform and Control Act of 1986 (IRCA).
In addition to having an eligible status, the borrower’s business must be in operation for a minimum of 12 months before the application date and the borrower must have enough U.S.-based collateral to repay the loan in full at any time during its term.