As we mark the Fourth of July holiday, it is interesting to take a look at the ever growing percentage of small businesses in the U.S. that are owned by first generation immigrants.
People have long made this country their destination in pursuit of a better life. The "American Dream" has long lured immigrants, who have always used the opportunities of our capitalist system to start their own small businesses -- whether they be nail salons, grocery stores, diners or companies specializing in computer systems or technical consulting services. Immigrants own more than 50% of all laundromats and dry cleaners, more than a third of all restaurants, and about 20% of computer companies.
The Fiscal Policy Institute recently analyzed data from U.S. Census’ American Community Survey and found that 18% of small businesses in the U.S. are owned by immigrants, up from 12% in 1990. The latest census figures available show that immigrants comprise 13% of the U.S. population and that the majority of these small business owners do not have college degrees. In New York, 36% of small businesses are owned by immigrants, including myself. Miami and Los Angeles have the highest share of immigrant-owned businesses.
What comes as a surprise to many Americans is the changing face of immigration. The number of people coming from European nations is much smaller than it was a century ago. Mexicans comprise the largest immigrant group, followed by Indians, Koreans, Cubans, Chinese and Vietnamese. Foreign-born women are much more likely than their native U.S. counterparts to start their own businesses. Immigrant women are more apt to have a wider net of family support that helps when launching a business venture.
Family structure is just one reason for immigrant success. Additionally, there are special programs to help immigrant-owned businesses, which are often located in urban enterprise zones. Further, organizations such as ACCION USA are much more willing to provide capital to immigrants than big banks are. The SBA has long supported entrepreneurs, whether or not the U.S. is their country of origin.
That is not to say immigrants do not face challenges. Sometimes barriers such as language, cultural aversion to borrowing money or lack of credit history provide hurdles. Also, immigrants sometimes make the mistake of approaching big banks for loans when the larger institutions are likely to have tougher lending parameters. Immigrants are much more likely to secure funding from smaller banks, credit unions and alternative lenders, such as ACCION, the county's leading micro finance organization.
Immigrants add vibrancy to their communities and bring a strong work ethic. Their communities make America a greater place overall.
This opinion column was written by Rohit Arora, co-founder and CEO of Biz2Credit, an online resource that connects small business owners with 1,100+ lenders, credit rating agencies, and service providers such as CPAs and attorneys via its Internet platform. Since 2007, Biz2Credit has secured more than $600 million in funding for thousands of small businesses across the U.S.