Immigrant Entrepreneurs and Small Business Owners and their Access to Financial Capital

Robert W. Fairlie, Ph.D., May 2012


This study, using data from the 2007 U.S. Survey of Business Owners, attempts to complete the picture on immigrant entrepreneurship and addresses questions such as the following: What hurdles do they face accessing capital? How do they use capital? The importance of immigrant entrepreneurs to the U.S. economy has been very well documented in Advocacy-sponsored research and elsewhere in the economic literature. They contribute greatly to the economy, have high business formation rates, and create successful businesses that hire employees and export goods and services. Lacking, however, was a thorough look at the financial picture that would complement what we know of them.

Overall Findings

  • Immigrants are found to have higher business ownership and formation rates than non-immigrants. Roughly one out of ten immigrant workers owns a business and 620 of 100,000 immigrants (0.62 percent) start a business each month.
  • Immigrant-owned businesses start with higher levels of startup capital than non-immigrant- owned businesses. Nearly 20 percent of immigrant- owned businesses started with $50,000 or more in startup capital, compared with 15.9 percent of non-immigrant-owned businesses.
  • Roughly two-thirds of immigrant-owned businesses report that the most common source of startup capital is personal or family savings. Other commonly reported sources of startup capital by immigrant businesses are credit cards, bank loans, personal or family assets, and home equity loans. Overall, the sources of startup capital used by immigrant businesses do not differ substantially from those used by non-immigrant firms.

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