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Immigrant Businesses Start with More Capital than Others Do

May 3rd, 2012 · No Comments

Immigrants make a significant contribution to business ownership and formation, according to a new study from the Office of Advocacy.  Immigrant Entrepreneurs and Small Business Owners, and their Access to Financial Capital found that 10 percent of immigrants own a business. Nearly 20 percent of immigrant-owned businesses started with $50,000 or more in startup capital, compared to 15.9 percent for non-immigrant-owned business. The study uses data from the 2007 U.S. Survey of Business Owners and the 1996-2010 Current Population Survey.

“Immigrant entrepreneurs are essential to our nation’s growth and economic prosperity,” said Chief Counsel for Advocacy Winslow Sargeant. “Immigrant entrepreneurs make our nation more competitive and serve as reminders of the American dream.”

The most common source of startup capital for immigrant-owned businesses is personal or family savings, with roughly two-thirds of businesses reporting this source of startup capital. Other commonly reported sources of startup capital by immigrant-owned businesses are credit cards, bank loans, personal or family assets, and home equity loans. Overall, the sources of startup capital used by immigrant-owned businesses do not differ substantially from those used by non-immigrant-owned firms. 

Startup Capital Distributions for Immigrant and Non-Immigrant Owned Firms (Percent)

Special Tabulations from the Survey of Business Owners (2007)

Amount of Startup Capital

All Firms

Immigrant

Non-Immigrant

Hispanic Immigrant

Asian Immigrant

No startup capital

23.5

22.0

23.8

25.2

17.3

Less than $5,000

33.7

29.7

35.3

34.8

22.8

$5,000 to $9,999

9.2

10.1

9.2

12.0

8.8

$10,000 to $24,999

9.8

11.1

9.6

10.9

12.5

$25,000 to $49,999

6.4

7.6

6.2

6.7

9.6

$50,000 to $99,999

6.1

7.4

5.7

4.8

10.5

$100,000 to $249,999

5.8

6.9

5.4

3.4

10.7

$250,000 to $999,999

3.9

4.1

3.6

1.8

6.0

$1 million or more

1.6

1.2

1.2

0.4

1.7

Notes: (1) All firms includes publicly held firms. (2) Excludes non-responding firms and owners reporting “don’t know” for level of startup capital.
Source: Robert Fairlie, Immigrant Entrepreneurs and Small Business Owners, and their Access to Financial Capital, U.S. Small Business Administration, Office of Advocacy, May 2012, http://www.sba.gov/advocacy/7540/141841, p. 17.

Tags: Research & Statistics