Harnessing Immigrant Entrepreneurship for Economic Growth

Last week’s release of Bread for the World’s new paper on immigrant small businesses was marked by racial tension from unexpected quarters, as audience members and presenters at a joint panel discussion took on the question of who it was politically palatable for the government to support.

The event, titled “Harnessing Immigrant Small Entrepeneurship for Poverty Reduction and Economic Growth” and co-sponsored by the New America and Bread for the World Institutes, focused on the potential of immigrant-owned small businesses to grow the economy and reduce poverty, and the challenges that may prevent them from doing so.

According to Bread for the World Senior Immigration policy analyst Andrew Wainer, immigrants represent 13 percent of the population, but are 18 percent of entrepreneurs. Lack of documentation to work legally is likely a major statistical driver, though small business may also be an opportunity for individuals to use skills from back home or fulfill a need within an immigrant community. President Obama’s executive action that granted deferred deportation and work permits to millions of unauthorized immigrants provided Bread for the World the opportunity to suggest policies to better serve them. Their suggestions included dedicated funding from the Small Business Administration along the lines of that provided for women-owned, minority-owned, and rural businesses; connecting immigrant entrepreneurs to resources through the Deferred Action for Parental Accountability (DAPA) initiative; and broad legalization. Amelia Lobo, who runs a CDFI for small businesses, also mentioned the important resources provided by USDA, the CDBG program, and the CDFI Fund.

We heard from Betty Garcia, an entrepreneur who helped grow her family’s tortilla business …
The Garcias took advantage of the 1987 Immigration Reform and Control Act to gain legal status, which allowed them to secure bank loans, buy property, and formally incorporate the business. According to Lobo, undocumented entrepreneurs can be too risky for banks, as they lack credit histories and are at risk for deportation. Even nonprofits are frequently barred from using federal funding to make loans to people lacking legal work status. However, she is seeing cities beginning to lead the way by supporting entrepreneurs they know to be undocumented, on the strength of their contributions to the business community. “We call ourselves a client-driven organization, so we must be culturally competent,” said Lobo. “I live in a state where the legislature made a conscious decision not to provide materials in other languages, so nonprofits need to fill that gap.”

Financial education is also crucial for immigrant small business owners, according to Rod Castillo, head of the Sauzo Center for Business Development and Entrepreneurship in Salt Lake City, UT. “A lender might go out and look for A+ borrowers, but we create the A+ borrowers,” he said. “We help them help themselves.” Castillo highlighted the variety of skills needed by entrepreneurs, saying, “Entrepreneurship demands a lot. You need to be a little bit of a lawyer, a little bit of a salesman, etcetera.” This perspective underpins Bread for the World’s conclusion that the federal government, through the Small Business Administration, should be supporting nonprofits who provide financial training for immigrant entrepreneurs.

For moderator Scarlett Adelbot-Green of the New America Institute, the legal status question is a straw man argument. “We cannot possibly deport everyone who is in the U.S. without legal status. That’s just a fact. What is the potential long-term loss [to the U.S. economy] of creating this system that keeps people and their children in a second class economic status?” Immigrant entrepreneurs are politically appealing because they create new jobs, avoiding the trope that immigrants “take jobs away from Americans.” However, an audience member's question then tried to goad the speakers, who were predominantly from Latino serving organizations and Latinos themselves, into pitting Latinos against African Americans—a group with different barriers to economic opportunity—by asking whether the jobs created by these immigrant entrepreneurs are going to “Americans” or family members of the entrepreneur. The speakers did an excellent job of neutrally acknowledging the racial context of the issue while maintaining that it was “not productive to pit groups against each other.”

A community development lens was again raised as a solution: focus on bettering low income neighborhoods, no matter the racial composition. All agreed that community development nonprofits play vital roles by providing capital, education, and culturally competent services to new entrepreneurs.

(Photo credit: Flickr user Bev Norton, CC BY-NC-ND 2.0)

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