Business? Yes. Citizen? No. The Struggles of Immigration and Entrepreneurship

Eric Goldschein

Eric Goldschein

Eric is an editor and writer at Fundera with nearly a decade of experience in digital media. He has written for a number of outlets including Business Insider, HuffPost, Men's Journal, BigCommerce, and Volusion, covering entrepreneurship, finance, marketing, and small business trends. He graduated from the University of Pittsburgh with degrees in history and English writing.
Eric Goldschein

The role of immigrants in American society has never been in a more uncertain place than today.

It’s inarguable that foreign-born workers, entrepreneurs, and business owners—documented and undocumented—make a substantial contribution to the U.S. economy. Immigrants account for nearly a third of all new small businesses, hold a third of internationally valid patents, and in cities like New York and L.A., they are responsible for a vital amount of the local economic output.

All small business owners know the hardships related with starting and maintaining a business. How much more difficult is it keep your business financially stable when you’re a non-U.S. citizen?

Well, just as there is no singular immigrant experience—and no singular small business experience—there is no universal immigrant business owner story. Take Shahzeb Shahzeb, the co-founder of Startup Investments and a Pakistan national with U.K. citizenship. His company does financial planning for individuals and businesses all over the world, and his journey through doing business in the U.S. has taken him across the country, into (and out of) the offices of numerous banks, and put him up against various forms of discrimination and ostracizing.

“There have been a lot of times when we have encountered problems solely because of our nationalities,” Shahzeb says.

That’s something many immigrants can likely sympathize with. Here are some other commonalities of the immigrant business owner experience:

What You Need to Start a Business as an Immigrant

According to the U.S. Small Business Administration, you need to have one of the following in order to start a business as a foreign national:

  • A green card, otherwise known as status as a permanent resident. A green card lets immigrants maintain their foreign citizenship but also gives them the right to join the armed services or start a business.
  • EB-5 Investor Green Card, which basically like receiving green card status due to investment in the country. A lawyer can give the best advice on how to proceed down this path, but the requirements include making an investment in commercial U.S. enterprise and a plan to create or preserve 10 full-time jobs.
  • Other immigrant or nonimmigrant visas, including EB-1 and EB-2 or B-1 and O-1A, respectively. A full description of possible visas for foreign entrepreneurs can be found on the U.S. Citizen and Immigration Services site.

Other things you need to consider before moving ahead: setting the structure of your business (LLCs and C Corporations have no restrictions on the nationality of the owners, but an S Corporation’s shares can only be held by U.S. citizens and resident aliens), establishing a business bank account (which for a non-U.S. national requires a tax ID number and a government-issued document with a photograph, and other requirements depending on the bank you use), establishing an online retail presence, and understanding your tax requirements.

Would becoming a citizen make life easier?

Becoming a U.S. citizen is, of course, easier said than done. And there are pros and cons, in the eyes of foreign nationals, to becoming a citizen for the purpose of making business dealings run more smoothly.

Put it this way: It’s not something Shahzeb was looking to do just to circumvent the system.

“I have a fiancée from Tennessee, and if I marry her and switch my visa category, I will eventually become a U.S. citizen, but that is not on the cards for at least 3 to 5 years as I personally don’t think that I am ready for such a commitment. And exploiting the institution of marriage for a personal gain does not appeal to me,” he says.  

There are other things to consider besides not wanting to get married right away as well. Like it or not, citizenship isn’t always in the best interest of those who want to conduct business in our country.

“As far as my business associate Nicole, who is from South Africa, is concerned, she drives her income from a variety of businesses operating outside the United States which were set up by her father, and if she were ever to become a U.S. citizen, she would be liable to pay taxes to the U.S. government on her worldwide income, something she is reluctant to do,” Shahzeb notes.

Another thing to note: There is no avenue to citizenship through successful business dealings. “The business visas we’re on don’t lead to U.S. citizenship, even if we live here for 50 years,” says Shahzeb.

What issues might immigrants have when dealing with local government and institutions?

In theory, there is no government objection to immigrants starting businesses, provided they have the proper documentation. In fact, an SBA study found that immigrants have higher business ownership and formation rates than nonimmigrants. Cities like New York are famous for their “bodegas,” or convenience stores, often open 24 hours a day and owned and operated by immigrants.

The one area that causes issues: the gray zone that comes with managing a business that has no physical presence. This creates challenges for immigrants and nonimmigrants alike, but it was especially troublesome for Shahzeb and Startup Investments.

“The best way to judge a state’s ‘friendliness’ towards foreign businesses is by analyzing how convenient it is for businesspersons from other states and countries to manage their business entities without a physical presence,” says Shahzeb. “States that are ‘unfriendly’ to foreign businesses require state residency to let an entrepreneur become an owner, manager, shareholder, member, or a director of a business entity.

“In states with significant foreign business presence, financial institutions like banks and insurance companies have greater experience of serving people who are not American, so it makes it easier for us to deal with them,” he explains. “In my experience, financial institutions in states like Nevada, Wyoming, Delaware, New Hampshire, and Utah understand the international, federal, and state business laws better than others.”

Another reason Shahzeb highlights a state like Nevada is its tax laws: The state levies no corporate income tax, franchise tax, or personal income tax. This makes it more appealing for foreign business owners who want a U.S. foothold without financial ramifications.

Are banks and lenders as helpful to immigrant business owners as they are to U.S. citizens?

Again, banks and lenders are generally fine lending to immigrant businesses. Immigrants clearly understand the importance of startup capital to their endeavors: Nearly 20% of immigrant-owned businesses start with at least $50,000 in startup capital, compared with 15.9% of nonimmigrant-owned businesses, according to the SBA. But that same report showed that the most common source of funding was personal or family savings, rather than a bank or lender.

Shahzeb’s experience illustrates why obtaining capital as an immigrant-owned business can be trying.

“I was a U.K. resident when I applied for a personal and a brokerage account at Charles Schwab,” he tells us. “My application contained a bulk of documents including proofs of residence. I was on a vacation with my girlfriend and we were visiting the Middle East and Africa when I received a call from Schwab. They asked where I was at the time. When I told them about my whereabouts, they turned down my application, saying that I was in a country that they did not currently serve.

“I reiterated to them that I was living in the U.K., a country they did serve, and I was out of the U.K. only for a brief vacation. The customer service representative just said, ‘We have already returned your documents.’” The fact that my then-girlfriend, an American, only needed to fill out an online application with a minimum balance requirement of $25, made me feel as if I was being discriminated against.

“We also tried opening an account at Bank of America. The customer rep said, ‘We only open accounts for U.S. citizens,’ and she didn’t ask if we had International Tax Identification Numbers. Though I personally think that she was misinformed.”

Will the local business community be as accepting?

The answer to this question depends on a lot of factors, of course. Good business owners know the value of a supportive local community, including customers and fellow entrepreneurs who understand the ins and outs of local regulations, can find the best deals, and are willing to help you meet new potential clients and partners.

While Shahzeb has prioritized establishing partnerships and keeping the peace in his time in the U.S., he has come up against forms of discrimination and isolationism that would hurt any person’s feelings—let alone their business.

“Businesses that operated near ours in Alabama organized a Thanksgiving dinner and gave out invitations to every business owner,” he says. “We thought that this would be a good opportunity to meet other business owners as we had just started our operations, but to our surprise, we were first invited and then uninvited from the event because ‘Thanksgiving is an American tradition,’ and we were not Americans.

“On another occasion, we were not invited to a 4th of July barbecue organized by business owners in our vicinity. We were kept out of a local business convention since that was again for ‘real American businesses.’ On a latter date it we did receive an apology, and it was revealed that a competitor had influenced the decision for our exclusion.”

Again, reception for business owners of all backgrounds can vary, depending on factors such as the current political and economic climate. How business owners are received is only partially up to them—it’s also incumbent upon existing business owners to make newcomers feel welcome.


The truth is, as with immigrants in general, immigrant business owners face a certain level of scrutiny, paranoia, and judgment that makes success more difficult. Whether you agree or disagree with the level of difficulty being raised for non-citizens in this arena, immigrant-owned businesses are undeniably an unextractable part of U.S. economic life.

And as long as we are the land of opportunity, there will be people—both born here and abroad—hoping to make that opportunity their own.  

Editorial Note: Fundera exists to help you make better business decisions. That’s why we make sure our editorial integrity isn’t influenced by our own business. The opinions, analyses, reviews, or recommendations in this article are those of our editorial team alone. They haven’t been reviewed, approved, or otherwise endorsed by any of the companies mentioned above. Learn more about our editorial process and how we make money here.
Eric Goldschein

Eric Goldschein

Eric is an editor and writer at Fundera with nearly a decade of experience in digital media. He has written for a number of outlets including Business Insider, HuffPost, Men's Journal, BigCommerce, and Volusion, covering entrepreneurship, finance, marketing, and small business trends. He graduated from the University of Pittsburgh with degrees in history and English writing.
Eric Goldschein

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