Sponsored post: What You Didn’t Know About Arab Businesses In the U.S.
According to data from the US Census Bureau, the Arab population in the United States is relatively small compared to other minorities, accounting for roughly 0.42% of the people by the end of 2000, with around 1.2 million Arabs currently being based in America.
Among them, the median household income going from 2006 to 2010 stood at $56,433, which is roughly $4,000 above the median for all US households, indicating that the Arab community is, on average, more affluent than the average American family.
However, the Arab business community faces significant challenges, including racial discrimination from potential clients and lenders, as indicated by a 2017 Pew Research survey. This regrettable situation accompanies the regular hurdles that immigrants face when attempting to secure credit for their businesses.
To respond to these issues, spokespersons for the community have advocated for the classification of Arab businesses as “disadvantaged” – a categorization that would facilitate access to government contracts and financing sources.
Moreover, companies like Camino Financial have small business loans and other financing alternatives that are now accessible to Arabs and other minority-owned businesses in an attempt to offer a solution to those imbalances that often cap the advance of companies owned and operated by immigrants.
Fintech companies as an alternative for minority-owned business owners
The Pew Research study highlighted that at least 75% of American Muslims – a segment of the Arab population – have experienced a high degree of discrimination regarding work and business affairs.
The Arab community has cited examples of Arab business owners being indirectly forced to close down their ventures due to the obstacles that lenders often impose on them, which prevent them from accessing much-needed capital and even government contracts.
For Arab businesses, small business loans like those offered by financial technology companies can be an avenue through which they can obtain funding at a competitive interest rate without having to go through the often time-consuming process of applying with a traditional financial institution.
Online lenders like Camino have designed products that even cater to undocumented immigrants, as is the case of ITIN loans, which allow individuals who have not yet obtained a Social Security Number (SSN) to obtain financing for their existing companies.
Interest rates for these types of loans commonly start at 1% per month. The repayment period can go from 12 to 60 months while the approval is conditioned to meeting less rigid criteria compared to the requirements imposed by traditional lenders.
How can Arab entrepreneurs benefit from small business loans?
A small business loan works similarly to an installment loan. This means that the borrower commits to paying back a fixed amount per month during a pre-defined period while the proceeds from the loan can be used for multiple purposes.
Typically, a growing Arab business will need capital for expanding inventory, purchasing fixed assets, or covering operating expenses during temporary business downturns such as the one caused by the pandemic.
Flexible repayment periods are particularly beneficial as they give the Arab business owners enough time to produce the capital needed to repay the loan’s principal. At the same time, interest expenses can be covered by the profits generated by the projects for which the funds are deployed.
If Arab businesses are categorized as “disadvantaged”, which would give them access to more opportunities to bid for government contracts, they will probably require capital injections to finance the completion of these projects, and these loans will be quite helpful to achieve that goal.
What does an Arab business owner need to apply for a small business loan?
According to data from the 1990 US Census, most Arabs in America were already citizens, while as much as 63% of them were born in the United States. This facilitates the process of applying for a traditional loan as individuals who have a valid Social Security Number (SSN) will usually pay lower interest rates compared to undocumented immigrants.
The criteria for getting approved for a loan include being 18 years old or older and owning a business that has generated a certain minimum amount of revenue in the past few years. Moreover, having a credit score above 700 can also be helpful not just for getting approved but also to secure the most advantageous conditions for a credit line.
As for the application and approval process, fintech companies have facilitated this task by simplifying the procedure. Nowadays, applying for a small business loan will only take a few minutes, and the process can be completed from home or from anywhere in the States by using a smartphone.
Meanwhile, response times have been reduced significantly by fintech companies through the introduction of algorithms and artificial intelligence that help lenders in responding in less than 24 hours in some cases.
Bottom line
Are you an Arab business owner? Have you struggled to secure a loan for your American-based business? Fintech companies are working on your behalf, and the financing solutions they have conceived for you were designed to reduce the hurdles typically imposed by traditional institutions during the process of applying for a loan.
Give one of these companies a shot, and don’t let a lack of capital get in the way of achieving the dreams and goals you have set forth for your company.
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