According to a recent (2012) survey, "Asian Americans are the highest-income, best-educated and fastest-growing racial group in the United States. They are more satisfied than the general public with their lives, finances.." Asian Americans own and operate more than 2 million small businesses in the United States and "in the past decade, the number of companies owned by Asian-Americans increased by an incredible 24%." Part of the reason for this strength lies in higher levels of capital sources in the community. Other factors include the language barrier, which has always made members of these distinct, self sufficient groups reluctant to seek capital outside a small, tight knot community. Asian owned banks in the US are much larger than their African American counterparts. Seventy three (73) Asian American banks hold $120 billion in assets. Black banks hold a relatively paltry $5 billion in assets. Launching an Asian American-owned business is, in this sense, relatively easier. We have described this in Thriving As a Minority-Owned Business in Corporate America: Building a Pathway to Success for Minority Entrepreneurs.
And remember, for all of the talk about Asian American business success, there is a significant percentage of the population that is comprised of "new immigrants who have few options for joining the labor market. Factors include poor or no credit, access to the appropriate financial products and services, lack of education and familiarity with U.S. financial systems, and lack of access to capital."
Given this, if you are an Asian American citizen (not immigrant) looking to start a business or to obtain business funding, we suggest you start with a bank, not a credit union. We provide more detail below.
We outline the sources and tactics we recommend below.
Request more informationAsian banks are the first stop if you are a US Citizen of Asian descent. For Asian American immigrants, however, some of the newer tools, like crowdfunding, credit unions and microfinance may work best.
Seventy three (73) Asian American banks hold $120 billion in assets. This is more than any other ethnic group in America. In addition, given the language barrier, it makes sense to look at this source first if you are Asian. (Of course, Asian does not mean monolithic. If you are Chinese, don't go to a Vietnamese bank.) Culturally, this is a hard sell, since Asian "small businesses perceive banks as untrustworthy, have a fear of taking on debt and are unfamiliar with services and products offered by financial institutions." But with over $100 billion in assets, we suggest starting here.
For immigrants with few options, donations-based crowdfunding allows you to raise small ($1,000 to $10,000) amounts of business capital. Culturally, we have heard that Asians feel that crowdfunding is akin to begging, so they are reluctant to use it. This, we feel, would be addressed by a platform specifically focused on this sector. There are no platforms that we are aware of that focus on Asian Americans, however, but cultural and language barriers might support the creation of one.
According to the NCUA, in 2017, 54 Asian focused credit unions held $4,328,873,700 in assets. For Asian American citizens, we think Asian focused credit unions are another natural option. "Credit union business loans and credit union short-term loans work just like business loans from a bank. It’s generally no easier to get business loans from a credit union than a bank."
If you are an Asian American immigrant, we suggest you look at Community Development Financial Institutions and microcredit lenders, specifically members of the National Coalition for Asian Pacific American Community Development: Asian Economic Development Association, Asian Pacific Islander Small Business Program, Asian Services in Action, Business Center for New Americans, Center for Pan Asian Community Services, Pacific Asian Consortium in Employment, Pacific Island Knowledge 2 Action Resources, Philadelphia Chinatown Community Development Center, and Renaissance Economic Development Corporation.
Asian Business Financing Options are extensive, but, as with options for Black businesses, not all are created equal. More suggestions are below.
Eligibility factors vary depending upon the type of business financing you are looking for, but there are a few factors which you should keep in mind. If you are going to a financial institution, a personal credit score of at least 650. According to one source, in 2010, "the average FICO (credit agency) score in America is 728 for a homebuyer" and the average Asian homebuyer FICO score was 747," compared to an average score of 677 for Blacks. What this implies is that financial institutions will be more willing to provide small business loans to Asian Americans. This is why we recommend banks as the first stop for Asian American US citizens. This includes online loans. Note that, for new Asian immigrants, the recommendation is different.
For most online small business loans, you need to be in business for at least a year.
$50,000 to $150,000
You will need to specify how you plan to use the money. Some financing types limit how you can spend the approved funds: equipment financing loans require you use the funds to purchase equipment.
If you have a question about Asian Business lending, see the FAQ page.
Given the higher than average credit scores of Asian Americans, we think online lending options are good. As with all sources, we suggest evaluating these sources carefully. They may work, but it is a case-by-case determination.
Take a look at our page on credit cards. For a group with higher than average credit scores, like Asians, any type of lending from regulated financial institutions becomes more viable. This includes credit cards. The cost of this financing is elevated, however, which means you must have a solid idea of the revenue your business expects to generate so that you can repay what are likely to be very expensive short term loans.
Other financing options and resources including grants and awards. We would not count on these. The demand for these resources far outstrips the supply, so your chances are minimal.
Some of these are "Shark Tank" like competitions.
See minoritybank.com, creativeinvest.com, diversityfund.net, moneytoday.info and hr41.info
If you need personalized information, focused on your specific situation, all you need to do is provide details below.
