We recently had the opportunity to help a local business owner who is a D.A.C.A resident.
Good commercial real estate loan. Credit and income good and owner occupied.
Challenge for borrower was his resident status was that of D.A.C.A. The borrower came to the U.S. as a child, they are fluent in English, hard-working, and making a good life for themselves in the land of opportunity. As you can imagine, a D.A.C.A immigrant trying to get a business loan is kind of a challenge. Even hard money lenders were passing on the deal.
With some luck we found a lender who offered pricing just above that of a normal bank loan. 6.75% fixed for 5 years, 10-year term and loan pymts based on a 20-year amortization.
D.A.C.A is an abbreviation for “Deferred Action for Childhood Arrivals”. D.A.C.A status was created to allow some children who were brought into the United State illegally to receive a renewable two-year legal immigrant status and be eligible to work in the U.S.
Some of these children, also know as Dreamers are now grown up and positive contributors to our local economy. They own successful businesses, hire people and pay their fair share of taxes.
Although these immigrants are here legally, obtaining business financing can be extremely difficult. The reason for this is banks are afraid that their legal residency may expire. If the business owner’s D.A.C.A status expires or if the D.A.C.A program is eliminated, the business owner would become an illegal alien.
Why are D.A.C.A immigrant business owners having trouble finding financing?
What are the rules D.A.C.A Immigrants must follow to be allowed to work in the United States? D.A.C.A immigrants must show documentation that proves their identity and employment authorization. Some D.A.C.A immigrants also known as “List A”, must establish a photo ID which shows that the D.A.C.A immigrant is authorized to work. D.A.C.A immigrants will not need to have the documentation if they are not working.
How do immigrants become accepted into D.A.C.A? To be accepted into D.A.C.A the immigrants must first be under the age of thirty-one as of June 15, 2012, have come to the United States before reaching their 16th birthday, and have continuously resided in the United States since June 15, 2007, up to the present time. Also, the illegal immigrants must have been physically present in the United States on June 15, 2012 and must be physically present at the time of making their request for D.A.C.A consideration.
Additional requirements to apply for D.A.C.A are that the illegal immigrant must be currently in school or have received a GED, or are an honorably discharged veteran of the Coast Guard or Armed forces. Finally, these applicant immigrants must have never been convicted of a felony, significant misdemeanor, or three or more misdemeanors, and do not pose a threat to national security and or public safety. There are more requirements but the requirements stated previously are the most important.
How many people are enrolled in D.A.C.A? And how many D.A.C.A immigrants are self-employed? About 700,000 young undocumented immigrants (known as dreamers) have signed up for the D.A.C.A program. According to an article on CNN, “More than 5% of D.A.C.A recipients have started their own businesses since enrolling the program”. This evidence suggests that over 35,000 D.A.C.A recipients are self-employed running their own business.
Can D.A.C.A recipients receive loans with Small Business Administration guarantees? The answer to this is unfortunately no, they are not entitled to any Federal loans. Here are the SBA Guidelines regarding Non-U.S. Citizens.
Businesses Owned by Non-U.S. Citizens.
SBA can provide financial assistance to businesses that are at least 51% owned and controlled by persons who are not citizens of the U.S., provided the persons are lawfully in the U.S. and have an appropriate work visa. The processing procedures and the terms and conditions will vary, depending upon the status of the owners as assigned by the United States Citizenship and Immigration Services (USCIS).
SBA requires all participating Lenders, including SBLCs, to comply with the U.S. Department of the Treasury regulations for Customer Identification Programs for banks, savings associations, credit unions, and certain non-Federally regulated banks found at 31 CFR § 1020.220.
Businesses owned by Naturalized Citizens are eligible and the naturalized citizens are 1.not subject to any special restrictions or requirements. If an individual’s SBA Form 1919 (or EIB-SBA Joint Form 84-1 for EWCP loans) reflects he or she is a U.S. Citizen no further verification of status is required.
Businesses owned by Lawful Permanent Residents (LPRs) are eligible. LPRs are 2.persons who may live and work in the U.S. for life unless their status is revoked through an administrative hearing.
The USCIS Form I-551 (551), Lawful Permanent Resident Card, commonly a)referred to as the “green card,” is evidence of LPR status. USCIS has two versions of the 551:
In addition, most banks won’t fund business loans to D.A.C.A residents because of the same United States citizenship concerns.
What options are available for D.A.C.A business owners? D.A.C.A business owners are mostly restricted to non-traditional lending sources. This is because lenders are concerned about the longevity of their stay in the United States. Therefore, many D.A.C.A business owners have trouble finding loans around the United States. For most of them it is a very difficult or near impossible task to get loans for D.A.C.A immigrants due to the restrictions of D.A.C.A and the limitations the banks are under.
All the statements listed previously are reasons as to why many believe D.A.C.A immigrants are being treated poorly and are unable to find financing, from having trouble applying to D.A.C.A to the recent Trump administration policy towards immigrants, things don’t seem to be improving. Many believe the Trump Administration is trying to destroy D.A.C.A.
The ability of lenders to have added flexibility with D.A.C.A immigrants. This lender relationship is diminishing and at the time of this article, in Florida there is only one bank making business loans to D.A.C.A immigrants.
According to an article published in the New York Times “In trying to close the program, the Trump administration argued that Mr. Obama had abused his authority and circumvented Congress to create D.A.C.A”. The evidence shown above supports the statement that the Trump administration wants to eliminate D.A.C.A which will lead to these immigrants not being able to work and if they implement specific laws set forth, many immigrants will have to leave this country. Many banks will see this as a risky loan with no certainty that the D.A.C.A immigrants will be allowed to stay in the United States or be allowed to work.