This episode focuses on immigrant entrepreneurs, their impact on the New York economy, and their ability to access banking systems, loans, capital, and other resources to start and maintain their business. Ahyoung Kim, director of economic empowerment for the Asian American Federation, and Kristine Rudgers, small business advisor for America’s Small Business Development Centers out of SUNY Brockport, recently participated in the Institute on Immigrant Integration Research and Policy webinar on the Future of Immigrant Entrepreneurship and join the podcast to expand on their discussion to touch on the opportunities and obstacles facing immigrant entrepreneurs and share their insights into how to strengthen immigrant business opportunities through policies and programs targeted at immigrant entrepreneurs.
Ahyoung Kim, director of economic empowerment, Asian American Federation
Kristine Rudgers, small business advisor, Small Business Development Center, SUNY Brockport
Transcript was generated using AI software and may contain errors.
Alexander Morse 00:00
Hi and welcome to Policy Outsider presented by the Rockefeller Institute of Government. I’m Alex Morse. Today’s episode will focus on immigrant entrepreneurs, their impact on the New York economy, and their ability to access banking systems, loans, capital and other resources to start and maintain their business. Our guests, Ahyoung Kim, director of economic empowerment for the Asian American Federation, and Kristine Rudgers, small business advisor for America’s Small Business Development Centers out of SUNY Brockport, recently participated in the Institute on Immigrant Integration Research and Policy webinar Between Stewardship and Laissez Faire: The Future of Immigrant Entrepreneurship and join us again to expand on their discussion to touch on the opportunities and obstacles facing immigrant entrepreneurs and share their insights into how to strengthen immigrant business opportunities through policies and programs targeted at immigrant entrepreneurs. Coming up next.
Alexander Morse 01:13
Kristine, Ahyoung, thanks so much for joining me today.
Kristine Rudgers 01:16
Thanks for having me.
Ahyoung Kim 01:18
Pleasure to be here. Thank you.
Alexander Morse 01:20
So we’re here to talk about immigrant entrepreneurship and access to financial services. And so Kristine, while these first few questions are directed to you, Ahyoung, if you have anything to add to it, please feel free to jump in. So Kristine, New York’s small business development centers help 1000s of entrepreneurs each year. Can you tell us a little bit about what trends you’re seeing with regards to immigrant entrepreneurs growth and need for business development services?
Kristine Rudgers 01:46
I sure can. So what we’re seeing is immigrant entrepreneurs are particularly in the technology sector. They have played a key role in driving innovation. Many successful startups and tech companies have been founded or co-founded by immigrants. We are also seen in our business development services. That cultural competency training can help immigrant entrepreneurs navigate local business customs regulations, and communication styles. In particular, our center director and another advisor, she is Spanish speaking, we’ve been partnering with IBERO, and IBERO is a dual language, multi-service agency that advocates for the underserved, and they’re working to educate refugees and asylum seekers and immigrants regarding small business development. We’re seeing that there’s a huge need in the community, and the education piece must come first. That’s why it’s so important to have the free resources for the individuals like the Small Business Development Centers.
Ahyoung Kim 02:56
I would love to add a point there too, like Kristine said, like there’s a lot of newly emerging interest and appetite for tech. And in my end where I work with first generation immigrant entrepreneurs, especially those who have brick and mortar surfaces, a lot of them are looking into retiring soon. And I see a cultural shift in the Asian American community where previously, a lot of families did not want their younger children to take on the family business because they want the children to be you know, more comfortable in an office job. COVID has definitely changed that. And they think there’s a huge opportunity for us to grasp this interest, and to kind of connect the first generation American owners with the financial services that are available for them to work with their future generations to grow their business and create a long lasting wealth generation. Whereas until now, we have kind of seen the first generations just close down shop when they are ready to retire hoping that their children would be in the professional world.
Alexander Morse 03:54
And speaking of access to financial services, credit scores have traditionally been used to gauge potential access to capital, which is vitally important to entrepreneurs trying to start and maintain a business. This may be more especially challenging considering many immigrants may not have a robust credit history. I’m curious about what alternatives to credit scores may exist, or how immigrant entrepreneurs without credit histories can gain access to capital, while also providing surety to lending institutions.
Kristine Rudgers 04:26
That’s a great question financial institutions in general, the brick and mortar traditional institution that that we think of like to see credit scores right? In the high 600s. That traditionally has proved to be the mark, the standard. Banks have to know that their loans are going to be repaid. Risk tolerance right now is very low for financial institutions, especially in the high risk areas. So with the economy the way it is now I don’t see the traditional lending institutions taking any risks or lowering the standards of having credit scores. I don’t see that happening. However, we do have other avenues like Pursuit, for example, that’s just one of them I’m giving you an example, that will work a little bit more with the entrepreneur will accept a lower credit score. We have micro loans through counties and states levels that will also assess their risk tolerance a little bit lower. But this is why entrepreneurs and immigrant entrepreneurs, I think, face the challenges they do, we need to do a great job at tailoring these financial support programs, including grants, loans, investment opportunities, that’s crucial for their business development. This is why, once again, our center is getting on top of doing the financial education piece. It’s crucial in the beginning stages of working on a small business startup. And it’s you have to work on your business as well as in your business. And that’s what we’re trying to teach.
Alexander Morse 06:15
Now, you mentioned this financial education component, and also trying to gain access to types of grants and other financial services. How else could maybe government play a role here to help support flow to small businesses, including tax code simplifications or other forms of tax breaks?
Kristine Rudgers 06:32
Yeah, so I’m no expert on the tax advice. But I do want to tell you, our director has been in the government arena for quite some time. And I did pick her brain on this and, you know, establishing the programs that collaborate between government agencies and startups as what we are working strongly on. This involves funding joint projects, mentorship, facilitating the partnerships, you know, startups and established businesses, but I think they need to introduce tax incentives, right, enhance them, especially for startups. Tax breaks for research, development, expenses, capital investments, right. Deductions for those business startups that are underserved population. And they, it comes to launching awareness, you know, education, startups, support options, workshops, webinars, we do tons of workshops, and webinars and outreach programs, to disseminate all this information and streamline it so they can understand the processes for government grants and financial assistance programs, you have to reduce the hurdles there is with government, and the immigrants and all the programs out there.
Alexander Morse 07:52
Now Ahyoung, with the Asian American Federation, what are some of those hurdles that you have encountered that you’re trying to break through and gain access to financial services for Asian American immigrants, or broadly, just immigrant entrepreneurs?
Ahyoung Kim 08:05
I would say accessibility is still the biggest problem. It’s accessibility in terms of language access, that simply making sure that people understand what products are available and what kind of system they need to fit into to benefit from these products. But beyond that language access, we still have a huge barrier when it comes to developing a trusting relationship, which is the first step to inviting new immigrants into the American financial system. I see that even throughout the COVID period, when people were very desperate for extra finances and resources, and therefore had to step out of their comfort zone and the previously available financial opportunities, especially within their communities. They had a really difficult time trying to grasp like, what does it even mean to have a credit score, like what are you, what are you supposed to do as an immigrant that’s just landed and brought some cash together from your family and friends to start your business, there is no credit score to show for them. But that doesn’t mean that they’re not a good entrepreneur or that they’re not no financially responsible. And there really needs to be an avenue for them to start learning about these issues and get the basics right. But even before they actually start learning, there’s the problem of no real like reliable service provider and not just talking about financial institutions. But in general, like where do our community members go when they need to learn about general financial institution basics, right. We were saying in our report that was released last year that we need to invest much more in community organizations that already serve these groups, serve this business owners and make sure that those who have received help from these community organizations can come back to them to learn more and say what they need. And it we can’t just look at this as an issue of like how much money went out into a certain community. We have to really invest in the financial literacy and The education to increase accessibility?
Alexander Morse 10:02
What are some of the specifics of this educational campaign and access to financial literacy that you’re providing your members? And a question goes to both of you.
Kristine Rudgers 10:11
So I can speak to the financial literacy piece. What we are trying to do is go out to like the IBERO, right, where there’s the underserved and the immigrants and asylum seekers and refugees, like was said the trust piece, right. So the trust piece has to be there. So they understand what we’re trying to do to help them. And then we are extending the program out to the community. But like I said, we’re just, Rochester is a small community. But we’re trying to expand and take this to all of our other centers. And they have done a really good job at doing a lot of seminars, but we are also inviting them in in a small classroom setting, we’re finding that’s working the best.
Ahyoung Kim 10:55
As for the Asian American Federation, the direct services that we offer include things like webinars or training opportunities, where first generation immigrant owners can learn about how to prepare for your tax papers, for example, or what are the common mistakes that people make when they’re doing their finances, or simply the need to record things, you know, like, you cannot show up to an office with a box of receipts and say, This is my income, therefore, I need a loan based on this, right. So there’s a lot of work to do and just basic training. But I think what’s more meaningful and impactful for the Asian American Federation is that we are sharing these resources with our membership partner organizations. We work with over 70 organizations throughout New York City and State to really expand that reach into business owners that don’t have avenue to learn about what is available for them or what they need to watch out for. And it’s a long and difficult journey, of course. But what was really enlightening for me was that just a couple of months ago, we did a roadshow visit in Buffalo and Rochester. And during that roadshow, I had an opportunity to talk to business owners as well as specific groups that are helping business owners. What was really mind blowing for me is that a lot of these organizations that CBOs that came to talk to me about economic empowerment, their priority mission is actually not to empower small businesses. They’re literally just doing this because they see there’s an urgent need to keep our small businesses afloat, and they are also in need of resources and training for themselves.
Alexander Morse 12:28
That sounds like an important and worthwhile collaboration for CBOs and small businesses to invest in one another. Even something as simple as networking and introducing contacts to assist with access to financial or technical information can help entrepreneurs tremendously. Ahyoung, can you tell us a little bit about the New York State Community Reinvestment Act? The law encourages banks to meet the credit needs of all communities, including low and moderate income areas. Do you think this law is a good tool to measure banking services and access? Or do you think there is something else needed to help augment and support immigrant business owners needs?
Ahyoung Kim 13:06
I would love to kind of rephrase your question. Actually,
Alexander Morse 13:09
That’s perfect. Let me know how to do that.
Ahyoung Kim 13:11
Because I think a question that’s really important for my community is, are we measuring financial services provided in the correct way? Right, I believe the CRA is a good place to start. And they support a lot of the revisions that are being made. But at the end of the day, just simply trying to track how much money went into certain communities when we don’t really even have like aggregated data that properly represents the diverse context and the ethnicity and culture of our communities is kind of meaningless, honestly. And especially for a first generation immigrant. Even if you’ve been here for like over 20 years and wanting a successful business, a lot of these individuals will see mainstream financial institution as like not even an option for them to go ask for money. Unless you are really established and have a line into a bank, or you’re a community member or leader of the community, and therefore have a lot more connection. Regular mom and pop owners don’t really see mainstream financial institutions are somewhere they can just walk in to get information or even get a consultation, which is why we keep on talking about the need for the financial institutions as well as state and city agencies to keep providing support and investing in increasing the capacity of CBOs that are there to hold the hands of these immigrant owners that need that extra boost.
Alexander Morse 14:33
And so you mentioned some of that data that is collected isn’t exactly helpful in its current form or current state. What recommendations do you have, what entities are collecting that data and what information that would be more helpful to your organization?
Ahyoung Kim 14:45
So this is not a popular opinion. I know just because of the sheer burden of the suggestion I’m about to make, but I think we really need to do a deep dive on our new assessment that brings light into where do people get money in the first space, right? Just because you don’t see a lot of ask for loans from small business owners from a Korean American community, for example, does not mean that business owners don’t need money. So where do they get money, there’s a lot of these community oriented or like personal relationship oriented ways for people to pull money together, and then take turns. And if these are functioning, well, they are a great opportunity for individuals. But also, there’s a lot of scary stories of like scams happening, or the cell of the community pool breaking up in the middle because of personal crisis. So there really needs to be a creative measure to look into what is a real need right now. Another need that I want to emphasize here is that in a lot of like older business owners’ perspective, there’s a need for them to be able to re-finance their current debt. And a lot of the times the individuals I talk to are saying there’s a new opportunity for government loans or there’s a new like, nice loan program available, they simply say thanks for the information, but I’m not in a position to take any more loans, I’m already worried that I’m going to die or retire with a lot of debt, especially coming out of the pandemic years. And there are a lot of programs out there that will allow people to refinance their current debt and also like, bring some cash flow to their businesses as a result of that. But that kind of problem is simply not communicated to my community. And that’s where we’re missing out.
Kristine Rudgers 16:29
I have worked in the financial institution in the past, and I do see a lot of educational barriers there. And I agree, for instance, I would have people come over from another country for education, and they thought they could come get a credit card. Well, that’s just simply not how it works. If you don’t have a social security number, we can’t lend to you with that scenario. And the community does, they do pull together and they do pull their resources, I have seen that with several of my businesses in the Asian communities, which is great, and they are able to be educated and support themselves. But at the same time, I have seen the other side of the coin, the institution that I worked for specifically, we do reach out to the community. And we do try and help but there is a trust issue trust barriers.
Alexander Morse 17:21
New York State is currently facing a migrant influx. And many of these migrants or asylum seekers are not eligible to work under current federal regulation. Are these types of cases, people that you are working with, in any capacity?
Kristine Rudgers 17:36
Our center is working with them directly. That is with the IBERO association, we’re beginning to bring education to the forefront there and working to create a program. But like I said, we can only do five, maybe five people at a time because the the knowledge and the education that they need to get is so much that we don’t have enough resources ourself at our center to educate more than that at a time. So it’s baby steps. It’s starting somewhere. But we’re really trying to partner with other organizations as well, in our community.
Ahyoung Kim 18:20
As for my organization, we have been pushing more on the policymaking side to really ask for better ways to accommodate the migrant community and make sure that they are financially stable or at least not vulnerable at the arrival. And it’s a very difficult climate as well. On the other hand, we do work with organizations like those in Buffalo or Rochester that are hosting a lot of migrant community workshops and making sure that they understand their rights as workers here and and hoping that our work with them will continue.
Alexander Morse 18:52
This next question is for both of you. We haven’t touched on business incubators. So let’s pivot there. business incubators serve as a model to help businesses grow and connect them to a network of different resources. First, let’s elaborate on what a business incubator is and does. And second, what are some options the state or local governments should consider to help support and increase the number of incubators to assist businesses and entrepreneurs with limited English proficiency?
Ahyoung Kim 19:23
Well, I think the biggest benefit and the important factors for success of a business incubator is the ability to bring together many services that individuals need in order to start and grow their business instead of them needing to shop around and since right, and it’s a real sad topic for me on this day, because I think our community really does need a business incubator or two or three that can really cater to the needs of our community. And it’s not just an issue of English proficiency. It’s all the issues that we’ve talked about already the financial literacy, the cultural barrier, and the lack of trusting relationship. And if there are business incubators, especially in like ethnic communities that are very robust in small business ownership, for example, Murray Hill where we’re doing a commercial revitalization project, and right now, they will be able to connect the individuals that I mentioned earlier, the ones that are looking forward to retirement, and then also individuals that are looking forward to, you know, creating or revitalizing a dying business to fit better to the market needs of today and to pivot into like the consumer behavior that we have seen rapidly changing in the past few years. And without that kind of like extra help, it really is unfathomable for immigrant businesses or aspiring entrepreneurs to be able to really take that step forward and establish your new business and to grow. So having a business incubator where for example, a one stop shop, where you can learn about financial literacy, where you can learn about your rights, and also maybe get some legal assistance if there are issues. And we’re also you know, that you’re trusting CBO partner will be there to open the doors to or at least make a phone call to the government agencies that are maybe giving you trouble or can solve your trouble is really critically in need. And I will love to see that.
Kristine Rudgers 21:17
I’ll add to that, I mean, understanding the the local demand and identifying the key industries when there’s a need for the support. It’s all about collaboration. This podcast is a way to establish partnerships to leverage the academic research. Mentorship is huge. In my industry, we are learning for instance, we have our advisor that’s Spanish speaking, in our culture, in her in her culture, she is learning that collaboration piece, that mentorship, how they look up to her because they can relate to her, right. So you know, there’s language barriers, a lot of our advisors, speaking with me, I only know English. So it’s hard, because that isn’t something that was forced upon us to learn, right. So we are our business development services, we have language lines, so we can provide language support. And that has to be something that’s brought into these incubators. There’s a lot it’s a work in progress. We are definitely working on it at the SBDC. And we’re working very hard at focusing on the language barriers and the incubators and putting together a solid program.
Alexander Morse 22:27
Well, I’m very grateful for the both of you for joining the podcast to help continue your outreach and provide the support that you know for these necessary services for people who are in need of education, financial literacy, and business support. That’s it for any questions that I have if there’s anything else that you guys want to touch on as a last note, before we wrap up.
Kristine Rudgers 22:45
No, I just, I thank you very much for bringing this to the attention of everyone. It’s it’s a much needed topic. It takes one person in the community to begin working on this, and then it’s it’s catching. So we are definitely getting there in our area. And it’s unfortunate that we only could do so much. But like I said, this awareness is wonderful. And thank you for having me.
Ahyoung Kim 23:12
Yeah, I guess my last comment on leaving would be that whenever we are reimagining policies or programs or even financial products, I wish that those who are designing these new products and policies would really consider a how will this be received in the immigrant community? If you didn’t know how the American banking system works? Where will people even start to find out about this issue and really put your money and effort into investing and raising up the organizations that are helping people on the ground? Even if it doesn’t mean you can show a number of like how many dollars actually went into the community from that one single effort. It is a long term investment and I think everybody in the community benefit not just immigrants.
Alexander Morse 23:59
Ahyoung Kim, Kristine Rudgers, thank you so much.
Alexander Morse 24:07
Thanks again to Ahyoung Kim, director of economic empowerment for the Asian American Federation, and Kristine Rudgers, small business advisor for America’s Small Business Development Centers out of SUNY Brockport, for sharing insights into the challenges faced by immigrant entrepreneurs trying to gain access to financial services to improve and maintain their businesses. If you want to learn more, I recommend checking out the Institute’s recent webinar on the subject: Between Stewardship and Laissez Faire: The Future of Immigrant Entrepreneurship. A link to the webinar is in the episode description. If you liked this episode, please rate subscribe and share. It will help others find the podcast and help us deliver the latest in public policy research. All of our episodes are available for free wherever you stream your podcasts and transcripts are available on our website. Special thanks to Rockefeller Institute staff Guillermo Martinez and Heather Trela for their contributions to this episode. Thanks for listening. I’m Alex Morse. Until next time. Policy Outsider is presented by the Rockefeller Institute of Government, the public policy research arm of the State University of New York. The Institute conducts cutting edge, nonpartisan public policy research and analysis to inform lasting solutions to the challenges facing New York State and the nation. Learn more at Rock institute.org or by following at Rockefeller inst. That’s Rockefeller i n s t on social media. Have a question comment or idea? Email us at [email protected]
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