International Students: Getting A Business Loan In The Usa

As an international student in the USA, you have access to different types of student loans, including federal, private, and institutional loans. However, most federal loans are only available to US citizens and eligible non-citizens, so you will likely need to consider private loans. These loans don't require borrowers to have a Social Security Number (SSN) or collateral, and some don't even require a co-signer. To be eligible for an international student loan, you must be enrolled in an accredited degree program at a US college or university. The availability of scholarships and financial aid varies, so it's important to check with your institution to see if they offer any aid you might qualify for.

Characteristics and Values Table for International Students Seeking Business Loans in the USA

Private student loans for international students

As an international student, you may not have access to federal student loans in the USA and scholarship opportunities are scarce. Thus, you may need to turn to private lenders that specialize in student loans for international students.

Some private lenders that offer student loans for international students include:

• Prodigy Finance: Offers graduate loans to international students attending programs at more than 1,500 schools worldwide. Loan decisions are based on applicants' future earning potential, and do not require collateral or a cosigner.
• MPOWER Financing: Offers private student loans for international students.
• Earnest: Offers a wide variety of student loans, including some specialized graduate loans and refinance loans.
• SoFi: Offers loans to undergraduates, graduate students, law and business students, and parents.
• Ascent: Offers both co-signed and non-co-signed student loans, which gives borrowers without co-signers more college funding options.

There are some other options to consider before taking out a private loan. Firstly, you should research funding opportunities from your country's embassy or governmental educational office to see if there are applicable scholarships. You can also use the U.S. Department of Labor's scholarship search engine to identify scholarships, fellowships, grants, and financial aid awards. Additionally, you should check with the college you will be attending to see if they offer international students financial aid. Organizations like Education USA advise international students on topics like how to finance college in the U.S., the student visa process, and standardized testing requirements.

If you are considering a private loan, you should compare several lenders to determine the right fit. Many offer pre-qualification, which you can do with just a soft credit check that won't hurt your credit score. However, some lenders may require a full application to determine what you qualify for. Lenders will base private student loan approval on creditworthiness, so it is important to establish a credit history or find a creditworthy co-signer.

Interest rates for international students are computed using a benchmark rate (Prime Rate or SOFR) plus a margin that is contingent on the creditworthiness of the borrower or their co-signer. The repayment period generally ranges from 10-25 years, but the larger the loan, the longer the repayment period.

Co-signers and credit scores

As an international student in the United States, you will typically need a creditworthy co-signer who is a US citizen or permanent resident and has lived in the US for the past two years. This is because most international students in the US do not have a credit history, which is necessary for the loan application process.

The credit score of a student or their co-signer is a three-digit number determined by three credit bureaus: Equifax, Experian, and TransUnion. These credit bureaus evaluate your past payments, loans, and credit cards to determine your credit score, which reflects the potential risk of lending to you. The higher your credit score, the more likely you are to receive a better interest rate on your loan. A good credit score indicates that you can regularly make payments without being late, reducing the risk for the lender.

Since most international students do not have a credit history, their co-signer's credit score becomes crucial in securing a loan. The co-signer is legally obligated to repay the loan if the borrower fails to do so. Lenders will evaluate the co-signer's ability to pay by considering their credit score and income. The minimum income requirement for a co-signer is typically $24,000 to $35,000 per year.

While most international student loans require a co-signer, there are a few options available for those without one. In these cases, lenders will consider other factors such as academic success, career path, graduation date, and the school you attend. However, it is important to note that undergraduate student loans without a co-signer are more difficult to obtain than graduate student loans.

Overall, having a co-signer with a good credit score and meeting the income requirements will significantly improve your chances of obtaining an international student loan in the United States.

Repayment options

Standard Repayment Plans

This is the most common type of repayment plan, where borrowers make fixed monthly payments over a set period, typically ranging from 5 to 25 years. The payments consist of both principal and interest components. The specific terms depend on factors such as the loan amount, interest rate, and requirements set by the lender.

Interest-Only Repayment Plans

In this arrangement, borrowers pay only the interest accrued on the loan during the initial period of the loan term. This period can vary but often lasts until 45 days after graduation or when the student's course load drops to part-time. Once the interest-only period ends, borrowers begin making regular payments that cover both principal and interest. This option can provide some financial flexibility while the business is still in its early stages.

Extended Repayment Plans

Extended repayment plans offer longer repayment terms, often up to 25 years or more. By stretching out the loan repayment over a more extended period, the monthly payments are reduced, making them more manageable for borrowers. However, the downside is that borrowers end up paying more in interest over the life of the loan.

Graduated Repayment Plans

With graduated repayment plans, the payments start out lower and gradually increase over time, usually every two to three years. This type of plan is designed to accommodate borrowers who anticipate their income will increase in the future and can handle higher payments down the line.

Income-Driven Repayment Plans

These plans base the monthly payments on a percentage of the borrower's income. As the borrower's income increases or decreases, the monthly payments adjust accordingly. This option can provide much-needed flexibility for new businesses that may experience fluctuations in their cash flow.

It is important to note that the availability of these repayment options may differ for international students, and specific requirements and restrictions will vary depending on the lender and the loan program. International students should carefully review the repayment terms and conditions before committing to any loan.

Scholarships and grants

The Foreign Fulbright Student Program offers scholarships for graduate students from around the world, as well as young professionals and artists, to study in the USA. The Joint Japan/World Bank Graduate Scholarship Program provides comprehensive financial coverage, including tuition, a monthly stipend, airfare, health insurance, and a travel allowance, to students from developing countries who have supported their home country's development and are applying for a development-related Master's program. The Aga Khan Foundation International Scholarship provides scholarships to students from select developing countries who have no other source of financial help for their graduate studies. The scholarship is 50% grant and 50% loan. The American Association of University Women offers fellowships for non-American women seeking a Master's or doctorate in the USA, with priority given to women who demonstrate a commitment to the advancement of women and girls. The P.E.O. International Peace Scholarship awards scholarships to women from other countries earning their graduate degrees in the USA. The Civil Society Leadership Awards offers full scholarships for Master's students from specific countries who are dedicated to fostering social change. MPOWER Financing offers scholarships for international and DACA students through its Global Citizen Scholarship Program, which has broad eligibility criteria and is offered throughout the year. NAFSA: Association of International Educators is the world's largest nonprofit association dedicated to international education and exchange, and it may be a useful resource for learning about financial aid for undergraduate international students.

Some public and private universities offer financial incentives for students to attend their institution, and both private and public institutions may waive application fees in some situations. Merit-based scholarships are granted based on special skills, talents, or abilities, and are usually very competitive. The #YouAreWelcomeHere scholarship is hosted by participating colleges and universities and offers two yearly renewable scholarships for international undergraduate students. The College Board supports 7 million students each year and offers scholarship and other financial aid and internship information from more than 2,200 programs. Fastweb provides access to 1.5 million scholarships worth $3.4 billion, and students can create a profile to keep track of their applications on the website. International Student has a comprehensive and searchable database of grants, scholarships, loan programs, and other information for international students.

It is recommended that you research funding opportunities from your country's embassy or governmental educational office, as well as check with the college you will be attending, to see if they offer financial aid for international students.

Loan lenders

As an international student, you can get a business loan in the USA, but you will likely need a creditworthy co-signer who is a US citizen or permanent resident. Most international students are unable to receive credit on their own and must rely on a co-signer who is legally obligated to repay the loan if the borrower defaults. This co-signer must have a good credit score and meet a minimum annual income of $24,000 for the current and previous year.

There are a few options for loan lenders for international students in the USA. Here are some of the popular ones:

MPOWER Financing

MPOWER Financing is the only US-based lender mentioned in my sources that provides student loans to international students without co-signers or credit histories. They base their loans on the future income potential of the student and offer fixed interest rates. MPOWER Financing provides loans to students in their last two years of study who are enrolled in one of the schools supported by the company.

Discover Student Loans

Discover Student Loans is run by Discover Bank and provides student loans to international students attending eligible schools in the USA. Their loan terms and conditions require a co-signer, but they do not charge any fees or require payments while the student is still in school. Discover Student Loans can cover up to 100% of education costs.

Prodigy Finance

Prodigy Finance offers variable-rate loans to international students in business, engineering, law, public policy, and medical programs who are studying in a country that is not their home country. They do not require a co-signer but instead base their loan and repayment terms on a predictive credit model that assesses more than 150 variables to determine affordability after graduation.

Sallie Mae

Sallie Mae provides international student loans to those with a co-signer. They advertise discounts for in-school repayment and paying by auto debit. There are no origination or pre-payment fees, and borrowers may be able to pay only interest for the first year after graduation.

Wells Fargo

Wells Fargo offers international student loans for both undergraduate and graduate students at eligible schools. They do not require borrowers to start payments until six months after graduation, and there are no application or origination fees. However, they do require a co-signer for international students.

Earnest

Earnest offers a range of student loans, including specialized graduate loans and refinance loans. International students can apply without a co-signer if they meet specific criteria. They offer competitive interest rates and flexible repayment options, allowing borrowers to adjust their terms down to the month. Earnest also provides a nine-month grace period after graduation.

Ascent

Ascent provides several student loan options for international students, particularly for graduate studies. They offer a range of repayment terms, and borrowers can postpone payments after graduation for up to nine, 36, or 48 months, depending on the loan program. Ascent also offers a 0.25% autopay discount on interest rates and a 1% cash-back reward on the loan balance when certain requirements are met.

Citizens Bank

Citizens Bank offers various graduate student loan options, making it easier for students to find a loan that suits their needs. They provide a 0.25% interest rate discount for automatic payments and an additional 0.25% rate discount if the borrower or co-signer has a qualifying Citizens Bank account. Citizens Bank also offers multi-year approval, so you don't need to submit a new application every year.

Frequently asked questions