On Friday, California’s banking regulators closed SVB Financial group, marking the largest bank failure since the Great Recession. Silicon Valley Bank (SVB) largely focused on lending to technology companies, so its collapse is likely to have a large ripple effect on the tech industry as a whole.
Immigrant entrepreneurs and employees could also be disproportionately impacted by the news, as nearly 44% of tech companies were started by immigrants, and more than 70% of tech workers in Silicon Valley were born in another country.
Loss of Jobs and Risk of Deportation for Immigrant Workers
Not only does SVB employ more than 4,000 people, many of whom are immigrants, but the effects of its collapse could also impact the overall job market, especially in the venture capital sector. Fears of further financial turmoil could not only drive companies to hold off on hiring, it could also lead to more layoffs in the tech industry as companies aim to reduce budgets.
For foreign workers, layoffs present more challenges than a missing paycheck. Losing your job while on a work visa can be particularly stressful, as your immigration status and ability to remain in the U.S. depends on your employer. If you lose your job while on an H-1B visa, in addition to other common work visas, you are considered “out of status” in the U.S., since U.S. immigration law requires the visa holder to be actively employed in order to maintain lawful status. In this case, you generally have a 60-day grace period to find a new job before you have to leave the country. Alternatively, if you’re unable to find a new employer in 60 days, many people in this situation choose to apply for a different visa type, such as a student visa or family-based visa when applicable.
Boundless put together a detailed guide on how to navigate layoffs while on a work visa, where you can learn more about the 60-day grace period, different visa types that may be available for you, and more.
Loss of Access to Banking Services
Silicon Valley Bank is one of the largest lenders to startups in the country, and many venture backed companies have relied on its services to also hold their operating cash. Historically, SVB was willing to provide banking services and loans to small businesses and entrepreneurs who may have struggled to receive backing from the country’s larger banks. In a statement, federal regulators said that those who had insured accounts with SVB would have access to their funds by Monday (up to $250,000). The federal government later announced that it will resolve SVB’s closure in a way that protects depositors from any losses and guarantees the bank’s clients will have access to all of their money.
Despite these protective measures, companies will now need to look elsewhere for long-term solutions to their banking needs. With tech-forward SVB no longer an option, startups and the many immigrants who benefit from their services are likely to suffer from the loss. Immigrant-led startups that are strapped for cash and unable to secure a new banking partner quickly may struggle to provide necessary financial support to their employees and deliver on promises to their customers.
This is a rapidly developing story, and Boundless will continue to monitor closely for more updates on how SVB’s collapse could impact immigrant workers and immigrant communities across the country.
You can also read more about navigating the U.S. financial system as an immigrant in Boundless’ finance guide.