Skip to content
Starting a business in Central America

Financing Your Dream: Starting a Business in Central America

Have you ever dreamed of starting a business in Central America? If so, you’re not alone. Many expats dream of steering their own course in the tropical sun. But it’s not easy and it’s not free. Below, we offer the most common ways expats finance their entrepreneurial adventures.

You may have seen how expat entrepreneurs are thriving and, at the same time, enjoying their lives in Central America. While it’s certainly possible to live in Belize or Costa Rica as a digital nomad or freelancer, there’s still immense satisfaction in starting your own boots-on-the-ground enterprise in your new home, employing others and making a difference in your new community.

Popular Business Ideas in Central America:

  • Hotels. Central America attracts a diverse range of travelers, from budget-conscious backpackers to luxury seekers. You can cater to a specific clientele by creating a unique atmosphere, focusing on sustainability, or offering adventure packages.
  • Restaurant/Cafe. If you have a passion for a particular cuisine, this could be a great business opportunity. You could introduce a new flavor profile to the area, or offer a familiar comfort food experience with a local twist.
  • Bars. Move beyond the standard bar scene and create a unique concept. A themed bar, a wine bar with tastings and flights, or a sports bar could all be successful options.
  • Vacation Rentals. If you have a property in a popular tourist destination, consider managing it as a vacation rental. This can be a great way to generate income without the overhead costs of running a traditional hotel.
  • Adventure Outfitter. Central America is a paradise for adventure seekers. You can capitalize on this by offering guided hikes, kayaking excursions, whitewater rafting trips, or other outdoor activities.
  • Agriculture. The fertile land and tropical climate are perfect for growing coffee, fruits, and vegetables. You can start a farm or focus on organic produce.
  • Coffee Shop/Roaster. Coffee is a major product in Central America. You can open a coffee shop featuring locally roasted beans or even start your own roasting operation.
  • Education. The region is investing heavily in education. You can open a language school, specialize in online tutoring, or offer educational consulting services.
  • Digital Nomad Services. Central America is a popular destination for digital nomads. You can cater to this crowd by offering co-working spaces, concierge services, or visa assistance.

These are just a few idea for budding entrepreneurs to consider when opening a business in the region, but like everything in the world, it’s not easy. Any successful endeavor along the ideas listed above requires planning, research, lots of hard work, even more hard work, and money. Especially money.

Financing Your Dream

So how can you raise the cash to start a business in Central America? Especially when you should know that getting financing from local banks is unlikely unless you’re a long time resident of good standing. It’s a rare thing for a foreigner to show up from the airport, open an account, and get a loan. Almost impossible, in fact. So you’ll need to rely on your bank in your home country or consider exploring SBA 7(a) loan types to fully fuel your business’s financing needs. But if these options don’t appeal, here are some other considerations:

Put Forward Your Personal Savings

It’s best to kickstart your business using your own savings. After all, as we said, getting a local loan is difficult and your bank in your home country might be enthusiastic about financing a business abroad. Using your personal savings, if you’re lucky enough to have enough tucked away, at least you can show you’re serious and solvent, increasing your chances of being considered eligible for financing or project funding in the future. These are strong points that tell potential investors or lenders that you’re committed and confident in your proposed business.

Look for Government Grants and Programs

This isn’t really about getting a loan or financing, but more about the benefits you can receive from setting up a business in Central America. Many governments offer incentives for foreign investors, depending on the venture, and in Central America, countries like Costa Rica and Panama make residency through investment easier and cheaper for some agricultural or eco-projects. You’ll need to come up with the initial investment into your business, but once you do, you’ll get ease of residency and tax breaks to make life easier as you proceed.

On another note, if you have a business plan that an institution like the Central American Bank of Economic Integration finds appealing, they might also be ready to support entrepreneurs like you, especially if your business is geared towards eco-friendly projects and sustainable development. So, if your company is into green projects or those that promote and improve the climate resilience of regional communities, then they might be worth approaching.

Engage Venture Capital and Angel Investors

Venture capital and angel investors can also help boost your business growth. These capitalists and investors are known for their funding, expertise, and networks, especially if you’re a startup with high growth potential. They usually support a range of industries, from tech to agri, and can foster innovation and economic development across the region. By attracting investment from venture capitalists and angels, your startup in Central America could accelerate your growth trajectories, create jobs, and contribute to the region’s vibrant entrepreneurial ecosystem.

Access Business Incubators and Accelerators

When exploring an area where you may not know anybody yet (business-wise), it’s best to access business incubators and accelerators in Central America. They are institutions or programs that serve as nurturing environments for many startups like you, providing support, guidance, and resources. You can get mentorship from industry experts, connect with potential investors, and also access funding opportunities through these programs. They’re called “incubators” because they nurture your early-stage business activities to help you grow. And they’re also your “accelerators” because they speed up your growth processes, propelling you towards success. For help identifying this kind of help in Central America, Biz Latin Hub is a great place to start.

Go Bootstrapping

A savvy strategy for startups, like bootstrapping, may just work for your business journey. Take your pick from the seven countries in the region where you can run your business on a tight budget, minimizing costs and generating income from the get-go. An example is when, say, you launch a small bakery in Honduras. You use your savings for basic equipment and ingredients, then sell your homemade treats at local markets. It’s an approach that can showcase your determination and financial prudence. This strategy has the potential to entice investors, especially those who are impressed with your resourcefulness and commitment to success.

Connect with International Financing Institutions

We mentioned the Central American Bank of Economic Integration earlier, but it also might be worth checking out funding availability from international organizations like the Inter-American Development Bank (IDB) or the World Bank Group. Most often, they back projects to boost economic growth and entrepreneurship in Central America. If you get support from these institutions, it will not only kickstart or boost your business, but it will also mean more opportunities for other businesses and innovations in the region. Your foreign connections will enhance your linkages and collaborations, which will further boost your endeavors.

Are You Ready To Start?

The above are some of the options available if you want to pursue your dream of starting a business in Central America. Some options are more feasible than others, depending on how much money you have to start with, how solid your plan is, and what you want to do. If you’re looking at opening a hotel, bar/restaurant, or tour company, you’re mostly relying on what you can put in from your savings, or bootstrapping. If, however, you have a viable idea that boosts the economy of your new country or has green credentials, you might get government help or assistance from international orgs.

One thing is for sure, though. No matter the country, Central America welcomes innovative ideas and passionate individuals who want to make a difference in the region. Starting a business in Central America needn’t be nothing but a pipe dream!

CA Staff

CA Staff