While the public conversation around H-1B visas often focuses on larger players in tech, startups and small tech companies rely on the program, too. Data from the National Foundation for American Policy (NFAP) shows that more than half of new H-1B approvals go to employers that file 20 or fewer applications, and nearly 70 percent go to those filing 100 or fewer. This suggests that many small and mid-sized firms actively utilize the program to attract specialized talent and stay competitive, not just the largest tech companies and outsourcing firms.
A recent presidential proclamation from the Trump Administration announced plans to impose a $100,000 fee on new H-1B petitions, to be implemented by the Department of Homeland Security. This new fee would apply to petitions filed over the next year, dramatically raising the cost of bringing new employees to the United States. While larger tech firms may be able to absorb this expense or shift roles overseas, startups and small businesses lack the same financial flexibility and global infrastructure, putting them at a clear disadvantage.
“We rely on H-1B employees to fill specialized roles we can’t source domestically, and we’d like to hire more. However, as a small tech startup, we don’t have an unlimited budget or a large legal department, so the increase to $100,000 for sponsoring an H-1 B visa would cut us off from the talent we need to innovate. At a time of deepening skill shortages and underinvestment in education, making global talent harder to access will only widen that gap and leave critical roles unfilled.” – Jennifer Ide, CLO and General Counsel, Rimidi, App Association Member Company
Why the New Fee Hits Startups the Hardest
The proposed $100,000 fee applies only to new H-1B petitions, meaning it falls squarely on companies that are hiring to expand. While large, established corporations can treat this as another cost of doing business, folding it into legal and HR budgets or offsetting it through global operations, startups and small businesses don’t have the same flexibility. For them, the fee isn’t just a new line item; it’s a potential hiring roadblock.
This structure gives larger companies a clear competitive advantage. They have the resources and infrastructure to absorb new costs, manage complex visa processes in-house, or move roles abroad if hiring in the United States becomes too expensive. Startups and smaller firms operate without these options. Many have already identified the skilled workers they need, often contractors abroad, but are blocked from bringing them on as employees because the visa process is already costly and complex. Adding a $100,000 fee would make that step effectively out of reach, shutting growing companies out of talent pipelines that larger firms can continue to access with relative ease.
The result isn’t just higher costs for small businesses; it’s a hiring environment that rewards incumbents and raises barriers for new and growing firms. Policies like this exacerbate existing divides, making it harder for startups and small businesses to compete on a level playing field in the global talent market.
“We’ve built a strong team by working with contractors abroad, and we’d love to bring many of them on as full-time employees in the U.S. But as U.S. talent costs rise faster than what clients will pay, the visa process is already tough, and a $100,000 fee would make it completely out of reach. Changes like this would shut us out of the talent pool entirely and leave smaller businesses at a serious disadvantage.” – Andrew Savitz, CEO, Canned Spinach, App Association Member Company
U.S. Small Businesses and Economy at Risk
Changes to the H-1B program won’t just reshape hiring decisions, they’ll reverberate across the U.S. economy. Decades of research show that skilled foreign workers are a major driver of U.S. productivity. Economists estimate that increases in H-1B employment among STEM workers have accounted for 30 to 50 percent of U.S. productivity growth between 1990-2010, underscoring the central role that access to global talent has played in America’s economic strength.
H-1B workers also fill critical gaps in the domestic labor market that the United States is unable to meet on its own. The American Immigration Council has found that H-1B workers often complement U.S. workers rather than compete with them, helping companies address specialized skill shortages while expanding overall job opportunities across sectors. These shortages are expected to intensify as cuts to the U.S. education system and increasing demand for technical skills make it more challenging to build a strong workforce.
If these trends continue, the consequences for the U.S. workforce will be detrimental. Limiting access to global talent while underinvesting in domestic education creates a brittle workforce built on scarcity rather than opportunity. Small businesses lose their ability to grow, workers lose pathways into high-skill industries, and the talent pipeline narrows, concentrating opportunities in the hands of the largest firms. This environment threatens both the small businesses that power innovation and the strength of the U.S. economy.
Moving Forward
Startups and small businesses need an H-1B system that is accessible and workable for companies of all sizes, not one that prices them out in favor of the largest players. It risks sidelining the very companies that drive competition, innovation, and job creation across the digital economy. Policymakers should consider more balanced approaches, such as a sliding scale for fees, targeted exemptions for early-stage companies, or national interest waivers for startups advancing critical technologies.