SBA Bars Non-U.S. Citizens From Its Main Small Business Loan Program
The Small Business Administration (SBA) has issued new policy guidance cutting off non-U.S. citizens from its flagship 7(a) loan program, a move that will prevent small businesses with any ownership stake held by green card holders from applying for the government-backed loans.
Under the new rule, effective March 1, 100 percent of a business’s ownership must be held by U.S. citizens or U.S. nationals who maintain their principal residences in the United States. The policy reverses guidance issued in December that allowed up to 5 percent foreign or green card holder ownership in businesses seeking 7(a) loans.
The SBA is led by Administrator Kelly Loeffler, who assumed the role under President Donald Trump’s second administration.
The change means that legal permanent residents, despite living and working in the U.S., will no longer be eligible to own any portion of a business applying for the SBA’s most popular loan program.
House Small Business Committee Chair Roger Williams (R-Texas) voiced support for the decision, though he acknowledged its difficulty.
“We’ve been too loosey-goosey for too long,” Williams said, citing concerns about missing funds at the SBA from previous years. “Some options aren’t the best. Maybe we need to have one option and grow from there.”
Democratic leaders sharply criticized the move. Senator Ed Markey (D-Mass.) and Representative Nydia Velázquez (D-N.Y.), the ranking members of the Senate and House Small Business Committees, respectively, condemned the policy in a joint statement.
“Rather than support hard-working legal immigrants to start or expand a business, the Trump SBA is choosing hatred by barring green card holders from receiving an SBA loan,” they said. “The Administration’s message to immigrants is clear: you are not welcome to pursue the American Dream.”
An SBA spokesperson said the agency is “committed to driving economic growth and job creation for American citizens,” adding that the administration plans to expand capital access through future legislation that could increase SBA loan limits.
The policy is expected to apply not only to the 7(a) program but also to the smaller 504 loan program, which provides long-term, fixed-rate financing for major purchases such as real estate and equipment.
The move aligns with a January 2025 Trump executive order directing federal agencies to fully enforce U.S. immigration laws.
In 2025, the SBA approved 68,435 loans through the 7(a) program, totaling $33.8 billion. The program guarantees 75 to 85 percent of qualifying loans issued by private lenders.
Small business advocates warned the new restriction could hurt the broader economy. John Arensmeyer, founder and CEO of Small Business Majority, said the decision “will limit the growth of small businesses and jobs throughout the United States,” particularly at a time when entrepreneurs are grappling with rising costs from tariffs, health care, and inflation.
Carolina Martinez, CEO of the CAMEO Network, added that barring legal permanent residents from SBA loans “jeopardizes business creation and hurts the economy,” urging the agency to reconsider and broaden eligibility rather than narrow it.
