The new policy, which takes effect in March, limits small business loan eligibility to U.S. citizen-owned firms.
The Small Business Administration has been willing to finance businesses with small ownership stakes held by green card holders and even foreign nationals.
That ends on March 1.
A policy update from President Donald Trump’s administration will restrict SBA loan eligibility to businesses owned entirely by U.S. citizens, according to an agency notice released on Feb. 11.
The goal is to restrict ownership requirements for SBA-backed loans under programs such as 7(a) and 504, which offer financial support to millions of small businesses across the nation.
“SBA financing is limited to business applicants with 100 [percent] direct and/or indirect owners and SBA-required guarantors, all of whom must be U.S. Citizens or U.S. Nationals who have their Principal Residence in the United States, its territories, or possessions,” the new rule reads.
“All entity owners (whether direct or indirect) must be created, organized, or incorporated in the United States, its territories, or possessions.”
Legal permanent residents, commonly known as green card holders, may live and work indefinitely in the United States. They will, however, no longer be permitted any ownership stake in businesses applying for SBA financing.
The SBA notice revokes a previous guidance, “removing the narrow exception that allowed a Borrower to have up to 5 percent ownership held by foreign nationals, or U.S. Citizens, U.S. Nationals, or Legal Permanent Residents (LPRs) whose Principal Residence was outside of the United States, its territories or possessions.”
Rep. Grace Meng (D-N.Y.) said the move denies “hard-working legal immigrants the capital they need to start or grow a business” and will lock them “out of the American Dream.”
Although the rule prevents green card holders from receiving SBA loans, it does not bar noncitizens from owning businesses or procuring conventional financing from private banks.
The SBA was established to support entrepreneurship, including counseling, capital, and contracting.
Under the new rule, businesses eligible for loans must verify full ownership by U.S. citizens or nationals who live principally in the country. A business will be ineligible if it has had a foreign national stakeholder in the six months before the application.
