SBA to Bar Green Card Holders From Business Loan Programs Starting March 1
WASHINGTON — The U.S. Small Business Administration (SBA) has announced a significant revision to its lending eligibility rules, effectively barring non-U.S. citizens, including lawful permanent residents, from accessing its most popular loan programs. According to a policy notice issued earlier this week, the agency will require that 100 percent of a business’s owners be U.S. citizens or U.S. nationals to qualify for SBA-backed financing, effective March 1, 2026.
The new directive, which updates the SBA’s Standard Operating Procedure (SOP) 50 10 8, marks a sharp departure from decades of federal lending policy that allowed Green Card holders (Legal Permanent Residents) to secure government-guaranteed loans to start or expand their businesses. Under the revised guidelines, any business applying for a loan through the agency’s flagship 7(a) program or the 504 certified development company program must demonstrate that every direct and indirect owner is a U.S. citizen or national residing within the United States or its territories.
“SBA is requiring that 100% of all direct and/or indirect owners of a small business applicant be U.S. Citizens or U.S. Nationals,” the agency stated in the notice released Monday. The requirement applies to all owners, regardless of their percentage of equity in the company. Consequently, a business with even a minority stake held by a permanent resident will be ineligible for SBA backing.
The policy change rescinds guidance issued as recently as December 2025, which had permitted up to 5 percent ownership by foreign nationals or legal permanent residents under specific conditions. SBA officials indicated that the stricter standards align with recent executive actions aimed at prioritizing U.S. citizens for federal economic support. In a statement to news outlets, an SBA spokesperson said the move ensures that “every taxpayer dollar entrusted to this agency goes to support U.S. job creators.”
Lenders and business advocacy groups expressed immediate concern regarding the logistical and economic implications of the rule. The SBA’s 7(a) and 504 loan programs are critical sources of capital for small businesses, providing billions of dollars annually for working capital, equipment, and real estate acquisition. Industry analysts warn that the abrupt exclusion of immigrant entrepreneurs—a demographic that historically starts businesses at higher rates than native-born citizens—could disrupt local economies and force borrowers to seek higher-interest financing in the private market.
“This change came as a surprise to the lending community,” said Frank Gallegos, an executive director at a non-profit development company that facilitates SBA loans. Lenders noted that the “100 percent” threshold for both direct and indirect ownership means that complex ownership structures, such as those involving family trusts or holding companies, will face rigorous scrutiny to ensure no non-citizens hold any beneficial interest.
The SBA confirmed that the new eligibility requirements apply to all loan applications submitted on or after March 1, 2026. Applications currently in the pipeline must receive an SBA loan number before that date to proceed under the previous rules. The agency advised borrowers and lenders to review their ownership structures immediately to determine if they remain compliant with the incoming standards.
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