A major overhaul to eligibility requirements at the Small Business Administration (SBA) is set to deliver a significant blow to immigrant entrepreneurs, with the agency announcing a near total cutoff for non-U.S. citizens from its two largest loan programs.
The new policy, slated to take effect on March 1, 2026, will dramatically tighten the rules for the SBA’s flagship 7(a) loan program and the 504 loan program, which are crucial sources of capital for working funds and purchasing commercial real estate. Under the revised mandate, any business seeking these federal-backed loans must be 100% owned by U.S. citizens or U.S. nationals who reside within the United States.
A Major Reversal on Immigration Status
The most shocking aspect of the new rule is that it reverses decades of policy by making Lawful Permanent Residents (LPRs), commonly known as green card holders, ineligible to hold any percentage of ownership in an applying business. For years, the SBA allowed businesses to qualify for assistance as long as they were majority-owned by U.S. citizens, U.S. nationals, or LPRs.
The administration has framed the sweeping reforms as a way to “put American citizens first,” arguing they are necessary to end the use of taxpayer funds by “illegal aliens,” and citing a recent executive order. The new rules go even further than an earlier policy issued in March 2025, which restricted eligibility but still generally allowed LPRs to own and apply for loans.
The policy’s strict definition of ineligibility also extends to a wide array of other legal statuses, including foreign nationals, refugees, asylum recipients, and individuals holding various work or student visas.
Lenders and Lawmakers Raise Alarm
The abruptness and severity of the change have caught the small business lending community by surprise. Industry groups and lenders warn that the restrictions will disproportionately impact immigrant-founded businesses, which play an outsized role in job creation across the country. One development company that partners with lenders on SBA 504 loans estimated that approximately 10% of their loans included LPR ownership, suggesting a significant volume of future projects will be affected.
Lenders point out that many LPR-owned businesses receiving SBA financing have delivered substantial economic benefits, like the expansion of local companies and the revitalization of long-vacant commercial properties.
The new policy has sparked immediate political backlash, with lawmakers on Capitol Hill voicing strong condemnation. Congressional Democrats have labeled the move an “attack on immigrant business owners,” arguing that it directly contradicts the SBA’s core mission of promoting small business growth across the nation. They highlight that green card holders are legal residents who pay taxes and are already active participants in the U.S. economy, making them fully eligible business owners under previous long-standing criteria.
For any business with a green card holder owner, the deadline to have a loan approved and receive an SBA loan number is quickly approaching. Unless the business can secure the loan before March 1, 2026, they will need to explore alternative, often more expensive, financing options.
