The Small Business Administration (SBA) has implemented a significant change to its lending policies, effectively barring green card holders from accessing its loan programs. Starting March 1, 2026, the SBA will no longer allow green card holders to apply for loans under its primary lending initiatives. This policy change has far-reaching implications for small businesses and entrepreneurs who rely on SBA loans to start or expand their ventures.
Under the new rule, 100% of a business's direct and indirect ownership must be held by U.S. citizens or nationals to qualify for government-backed loan programs, including the widely used 7(a) and 504 loans. This means that even a minimal ownership stake held by a green card holder will disqualify an otherwise eligible business. The SBA's policy reversal eliminates long-standing permanent resident eligibility, forcing businesses to restructure their ownership immediately to secure funding.
The move aligns with Executive Order 14159, which aims to tighten citizenship requirements for obtaining SBA loans. This sudden shift impacts nearly 10% of the SBA loan portfolios, which face immediate disqualification due to the new rules. The change is part of a broader effort to ensure that SBA loans are accessible only to businesses with full U.S. citizenship ownership.
Green card holders, also known as legal permanent residents (LPRs), will no longer be eligible to own any percentage of a business seeking financial assistance through SBA loans. This rule applies to borrowers, operating companies, and eligible passive companies, covering both direct and indirect ownership interests. The policy update, issued on March 7, 2025, became effective immediately.
Non-U.S. citizens, including green card holders, are now ineligible for SBA loans unless U.S. citizens or lawful permanent residents own at least 51% of the business. This change impacts a wide range of entrepreneurs, from those seeking to start franchises to those looking to expand independent businesses. It is a significant shift that could limit opportunities for many non-U.S. citizens looking to grow their businesses in the United States.
The SBA's new policy has sparked discussions and concerns among affected entrepreneurs and industry experts. The sudden implementation of these rules has left many green card holders and their businesses scrambling to find alternative financing options or restructure their ownership to comply with the new requirements. The SBA's decision underscores the importance of understanding and adhering to the evolving citizenship requirements for accessing government-backed loan programs.
As of now, the SBA has not provided detailed guidance on how businesses can navigate this transition or what alternative financing options might be available for those affected. Entrepreneurs and business owners are encouraged to stay informed about any potential updates or changes to the policy and explore other financing avenues that may be open to them. The SBA's decision to bar green card holders from its loan programs is a significant development in the landscape of small business financing. It highlights the need for entrepreneurs to be proactive in understanding and adapting to regulatory changes that can impact their access to capital and growth opportunities.
