by Staff
The Small Business Administration (SBA) is ending loan eligibility for Lawful Permanent Residents (green card holders) effective March 1, 2026. This is a significant reversal of long-standing policy, as green card holders have historically been eligible for SBA-backed financing.
Key Changes to Eligibility
Under the new policy, businesses must now be 100% owned by U.S. citizens or U.S. nationals to qualify for SBA 7(a) and 504 loans.
- Total Exclusion: Green card holders are now barred from owning any percentage of a business seeking an SBA loan.
- Residency Requirement: Owners must also maintain their principal residence within the United States or its territories.
- Previous Flexibility Removed: This update rescinds a December 2025 rule that briefly allowed for up to 5% ownership by non-citizens.
Why Is This Happening?
The shift is part of a broader “America First” initiative by the Trump administration to ensure federal resources are reserved exclusively for U.S. citizens.
- Taxpayer Dollars: SBA officials have stated the goal is to ensure taxpayer-guaranteed funds support only U.S. job creators.
- Executive Order: The policy aligns with Executive Order 14159, titled “Protecting the American People Against Invasion,” and aims to tighten citizenship verification across all federal programs.
- Agency Restructuring: SBA Administrator Kelly Loeffler has framed these reforms as a way to prioritize “legal, eligible applicants” and move agency operations away from “sanctuary cities.”
Impact on Business Owners
This change is expected to hit immigrant-founded businesses particularly hard, as immigrants are statistically more likely to start small businesses than native-born citizens.
- Existing Loans: The rule change does not affect those who already have an active SBA loan.
- Pending Applications: If you are currently in the process of applying, you must receive an SBA loan number before March 1, 2026 to remain eligible under the old rules.
- Alternative Options: Affected owners may need to look into conventional bank loans, online lenders, or Community Development Financial Institutions (CDFIs), though these often come with higher interest rates or stricter collateral requirements.
Note: If your business has any non-citizen ownership, you should contact your lender immediately to see if your application can be expedited before the March 1 deadline.
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