WASHINGTON – The U.S. Small Business Administration (SBA) is expanding restrictions on access to its loan programs, a move that will significantly limit funding opportunities for immigrant entrepreneurs. The new policy, announced Monday, prioritizes loans for U.S. Citizens and permanent residents, effectively curtailing access for many foreign-born business owners seeking to launch or expand ventures within the United States.
SBA Administrator Kelly Loeffler stated the decision builds upon previous measures taken last month, which already excluded businesses with foreign ownership from the agency’s core 7(a) and 504 loan programs. “Last month, we made clear the SBA would not allow foreign nationals to access our core small business loan programs, and today we are expanding that policy to include all SBA-backed loans,” Loeffler said in a press release. The changes impact microloan programs and surety bonds for small businesses as well.
The move reflects a broader “America First” agenda, according to the agency, and comes as demand for SBA funding remains high. Loeffler argued that limited credit authority necessitates prioritizing American citizens who are creating jobs and businesses within the country. This decision is the latest in a series of actions taken by the SBA to reshape its priorities and align with the Trump administration’s policies.
New SBA Rules: Who Qualifies?
Under the new guidelines, any business owner applying for an SBA-backed loan must be a U.S. Citizen, national, or legal permanent resident – a green card holder – with their primary residence in the United States. A procedural notice updating the SBA’s internal financing rules stipulates that all direct and indirect owners of a business applying for a loan must meet these immigration and residency requirements. The business entity itself must be established within the United States or its territories.
Lenders are now required to certify that no owners or guarantors of a loan are considered “ineligible persons,” a category encompassing undocumented immigrants, asylum seekers, refugees, individuals with temporary visas, and those benefiting from the Deferred Action for Childhood Arrivals (DACA) program. Businesses established outside the U.S. Or linked to individuals on federal sanctions lists are also ineligible for SBA funding.
There is a limited exception: foreign nationals residing outside the United States may hold up to 5% ownership in a company applying for a loan, provided the remaining owners meet the citizenship or permanent residency requirements. The policy will take effect 30 days after its publication.
The SBA maintains that the policy change is designed to ensure that available resources primarily benefit American businesses, particularly given the current high demand for capital. According to agency data, in fiscal year 2025, approximately 3,358 loans were approved for small businesses with participation from legal permanent residents, representing roughly 4% of the approximately 85,000 loans granted that year. This suggests the impact, while significant for those affected, represents a relatively small portion of the SBA’s overall lending portfolio.
The Trump administration frames these restrictions as part of a broader economic agenda aimed at boosting job creation and strengthening local businesses within the United States. Last year, the SBA began implementing citizenship verification across all its loan programs to prevent undocumented immigrants from accessing federally-backed financing. The agency also announced plans to relocate some local offices out of “sanctuary cities” – municipalities that limit cooperation with federal immigration enforcement.
This move builds on previous actions, including the passage of the “Save SBA from Sanctuary Cities Act” in June 2025, which supported the agency’s decision to relocate field offices from cities deemed uncooperative with federal immigration law. The SBA relocated six regional offices, including those in Atlanta, Boston, Chicago, Denver, New York City, and Seattle, as part of this initiative. Administrator Loeffler applauded the House passage of the Act, stating it would move offices into “safer, more accessible communities.”
The decision to restrict SBA loans to citizens and permanent residents has drawn criticism, with some labeling it as discriminatory. The changes are likely to disproportionately affect immigrant entrepreneurs who contribute significantly to the U.S. Economy. The SBA, still, maintains its focus remains on supporting American businesses and prioritizing limited resources.
The SBA’s actions are part of a larger trend of tightening immigration policies and prioritizing domestic economic interests. The long-term impact of these changes on small business growth and innovation remains to be seen, but the immediate effect will be a more restricted lending landscape for immigrant entrepreneurs seeking to realize their American dreams.
What’s Next: The new SBA policy goes into effect in 30 days. Small business owners and lenders are urged to review the updated guidelines to ensure compliance. The SBA is expected to provide further clarification on the implementation of the policy in the coming weeks.
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