The Small Business Administration announced that, effective March 1, lawful permanent residents (green card holders) will no longer be eligible for SBA-backed loan guarantees as part of tightened loan-eligibility rules. The change rescinds a December allowance that permitted up to 5% non-citizen ownership and follows last year’s move to require 100% U.S. ownership under certain criteria. The SBA says the policy prioritizes American job creators, while advocates warn it could curb entrepreneurship and job growth because immigrants start new businesses at higher rates.
SBA Bars Green Card Holders From Backed Loans Starting March 1; Advocates Warn Of Economic Impact
FILE - Small Business Administration administrator Kelly Loeffler listens during a hearing of the Senate Committee on Capitol Hill, May 21, 2025, in Washington. (AP Photo/Mark Schiefelbein, File)(ASSOCIATED PRESS)
The Small Business Administration (SBA) announced in a policy note that, effective March 1, lawful permanent residents (green card holders) will no longer be eligible to receive SBA-backed loan guarantees. The change is part of a broader effort by the agency to tighten loan eligibility rules and to restructure its operations.
What Changed
Last year the SBA raised its ownership requirement for businesses seeking loan guarantees from a 51% ownership threshold to 100% ownership by U.S. citizens, U.S. nationals, or lawful permanent residents. In December the agency briefly allowed up to 5% non-citizen ownership in a policy note, but the current policy rescinds that allowance and further removes lawful permanent residents from eligibility.
How SBA-Backed Loans Work
The SBA does not typically make direct loans except in disaster-relief situations. Instead, it guarantees loans made by partner lenders, which often allows small businesses to obtain more favorable rates and terms than they might from conventional bank financing.
Official Statements
"The Trump SBA is committed to driving economic growth and job creation for American citizens – which is why, effective March 1, the agency will no longer guarantee loans for small businesses owned by foreign nationals," said SBA spokesperson Maggie Clemmons in an emailed statement. "Across every program, the SBA is ensuring that every taxpayer dollar entrusted to this agency goes to support U.S. job creators and innovators."
Small Business Majority criticized the move as likely to hurt small-business formation and job growth. "The latest decision by SBA fails to recognize that immigrants are twice as likely to start a business as native-born U.S. citizens," said CEO John Arensmeyer. "Given that reality, SBA's severe restrictions will have a negative impact on small business creation throughout this country for years to come."
Potential Impact
Supporters of the change argue it focuses taxpayer-backed financing on citizens and national job creators. Critics warn that excluding green card holders and reversing the limited non-citizen allowance may reduce entrepreneurship, slow small-business growth and cost jobs—particularly in immigrant-founded industries where new venture formation is high.
The policy will affect eligibility for SBA loan guarantees distributed through banks and other approved lenders beginning March 1. Small-business owners and prospective borrowers who may be affected should consult lenders and SBA guidance for details about existing loans and new applications.
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