A revised US SBA policy will ban green card holders from owning businesses that qualify for federal loans starting March 1, 2026, affecting immigrant entrepreneurs nationwide.
A revised US SBA policy will ban green card holders from owning businesses [Photo: X]
New US federal rules will significantly change who can access government-backed small business loans. Starting March 1, 2026, the US Small Business Administration (SBA) will require that all owners of loan-seeking businesses be US citizens or US nationals with principal residence in the US, effectively barring green card holders from SBA loan eligibility.
The sweeping revision marks a major shift in longstanding loan eligibility rules and has sparked concern among immigrant entrepreneurs, lenders, and lawmakers alike. With immigrant‑owned businesses playing a significant role in the US economy, many are now facing uncertainty about future financing and business growth.
The SBA’s updated guidance revises Standard Operating Procedure (SOP) 50 10 8, the rulebook for its most commonly used loan programs, including 7(a) and 504 loans.
Under the new policy, 100% of all direct and indirect owners of a borrower must be US citizens or US nationals with a US principal residence, meaning legal permanent residents (LPRs), commonly known as green card holders, cannot own any share of a business applying for an SBA‑backed loan.
This change goes into effect March 1, 2026, and replaces earlier guidance that had allowed limited non‑citizen ownership under specific exceptions. Previously, a narrow 5% foreign ownership threshold existed under certain conditions, but that exception has been completely removed.
Experts describe this SBA policy as an example of anti-immigrant entrepreneurship, where rules limit immigrant participation in business ownership. By restricting green card holders from accessing federal loans, critics argue the SBA is curtailing opportunities for immigrants who contribute significantly to the US economy.
Immigrant‑owned businesses often generate jobs, invest in local communities, and create tax revenue, making the new rule a contentious shift in policy.
Officials say the revised rule reinforces basic eligibility standards and aligns with sections of the Code of Federal Regulations that outline SBA loan criteria. It also reflects priorities in the current administration’s immigration and economic policy agenda. As part of this shift, the SBA eliminated earlier guidance that had permitted minor non‑citizen ownership in specific scenarios.
Critics argue the move goes beyond routine eligibility standards and effectively disadvantages immigrant business owners who have legally resided in the US with green cards for years or decades.
According to CFR Title 13, small business applicants for SBA loans must:
Immigrant communities, particularly those from countries with high rates of migration to the US, are expected to feel the greatest impact. For example, India was the second-largest country of origin for new green card holders in FY 2024, according to federal data. Many Indian‑born entrepreneurs operate small businesses, including hotels and service industries, across the country.
Industry data shows that about 4 in 10 small business owners in the US are foreign-born, illustrating how deeply immigrant entrepreneurs are woven into the national economy.
The policy has drawn sharp criticism from business advocates and Democratic lawmakers. Frank Gallegos, executive director of a California nonprofit that helps small businesses secure SBA loans, called the rule “a surprise” and said it runs counter to the agency’s mission to support business growth. He noted that many loans previously approved included LPR ownership and helped create jobs and revitalize local economies.
Senate and House Democratic leaders also condemned the rule, calling it an attack on immigrant entrepreneurship and a reversal of progress in small business financing. They argue that the change contradicts the SBA’s purpose of helping diverse business owners thrive.
Under the updated policy, businesses with any green card holder ownership must restructure ownership or secure financing before the new rule takes effect. Lenders warn that restructuring ownership in time could be impractical for many entrepreneurs.
Affected owners may have to transfer equity to US citizen family members or partners, or seek conventional commercial loans that typically require higher down payments and more stringent credit requirements. Those options may not be feasible for all businesses, especially newer or smaller operations.
Many regions rely heavily on immigrant‑owned small businesses to generate jobs and economic activity. For example, a large share of hotel properties in the US is owned and managed by business leaders of Indian origin, making this policy particularly relevant in hospitality and service sectors.
A 2022 report found that Indian American‑owned businesses generate more than $150 billion in annual revenue and employ over 800,000 workers nationwide — underscoring the potential economic ripple effects of stricter loan eligibility rules.
The rule applies to all SBA loans, including 7(a) and 504 programs, which are widely used for working capital, equipment purchases, and commercial property financing. Under the new guidance, no part‑ownership by an LPR or foreign national will be acceptable for SBA financing applications submitted after March 1.
Business owners seeking SBA loans are advised to review ownership structures now and consult financial advisors or lenders to explore options before the deadline.
The updated policy underscores growing debate over immigration, economic opportunity, and access to capital in America. While supporters say it protects domestic entrepreneurship, opponents warn it undercuts the contributions of immigrant‑founded businesses.
As the rule takes effect next month, business owners, lenders, and lawmakers will be watching closely to see how this change reshapes the small business landscape.
