The U.S. Small Business Administration has issued a notice tightening eligibility for SBA-backed loans so that borrower applicants must be wholly owned by U.S. citizens or U.S. nationals whose principal residence is in the United States. The notice also states that, starting March 1, Legal Permanent Residents - commonly known as green card holders - will not be eligible to own any percentage interest in an Applicant/Borrower seeking SBA support.
The SBA is the federal agency responsible for providing loans and assistance to millions of small businesses across the country. The notice formalizes a restriction that limits SBA loan programs to businesses owned entirely by citizens or U.S. nationals with principal U.S. residency and removes a prior narrow exception that had allowed up to a 5% ownership position to be held by foreign nationals or by U.S. citizens, U.S. nationals, or Legal Permanent Residents whose principal residence was outside the United States, its territories or possessions.
The new guidance explicitly states, "Further, and beginning with the Effective Date of this Notice, Legal Permanent Residents (LPRs) will not be eligible to own any percentage interest in an Applicant/Borrower," signaling a definitive removal of LPR ownership from SBA-backed borrower eligibility.
Political reaction has been immediate. Democratic Representative Grace Meng characterized the SBA decision as effectively denying capital to legal immigrants seeking to start or grow businesses, saying the move will lock them "out of the American Dream." The notice and the administration policy it reflects have also been criticized by human rights groups, which say that recent federal actions affecting visas, green cards, deportations and the deployment of federal agents have contributed to fear among minority communities.
The administration has defended its immigration-related policies by citing domestic security concerns and efforts to prevent fraud. The article notes that such policies have faced legal challenges, though the SBA notice itself focuses on eligibility criteria for its loan programs rather than broader immigration enforcement actions.
Importantly, the SBA notice does not prohibit non-citizens who are physically present in the United States from owning businesses in general, nor does it prevent those non-citizen business owners from obtaining conventional bank loans outside of SBA programs. The change applies specifically to loans backed by the SBA and the ownership conditions required for applicant borrowers under those programs.
The notice’s explicit elimination of the earlier narrow ownership exception and the categorical exclusion of Legal Permanent Residents from any ownership interest in SBA borrower applicants represent a clear regulatory tightening with direct implications for the pool of eligible applicants for SBA-backed financing.