The U.S. Small Business Administration is redrawing the boundary lines around who qualifies for its government-backed loans — and legal permanent residents are on the outside looking in.
Under a new directive set to take effect March 1, only businesses entirely owned by U.S. citizens or U.S. nationals residing in the United States will be eligible for SBA-backed financing. That means green card holders — long permitted to live and work permanently in the country — will no longer qualify for any ownership stake in companies seeking SBA support.
For decades, the SBA has served as a financial lifeline for small enterprises, guaranteeing loans that help entrepreneurs launch storefronts, expand operations and weather downturns. The latest rule marks a sharp shift in eligibility standards, narrowing access to what the agency describes as citizen-owned businesses.
The change also wipes away a previous allowance that permitted up to 5% ownership by foreign nationals or even U.S. citizens and permanent residents whose principal residence was outside the country. That flexibility is gone. Beginning in March, legal permanent residents cannot hold any ownership share in a business applying for SBA-backed funds.
The administration has defended broader immigration-related crackdowns as necessary for domestic security and fraud prevention, though critics argue the policies foster uncertainty among immigrant communities. Lawmakers opposed to the new SBA restriction say it will deprive lawful immigrants of access to critical capital and undermine their ability to build businesses in the United States.
Importantly, the rule does not prevent non-citizens from owning companies outright, nor does it block them from seeking traditional financing through private banks. It applies strictly to loans backed by the federal small business agency.
For many immigrant entrepreneurs who have relied on SBA guarantees as a stepping stone, the recalibration signals a new reality: federal small-business support will now come with a citizenship requirement attached.
