SBA to Restrict Loan Eligibility to Fully U.S.-Owned Businesses Starting March 1

By Ginika Igboke

The Small Business Administration (SBA) will soon limit its loan programs to businesses entirely owned by U.S. citizens or nationals, ending a policy that previously allowed limited foreign ownership, including by green card holders.

Under a new rule announced Wednesday by the Trump administration, businesses seeking SBA-backed financing must be 100 percent directly or indirectly owned by U.S. citizens or U.S. nationals whose principal residence is in the United States, its territories, or possessions. The change takes effect March 1.

“SBA financing is limited to business applicants with 100 percent direct and/or indirect owners and SBA-required guarantors, all of whom must be U.S. Citizens or U.S. Nationals who have their Principal Residence in the United States, its territories, or possessions,” the agency said in its notice.

The rule also states that all entity owners, whether direct or indirect, must be created, organized, or incorporated in the United States or its territories.

End of Limited Foreign Ownership Exception

The update revokes prior guidance that allowed up to 5 percent ownership by foreign nationals or by U.S. citizens, nationals, or legal permanent residents whose principal residence was outside the United States.

Legal permanent residents—commonly known as green card holders—may continue to live and work indefinitely in the United States. However, they will no longer be eligible to hold any ownership stake in a business applying for SBA financing.

The restriction applies to major SBA lending programs such as the 7(a) and 504 loan programs, which provide funding support to millions of small businesses nationwide.

In addition, a business will be deemed ineligible if it had a foreign-national stakeholder at any point during the six months prior to submitting a loan application.

Political Reaction and Broader Context

Rep. Grace Meng (D-N.Y.) criticized the move, saying it would deny “hard-working legal immigrants the capital they need to start or grow a business” and effectively lock them “out of the American Dream.”

While the new rule bars green card holders and other noncitizens from participating in SBA-backed loans, it does not prevent them from owning businesses in the United States or from seeking conventional financing through private lenders.

The SBA was created to promote entrepreneurship by offering counseling, capital access, and federal contracting opportunities. It has long served as a primary federal resource for small businesses.

Similar administration policies in other areas have faced legal challenges in federal court, with judges sometimes blocking or narrowing executive actions on grounds of overreach or discrimination. In one recent case, a federal judge ordered the administration to release $4 billion in congressionally appropriated funds for foreign aid and U.N. peacekeeping after an attempt to withhold the money. The Supreme Court later ruled in favor of the administration.