The U.S. Small Business Administration has made companies ineligible for SBA-backed 7(a) and 504 loans if any portion of the business is owned, directly or indirectly, by someone who is not a U.S. citizen or U.S. national—excluding legal permanent residents who previously qualified. The change took effect March 1, 2026, and has drawn pushback from some Democrats and small-business advocates.
The U.S. Small Business Administration (SBA) has revised eligibility rules for its flagship 7(a) and 504 loan programs to require 100% U.S. citizen or U.S. national ownership of applicant businesses, including all direct and indirect owners. Under the new standard, a company becomes ineligible if any ownership stake is held by a lawful permanent resident (green-card holder) or other noncitizen. (sba.gov)
The SBA said the updated requirements took effect March 1, 2026, applying to loans approved on or after that date. (sba.gov)
In announcing the shift, the agency framed the rule as a way to ensure federally backed lending supports U.S. citizens. In a statement reported by the Associated Press, SBA spokesperson Maggie Clemmons said the agency would no longer guarantee loans for small businesses owned by foreign nationals and that the SBA is aiming to ensure taxpayer dollars support U.S. job creators and innovators. (apnews.com)
The SBA has also cited its own lending figures to describe how often loans previously went to businesses with lawful permanent resident ownership. In a March 9, 2026 SBA post, the agency said that in fiscal year 2025 it approved 3,358 loans for small businesses owned in part by lawful permanent residents—about 4% of roughly 85,000 total loan approvals. (sba.gov)
The policy has prompted criticism from some small-business advocates and Democrats. The advocacy group Small Business Majority warned the change would limit small-business growth and jobs, according to AP reporting. (apnews.com) A February 2026 letter from House Small Business Committee Democrats and other caucus leaders criticized the new SBA policy and urged the agency to reverse course. (democrats-smallbusiness.house.gov)
The SBA does not typically issue these loans directly; instead, it works with private lenders by providing guarantees that can help borrowers obtain financing on terms that may be more favorable than conventional loans. (apnews.com)
