SBA Changes Loan Policy: Citizenship Now Required

The U.S. Small Business Administration (SBA) revised its loan policy in March 2025, mandating that all business owners must be U.S. citizens to qualify for SBA loans. Previously, lawful permanent residents (green card holders) were eligible for these programs.

"Small business loans are for American citizens, and we're unapologetic about it."
— SBA Administrator Kelly Loeffler

The policy shift is part of broader immigration enforcement efforts under the Trump administration. According to the SBA, the change aims to ensure taxpayer dollars support U.S. job creators and workers.

Impact on Small Businesses

The policy has already disrupted loan applications currently in progress, with many lenders pausing deals. According to SBA data, 4% of fiscal year 2024 loans involved businesses with lawful permanent residents.

Critics warn that alternative financing options for affected business owners are limited and may include riskier or predatory lending. Small business advisor Eda Henries noted these concerns, highlighting the financial vulnerability this creates for immigrant entrepreneurs.

Some members of Congress have introduced legislation to restore eligibility for permanent residents.

Broader Context

Lawful permanent residents pay U.S. taxes and are legally authorized to live and work in the United States permanently. Historically, immigrants and their children have founded a significant share of U.S. startups, including two-thirds of billion-dollar companies, according to a National Foundation for American Policy study.

Census data shows that immigrants account for approximately 15% of the U.S. population but run 20–25% of businesses.

SBA's Position

SBA spokesperson Maggie Clemmons said the rule change helps ensure more American citizens access funding previously granted to noncitizens. The agency maintains that the policy directs limited resources toward U.S. citizens first.