The U.S. Small Business Administration (SBA) has recently made significant changes to its small business loan programs, including updates to citizenship requirements for beneficial owners and key employees. These loan programs have long helped level the playing field and expand access to financing for small business owners, especially immigrant entrepreneurs. Despite being under-resourced, immigrants are twice as likely to start a business as U.S.-born individuals and make up 19% of the US workforce. As we continue to raise concerns about these changes in Washington, read below to learn what these changes could mean for you and what to expect when applying for financing.
New Citizenship Requirements for SBA’s signature 7(a) and 504 Loan Program
Effective March 1, 2026, businesses must be 100% owned by U.S. citizens or U.S. nationals to qualify for SBA 7(a) and 504 loans, including the Surety Bond and Microloan Programs. Any amount of ownership by non-citizens makes a business ineligible.
For years, SBA lending rules allowed businesses to qualify for agency-backed financing as long as a controlling share (≥51%) was held by eligible owners, which included U.S. citizens, U.S. nationals, or Legal Permanent Residents. In 2025, that long-standing policy shifted and on December 19, 2025, the SBA announced that businesses could only have up to 5% ownership held by non-resident foreign nationals, U.S. citizens living abroad, or legal residents living abroad. That guidance has now been rescinded and SBA has further tightened its eligibility standards, barring green card holders and U.S. citizens and nationals living abroad from accessing SBA loans, including the Surety Bond and Microloan Programs, effective March 1, 2026. Notably, small business borrowers that initiated an SBA-backed loan application but had not received an SBA loan number before March 1, 2026, may become ineligible for financing if they do not meet the SBA’s revised ownership and residency requirements.
Under the new rules:
- Lawful Permanent Residents (green card holders), visa holders, and other non-citizens can no longer hold any percentage ownership stake in a business seeking an SBA loan.
- This rule extends to key employees such as officers, directors, foreign investors and employees who manage daily operations.
- U.S. citizens, U.S. nationals, and legal permanent residents who reside outside the U.S. are also ineligible.
- Lenders must verify citizenship status and screen for ineligible owners.
- Stricter fraud reviews and background checks are now mandatory for all applicants.
This significant tightening of eligibility standards could shut out many legal immigrant entrepreneurs from accessing the capital they need. We encourage business owners to explore alternative, responsible financing options. Visit our grant and loan portals to discover additional funding opportunities in your area, or use our CRF Connect tool to help you match with a local lender. We will continue to monitor these changes and share updates as more information becomes available.