SBA to Bar Green Card Holders From Key Loan Programs Starting March 1

WASHINGTON — The U.S. Small Business Administration will prohibit businesses with any ownership by lawful permanent residents from its primary lending programs beginning March 1, 2026, a major reversal of decades-long policy that provided a critical source of capital for immigrant entrepreneurs.

In a policy notice issued on February 2, the SBA stated that to be eligible for its flagship 7(a) and 504 loan programs, 100% of a small business applicant's direct and indirect owners must be U.S. citizens or U.S. nationals. The rule effectively excludes the roughly 12.8 million green card holders living and working in the United States from accessing two of the federal government’s most important tools for small business financing.

Under the new regulation, even a 1% ownership stake by a legal permanent resident will render a company ineligible for these SBA-backed loans. Any business with green card holder ownership that has not secured an SBA loan number before the March 1 deadline will be subject to the new, stricter requirements.

An SBA spokesperson framed the decision as a move to prioritize American citizens. "The Trump SBA is committed to driving economic growth and job creation for American citizens – which is why, effective March 1, the agency will no longer guarantee loans for small businesses owned by foreign nationals," the spokesperson said in a statement to CBS News. "Across every program, the SBA is ensuring that every taxpayer dollar entrusted to this agency goes to support U.S. job creators and innovators."

The administration also suggested that more capital may become available for qualifying businesses in the future, pending legislation to raise SBA loan limits for companies that are "hiring, building and producing in America."

This policy change is one of the most significant tightenings of SBA lending eligibility in the agency's history. The 7(a) loan program is the SBA's most common, used for working capital, equipment purchases, and business expansion. The 504 loan program provides long-term, fixed-rate financing for major fixed assets like real estate and heavy machinery.

For years, these programs have been a lifeline for immigrant-founded businesses, which play a substantial role in the U.S. economy. By removing this avenue for affordable credit, the new rule is expected to have significant economic repercussions, particularly for mixed-ownership firms where U.S. citizens partner with legal permanent residents.

The move follows earlier restrictions implemented by the administration. In June 2025, the SBA enacted changes that barred loans to businesses with owners or key employees who were foreign nationals, recipients of Deferred Action for Childhood Arrivals (DACA), refugees, asylees, or certain visa holders. According to a letter from Senate Democrats, those changes contributed to a 46% decline in small business lending between June and August 2025.

The latest decision to include all green card holders drew immediate condemnation from Democratic lawmakers. In a joint statement, Senator Edward J. Markey of Massachusetts and Representative Nydia Velázquez of New York accused the administration of sending a hostile message to legal immigrants.

"The Trump administration is stoking the flames of hatred, spreading fear and confusion among immigrants and small business owners," the statement read. "Rather than support hardworking legal immigrants to start or expand a business, the Trump SBA is choosing hatred by barring green card holders from receiving an SBA loan. The administration's message to immigrants is clear: You are not welcome to pursue the American Dream."

Business advocates warn that the financial impact could be severe. A startup restaurant, for example, with a minority owner who is a green card holder could lose access to a seven-figure SBA financing package. The business would then be forced to seek shorter-term, higher-interest conventional bank loans, potentially adding thousands of dollars to its monthly payments and jeopardizing its viability.

In our experience, this abrupt policy shift creates significant uncertainty and forces a strategic pivot for thousands of small businesses. Companies with mixed-status ownership teams, which were previously on a clear path to growth with SBA support, now find a critical door slammed shut. This is not merely a new compliance hurdle; it represents a fundamental rewiring of the financing landscape for a large and vital segment of the entrepreneurial community. The focus must now shift immediately to alternative funding sources. While conventional bank loans are an option, they often come with stricter underwriting and less favorable terms than SBA-backed financing. This change underscores the urgent need for a sophisticated and diversified approach. We advise clients that now is the time to seriously explore private equity, venture capital, and other non-traditional lending avenues. Navigating this new environment requires expert guidance. C&S Finance Group LLC helps business owners develop a robust capital raising and investor strategy to secure the funding they need to grow, and you can learn more at csfinancegroup.com.

Looking ahead, business groups and immigrant advocates are expected to explore potential legal challenges to the new rule. The policy’s long-term effects on business formation, job creation, and economic activity within immigrant communities will be closely monitored by economists and policymakers. For now, affected business owners must quickly adapt their financing plans to a landscape without a key federal support system.