SBA Excludes Legal Permanent Residents from Loan Program from March 1
The Small Business Administration (SBA) has issued a significant policy shift that will bar lawful permanent residents, commonly known as green card holders, from accessing its loan programs. This change is set to take effect from March 1, 2026, as confirmed in an official policy note released by the agency.
Reversal of Previous Policies
This decision represents a notable reversal of the SBA's recent approach to loan eligibility. In December of the previous year, the agency had issued guidance allowing up to 5% of a business to be non-citizen owned. However, the latest policy not only rescinds that allowance but also explicitly excludes lawful permanent residents from applying for SBA loans altogether.
The move is part of a broader effort by the SBA to tighten loan restrictions and restructure its operations. Last year, the agency increased the ownership requirement for businesses seeking loans, mandating that they must be 100% owned by U.S. citizens, U.S. nationals, or lawful permanent residents. This marked a significant increase from the previous 51% standard.
Impact on Small Businesses
The SBA does not typically provide direct loans, except in disaster-related circumstances. Instead, it collaborates with lenders to distribute loans to small businesses, offering rates that are generally more favourable than those available through traditional lending channels.
The policy change has drawn sharp criticism from small business advocacy groups. The Small Business Majority has condemned the decision, stating that it will "limit the growth of small businesses and jobs throughout the United States."
Criticism from Advocacy Groups
John Arensmeyer, CEO of the Small Business Majority, highlighted the disproportionate entrepreneurial activity among immigrants. "The latest decision by SBA fails to recognize that immigrants are twice as likely to start a business as native-born U.S. citizens," he said. "Given that reality, SBA's severe restrictions will have a negative impact on small business creation throughout this country for years to come."
The SBA has not responded to requests for comment regarding the policy change or the criticism it has attracted. This silence leaves many questions unanswered about the rationale behind the exclusion and its potential long-term effects on the small business landscape in the United States.
