New Policy Makes Green Card Holders Ineligible for SBA-Backed Loans

The Small Business Administration (SBA) will only back funds loaned to U.S. businesses that are 100% owned by U.S. citizens or U.S. nationals, according to a recent memorandum. Beginning on March 1, businesses owned or partly owned by Green Card holders or foreign nationals will no longer be eligible for SBA funding.

The SBA announced the change for 7(a) and 504 financing on February 2 in a policy notice to its employees and lenders. The updated policy also notes that U.S. citizens and nationals seeking funding must have a principal residence in the U.S. or one of its territories.

Operating companies (OCs) and eligible passive companies (EPCs) also won’t be eligible for an SBA loan if a legal permanent resident owns interest in them. This means the new policy applies to both direct and indirect owners.

Immigrants owned roughly 19% of companies with employees in 2020, according to U.S. Census data released by the SBA in 2023.

The latest notice is a change from a policy issued in December 2025 that required a business to have no more than 5% of its ownership from foreign nationals or people residing outside the U.S. 

Next steps for Green Card holder business owners

Legal permanent residents seeking SBA-backed loans should speak with their lenders to determine whether the new policy applies to any pending loan applications. Green Card holders also could submit loan applications before March 1 to be evaluated under policies in effect before that date. 

Also, consider evaluating alternative sources of funding besides the SBA.