SBA Loan Restrictions for Green Card Holders Take Effect

Starting March 1, 2026, the U.S. Small Business Administration (SBA) will no longer approve loan applications for businesses that are not 100% owned by U.S. Citizens or U.S. Nationals with a primary residence in the United States or its territories. This policy change effectively excludes green card holders – lawful permanent residents – from accessing SBA-backed loans, a critical funding source for many small businesses.

Impact on Small Businesses and Communities

The exclusion of green card holders is expected to have a significant impact, particularly in regions with large immigrant communities. Experts predict fewer new business openings and reduced investment and hiring by existing businesses [CBS News]. This change could also hinder the ability of immigrants to achieve financial stability and enter the middle class.

John A. Rizzo, an economist at Stony Brook University, anticipates a contraction of Long Island’s economy, noting that approximately 28% of the region’s small businesses – around 25,000 – are immigrant-owned [AP News].

SBA’s Rationale and Loan Programs Affected

SBA officials state the new rule is intended to prioritize economic growth and job creation for American citizens [CBS News]. The policy applies to the agency’s two primary loan programs: the 7(a) program and the 504 program.

• 7(a) Program: Offers loans up to $5 million for various purposes, including working capital and business acquisitions.
• 504 Program: Provides loans up to $5.5 million specifically for purchasing fixed assets like real estate and equipment.

Recent History of SBA Policy Changes

This latest change builds on previous tightening of SBA loan restrictions. In December 2025, a policy allowing up to 5% non-citizen ownership in SBA-financed firms was rescinded [AP News]. Prior to that, the ownership requirement had been lowered to 51%.

The SBA’s actions align with a January 2025 executive order, “Protecting the American People Against Invasion,” focused on enforcing U.S. Immigration laws and public safety [CBS News].

Reactions from Business Groups

Leaders of immigrant business groups have expressed alarm and frustration, arguing the rule is discriminatory and will stifle economic growth. Zeshan Hamid, chairman of the New York South Asian Chamber of Commerce, questioned the rationale, stating that green card holders are “working hard, making enough money and then going out and opening up legitimate businesses.” Luis Vasquez, CEO of the Long Island Hispanic Chamber of Commerce, echoed this sentiment, asking, “What is the purpose of this rule change?” [AP News].

Phil Andrews, president of the Long Island African American Chamber of Commerce, noted that many members are likely unaware of the change but will be negatively impacted, as SBA loans are often the only financing option available to them.

Lender Expectations

Bankers anticipate a reduction in loan volume due to the new restrictions. Pursuit, a lender operating in New York, New Jersey, and Pennsylvania, projects a 5% decrease in 7(a) and 504 loan approvals [AP News]. Green card holders will likely need to explore alternative financing options, such as conventional bank loans or support from friends and family.

Key Takeaways

• Effective March 1, 2026, green card holders are ineligible for SBA-backed loans.
• The policy change is expected to negatively impact immigrant-owned businesses and the economies of regions with large immigrant populations.
• The SBA argues the rule will prioritize lending to U.S. Citizens and drive job creation.
• Business groups representing immigrant entrepreneurs have voiced strong opposition to the new regulation.