SBA Loan Ban Puts the American Dream at Risk for Immigrants

From 1 March 2026, applicants for loans backed by the Small Business Administration must be US citizens or nationals residing primarily in the United States or its territories, under revised eligibility rules that exclude businesses with any ownership by legal permanent residents.

The updated policy removes earlier provisions that allowed foreign nationals or green card holders to hold up to five per cent of a business without affecting eligibility for programmes such as the SBA’s 7(a) and 504 loans. Under the new rules, even a minimal ownership stake by a legal permanent resident will disqualify a company from receiving support.

Members of the Congressional Asian Pacific American Caucus have criticised the decision. Its chair, Grace Meng, said the change would restrict access to capital for immigrant families seeking to establish or expand small businesses.

The policy is expected to have a significant impact on Asian American, Native Hawaiian and Pacific Islander communities. According to figures cited by CAPAC, around 65 per cent of individuals in these groups are foreign-born. More than three million small businesses nationwide are owned by members of these communities, employing over five million people and generating close to one trillion dollars in annual revenue.

SBA data highlights the scale of recent lending. In the 2024 fiscal year, Asian-owned businesses received nearly 9,000 loans with a combined value of 7.2 billion dollars. These funds were used to finance expansion, cover payroll and support operations during periods of economic pressure. Under the revised criteria, similar businesses may no longer qualify.

The change also affects family-run firms in which US-born children and immigrant parents share ownership. A business could lose eligibility for federal loan programmes if a parent holds permanent resident status, regardless of the citizenship of other owners.

The SBA has not provided a detailed explanation for the policy shift. Earlier guidance had already excluded Chinese nationals from eligibility, a move that prompted concern among advocacy groups.