Green Card Holders Locked Out as SBA Overhauls Loan Rules

In a major policy shift that could significantly impact immigrant entrepreneurship in the United States, the Small Business Administration (SBA) has announced that starting March 1, it will no longer issue loans to businesses that are not entirely owned by US citizens or US nationals.

Under the new policy, Green Card holders — legal permanent residents of the United States — will no longer be eligible to own even a minority stake in a business seeking an SBA-backed loan. The change marks one of the most restrictive eligibility updates in the agency’s recent history and has sparked concern across immigrant business communities.

Green Card Holders: What the New SBA Rule Says

According to the updated policy note, 100% of all direct and indirect owners of a loan applicant must be US citizens or US nationals who reside within the United States or its territories. Any ownership — even a single percentage point — held by a Green Card holder will automatically disqualify the business from receiving SBA financial assistance.

The rule also eliminates a previously existing exception that allowed up to 5% ownership by foreign nationals or legal permanent residents whose principal residence was outside the US. That narrow allowance has now been removed entirely.

Why This Matters for Indian Entrepreneurs

For Indian immigrants, particularly those who hold Green Cards and operate businesses in the US, the implications are immediate and serious.

The SBA runs two cornerstone loan programs:

• General SBA loans, which support working capital, equipment purchases, and operational expansion

• SBA 504 loans are designed for acquiring commercial real estate and heavy machinery

The SBA loan ban for Green Card holders means that Indian entrepreneurs who are lawful permanent residents will be locked out of these programs unless they become naturalised U.S. citizens.

However, there is a brief window of opportunity. Green Card holders who intend to apply for an SBA loan must secure a loan number before March 1 to remain eligible under the previous rules.

Green Card Holders: Lenders Caught Off Guard

The announcement has also surprised lending partners who work closely with the SBA.

Frank Gallegos, executive director of the Cen Cal Business Finance Group, a non-profit development company based in Fresno, said the policy change was unexpected. His organization partners with lenders to provide SBA 504 loans and has seen firsthand how immigrant-owned businesses contribute to local economies.

“About 10% of our loans include Green Card holders,” Gallegos said, noting that these projects often generate significant employment. He cited a recent example involving a large nut processing company that revived a long-abandoned building and created 150 local jobs.

“These are real economic wins for communities,” he added.

Political Backlash Grows

The policy has drawn sharp criticism from Congressional Democrats, who argue that it undermines the SBA’s core mission of supporting small business growth.

Senate Small Business Committee Ranking Member Edward Markey and House Small Business Committee Ranking Member Nydia Velázquez condemned the move, calling it an “attack on immigrant business owners.”

In a joint statement, they pointed out that the rule change comes just weeks after the SBA allowed limited foreign ownership while explicitly barring Chinese citizens — a stance they described as inconsistent and discriminatory.

“The Trump administration is stoking fear and confusion among immigrants and small business owners,” the lawmakers said. “Rather than supporting hard-working legal immigrants who create jobs and strengthen communities, the SBA is choosing exclusion.”