The U.S. Small Business Administration (SBA) announced a new policy that prohibits foreigners and non-citizens from obtaining SBA-guaranteed small business loans. SBA Administrator Kelly Loeffler announced the change on Monday and will apply to all SBA loan programs, including the Major Loan Program and the Small Support Program.Under the new policy, only U.S. citizens and U.S. nationals residing in the United States, its territories or possessions are eligible to apply for SBA-backed loans. This includes key lending programs such as 7(a), 504, small loan and covered bond programs. Any business owned by a foreign person, including lawful permanent residents (green card holders), will be deemed ineligible for these federal loans.The SBA said the policy is designed to prioritize U.S. citizens and job creators. Administrator Loeffler said the agency’s lending authority is limited by Congress every year, and because small businesses have high capital needs, limited funds should flow first to U.S. citizens.This policy change builds on previous rules that have tightened eligibility.In February 2026, the SBA updated its guidance to require that 100% of direct and indirect owners of small businesses applying for loans be U.S. citizens or nationals, eliminating previous subsidies for businesses with small amounts of foreign ownership.About 3,300 loans approved in fiscal 2025 were for businesses partially owned by lawful permanent residents and foreigners, according to SBA data. These accounted for approximately 4% of total SBA loan approvals that year.The effective date of the policy is set to be 30 days after issuance, meaning affected applicants must meet the revised citizenship requirements by then.The shift has been criticized by some lawmakers, who say it will harm immigrant entrepreneurs who contribute to the U.S. economy. Opponents argue that excluding lawful permanent residents and other non-citizens from federal small business loans could reduce opportunities for entrepreneurship and job growth in communities across the country.
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