US Small Business Administration Implements Stricter Loan Eligibility Rules
The Small Business Administration (SBA) has announced a significant policy shift that will take effect from March 1. According to the new guidelines, the agency will no longer provide loans to businesses that are not entirely owned by US citizens. This decision explicitly excludes legal permanent residents, commonly known as Green Card holders, from accessing SBA loan programs.
Detailed Ownership Requirements and Elimination of Exceptions
The newly released policy note stipulates that 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. This marks a substantial change from previous regulations, as Green Card holders will no longer be eligible to own any percentage of a business seeking financial assistance from the SBA.
Previously, there was a narrow exception that allowed borrowers to have up to 5% ownership held by foreign nationals, or by US citizens, US nationals, or Legal Permanent Residents whose principal residence was outside the United States, its territories, or possessions. The SBA has now removed this exception, tightening the eligibility criteria significantly.
Implications for Indian Entrepreneurs and Business Owners
What does this policy change mean for the Indian community in the United States? The SBA operates two primary loan programs:
- Loans for general business purposes such as working capital and equipment purchases.
- 504 loans specifically designed for purchasing commercial real estate and heavy equipment.
The new rule effectively means that Indians who hold Green Cards in the US cannot obtain SBA loans until they become naturalized citizens. This creates a substantial barrier for immigrant entrepreneurs looking to start or expand their businesses through SBA-supported financing.
Industry Reaction and Economic Impact
Frank Gallegos, executive director of Cen Cal Business Finance Group, a Fresno-based non-profit development company, expressed surprise at the new regulations. His organization partners with lenders to provide SBA 504 loans, and he revealed that approximately 10% of their loans include Green Card holders.
Gallegos emphasized that these projects have delivered major economic benefits at the local level. He cited a specific example: "We had a large nut processor in this area that we did a loan for. It was 150 jobs, and they took an old building that had been empty for 15 years." This illustrates how SBA loans to immigrant-owned businesses can revitalize communities and create employment opportunities.
Political Criticism and Broader Implications
Congressional Democrats have strongly condemned the policy change, characterizing it as an attack on immigrant business owners. Senate Small Business Committee Ranking Member Edward Markey (D-Mass.) and House Small Business Committee Ranking Member Nydia Velázquez (D-N.Y.) issued a joint statement criticizing the move.
The lawmakers pointed out that the new rules come within two months of the SBA's previous regulation, which allowed up to 5% foreign national ownership while specifically barring Chinese citizens. They argued that the current policy contradicts the agency's mission to support small business growth and economic development.
"The Trump administration is stoking the flames of hatred, spreading fear and confusion among immigrants and small business owners," the Democratic legislators stated. "Rather than support hard-working legal immigrants to start or expand a business, the Trump SBA is choosing hatred by barring green card holders from receiving an SBA loan."
This policy shift raises important questions about immigrant entrepreneurship, economic inclusion, and the future of small business support in the United States. As the March 1 implementation date approaches, affected business owners and advocacy groups are likely to continue voicing their concerns about the practical and symbolic implications of these changes.
