WASHINGTON, D.C. (February 5, 2026) — The U.S. Small Business Administration (SBA) announced that, beginning March 1, lawful permanent residents — holders of so-called “green cards” — will no longer be eligible for loans guaranteed by the agency, as part of a new policy that tightens eligibility requirements for federal financing. The decision was communicated through an internal policy notice and confirmed by agency spokesperson Maggie Clemmons, who said the measure is intended to focus federal resources exclusively on U.S. citizens.
“The Trump SBA is committed to driving economic growth and job creation for American citizens,” Clemmons said in an emailed statement. “For that reason, effective March 1, the agency will no longer guarantee loans for small businesses owned by foreign nationals.” The new directive rescinds a provision issued last December that allowed up to 5% of a business applicant to be owned by non-citizens.
It also goes further than a change made last year, when the SBA tightened ownership requirements by mandating that businesses be 100% owned by U.S. citizens, U.S. nationals, or lawful permanent residents, up from the previous 51% threshold. Under the new policy, even lawful permanent residents are now excluded from the agency’s guaranteed loan programs. The SBA does not issue loans directly — except in cases related to natural disasters — but instead backs loans made by banks and other financial institutions.
Because of this federal guarantee, the loans typically offer lower interest rates, longer repayment terms, and more favorable conditions than traditional commercial loans, making them one of the main sources of capital for emerging small businesses. The decision drew immediate criticism from organizations that advocate for small businesses and immigrant entrepreneurship. The group Small Business Majority described the move as a blow to the economy and job creation.
“This decision limits the growth of small businesses and job creation across the country,” said John Arensmeyer, the organization’s chief executive officer. “Immigrants are twice as likely to start a business as native-born U.S. citizens. Given that reality, the SBA’s severe restrictions will have a negative impact on business formation for years to come.” According to industry studies, immigrants play a key role in sectors such as restaurants, retail trade, construction, transportation, and personal services, where small businesses account for a significant share of local employment.
Economic policy experts warned that excluding permanent residents could have ripple effects in communities that rely on these enterprises to stimulate local economies. “Limiting access to credit for people who live legally in the country and pay taxes reduces the pool of new businesses and restricts competition,” said a financial sector analyst consulted by specialized media outlets. The changes also come amid a broader internal restructuring of the SBA, which in recent months has reviewed multiple rules related to applicant eligibility.
The agency has said its goal is to ensure that “every taxpayer dollar” is directed exclusively to U.S. citizens, a stance that aligns with the current administration’s immigration and economic priorities. However, business organizations argue that the policy runs counter to the nation’s economic history. “The United States was built by immigrant entrepreneurs,” said a representative of a Hispanic chamber of commerce.
“Denying them access to formal credit not only affects those business owners, but also the workers they employ and the communities where they operate.” So far, the SBA has not indicated whether the measure will be temporary or permanent, nor has it specified how many businesses could be affected. It has also not clarified what will happen to loans already granted to businesses owned by permanent residents.
Meanwhile, small business advocates fear the policy could force many entrepreneurs to turn to informal financing or higher-interest loans, increasing the risk of bankruptcy in a segment of the economy that is already vulnerable. The new restriction takes effect on March 1 and adds to a series of recent measures reflecting a more restrictive approach to access to federal small-business support programs, at a time when inflation and borrowing costs continue to pressure small businesses nationwide.
