SBA Sends Borrowers Spinning

Legal permanent residents — those with a green card — will now be ineligible to own any percentage interest in a business pursuing an SBA loan.

Imagine that you have been issued a U.S. green card, have been living and paying taxes in the U.S. for years, are working hard to buy your first business, and are deep into the process of getting an SBA loan. Based on a new ruling issued this past Monday, you are out of luck if that loan is not finalized and approved by March 1st.

Small business owners need consistency from government lending programs. Clear rules—tough or not—allow them to plan and act, while sudden policy shifts are likely to disrupt their business. Recent SBA rule changes have created notable uncertainty for small business borrowers.

For as long as I can remember, SBA loan ownership rules used to be clear: If no more than 49 percent of a business was owned by a non-U.S. citizen or citizens, the business could qualify for an SBA loan. Many successful companies have been built by lawful immigrants who invest, hire, pay taxes, and tend to start businesses at a higher rate than U.S. citizens.

When the Trump administration took office in 2025, it quickly changed the rules. The SBA moved to require that an SBA borrower be 100-percent owned and controlled by U.S. citizens. For some businesses in the middle of a financing process, this created immediate confusion and disruption.  

During that period of time, I knew of a business owned by an immigrant family that had a 15-percent investor who was a foreigner. The business was two weeks away from closing on an SBA 504 loan to buy a building when suddenly the project fell into disarray and eventually fell apart.

In December, the SBA recognized the chaos and eased the rule to allow five-percent ownership by foreigners or green card holders. This wasn’t a complete return to the old standard, but it gave small business owners some flexibility regarding foreign ownership.

But then on Monday, in a move that confused many, the SBA announced that effective March 1,  it will revert back to the 100-percent ownership rule. That means that any company that is partially owned by a foreigner or green-card holder is no longer eligible. As a result, there are many businesses that are now desperately trying to get an SBA Loan Number before the rule changes on March 1.

Lenders and borrowers are facing uncertainty. Deals are expected to slow, and closings may be stalled or, even worse, called off.

To be clear, this doesn’t affect every borrower. Many businesses will never encounter this issue. But for those that do — especially immigrant entrepreneurs who have built legitimate companies in the United States — the impact is immediate and severe: loss of access to working capital, disruption to operations, and threat to business survival.

The real problem is instability. Unpredictable rule changes erode borrower and lender confidence, undermining the SBA’s mission. The SBA should not confuse entrepreneurs with constant reversals. Small business owners deserve clarity and consistency, not policy chaos.