SBA Bars Foreign Nationals From Federally Backed Small Business Loans

WASHINGTON — The U.S. Small Business Administration has announced a policy that bars foreign nationals and non-citizens from accessing federally backed small business loans, saying the move is intended to prioritize American entrepreneurs as demand for capital rises.

The policy expands earlier restrictions and will apply across several SBA-guaranteed lending programs, including the agency’s Surety Bond and Microloan programs. Under the new rule, applicants must be U.S. citizens or U.S. nationals whose principal residence is in the United States.

“The Trump SBA is committed to driving economic growth and job creation for American citizens,” SBA Administrator Kelly Loeffler said.

The change builds on a policy introduced earlier this month that already made businesses owned wholly or partly by foreign nationals ineligible for the agency’s flagship 504 and 7(a) loan programs.

“Last month, we made it clear that SBA would not allow foreign nationals to access our core small business loan programs – and today, we are expanding that policy to include all SBA-guaranteed loans,” Loeffler said.

“With our lending authority capped annually by Congress and amid record demand for access to capital, our responsibility is clear: the limited resource of SBA financing must prioritise American citizens who are building businesses and creating jobs here at home.”

According to SBA data, the agency approved 3,358 loans in fiscal year 2025 for businesses partly owned by lawful permanent residents, commonly known as green card holders. Those approvals accounted for about 4 percent of the roughly 85,000 loans the agency approved that year.

Officials said the new policy reflects the administration’s position that the SBA’s limited loan capacity should be directed primarily toward American citizens as demand for financing continues to grow.

The rule will take effect 30 days after publication.

The agency also said it has strengthened citizenship verification procedures across its lending programs to ensure that federal funds are not provided to individuals who are not authorized to receive such assistance.

In a formal policy notice, the SBA said it has revised program rules so that “100 per cent of all direct and/or indirect owners of a small business applicant be US Citizens or US Nationals who have their Principal Residence in the United States, its territories, or possessions.”

The notice also removes a previous provision that allowed up to 5 percent ownership of a borrowing business to be held by foreign nationals or individuals living outside the United States. It further specifies that lawful permanent residents will no longer be eligible to hold any ownership interest in a business applying for SBA-backed financing.

The SBA said the new rules are part of broader reforms designed to ensure that its programs primarily benefit American small business owners. Among the previously announced steps are enhanced citizenship verification checks across loan programs.

The agency also said it plans to relocate certain field offices from jurisdictions described as sanctuary cities that do not cooperate with U.S. Immigration and Customs Enforcement.

The Small Business Administration is the federal agency responsible for supporting small businesses through loan guarantees, counseling, and contracting assistance. Its flagship 7(a) and 504 programs help businesses secure financing through private lenders backed by federal guarantees. (Source: IANS)