Green card holders barred from US govt-backed business loans from March 1

From March 1, businesses with any green card holder ownership will lose access to SBA-backed loans, reversing long-standing eligibility norms

In yet another blow for green card holders, a new US Small Business Administration (SBA) policy taking effect March 1 will bar businesses with any legal permanent resident ownership from receiving SBA-backed loans.

 

The move reverses long-standing eligibility rules and is drawing criticism from lenders, who warn that immigrant-founded businesses will be disproportionately affected.

 

The policy notice, issued on Monday, requires that 100% of all direct and indirect owners of a loan applicant be US citizens or US nationals residing in the United States or its territories, doubling down on US President Donald Trump’s ‘America First’ agenda.

 

Legal permanent residents (LPRs), commonly referred to as green card holders, will no longer be allowed to own any share in a business seeking financial assistance through SBA loan programmes.

   

Who is affected by the US new rule

 

The restriction applies across the board and is not limited to new applicants.

 

It covers:

 

> Borrowers applying for SBA-backed loans

> Operating companies linked to the loan

> Eligible passive companies

> Both direct and indirect ownership interests

 

Any loan involving an LPR owner must receive an SBA loan number before March 1 to remain eligible under the old rules. 

 

Why immigrant-owned businesses are worried

 

Lenders and advocacy groups say the change will weigh heavily on immigrant-founded businesses, particularly in regions with high migrant entrepreneurship.

 

Immigrants from India are expected to be among the most affected groups, given India remains the largest source of migrants globally due to its population size and long-established migration links with the US.

 

Many Indian-origin entrepreneurs operate small and mid-sized firms that rely on SBA-backed credit to fund expansion, equipment purchases or property acquisition.

 

What SBA loans are used for

 

The SBA’s two main lending programmes play a key role in small business financing.

 

They include:

 

> 7(a) loans, used for general business needs such as working capital, inventory and equipment

> 504 loans, used for buying commercial real estate and heavy machinery

 

In California’s Central Valley alone, the top 20 SBA lenders guaranteed loans worth $115.6 million during the period referenced by lawmakers, underlining how widely the programme is used.

 

Congressional Democrats have criticised the policy shift, calling it hostile to immigrant entrepreneurs and inconsistent with the SBA’s mandate.

 

Senate Small Business Committee Ranking Member Edward Markey of Massachusetts and House Small Business Committee Ranking Member Nydia Velázquez of New York described the move as an attack on legal immigrants who run small businesses.

 

They also pointed out that this is the second reversal of SBA citizenship rules in under two months. In December, the agency had said it would allow up to 5% foreign national ownership while barring Chinese citizens. That position has now been fully rolled back. 

 

In a joint statement, the lawmakers said the change runs counter to the agency’s purpose of supporting small business growth.

 

“The Trump administration is stoking the flames of hatred, spreading fear and confusion among immigrants and small business owners,” said Markey and Velázquez. “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.”