New SBA Rules Block Green Card Holders from Government-Backed Small Business Loans

The U.S. Small Business Administration (SBA) announced that it will restrict flagship loan programs, such as the 7(a) and 504 loans, to businesses where 100% ownership is to United States citizens or United States nationals who have their principal residence in the U.S., or its territories.

Under the revised policy, lawful permanent residents (green card holders) are no longer allowed to have any stake, either direct or indirect, in businesses that are requesting SBA-backed loans. Effective as of March 1, 2026, this rule removes a long-standing exception that allowed for a minority ownership of up to five (5) percent by any non-citizens or green card holders under certain conditions; this includes E-2 investors. According to the SBA Policy Notice, this rule is consistent with the Trump Administration’s January 2025 Executive Order.

It is important to note that while this policy update limits access to certain loans offered by the SBA, it does not prevent non-citizens from owning businesses, seeking conventional bank loans, or exploring private financing avenues. With this change in policy, it is extremely important for small business owners and investors to re-evaluate immigration pathways via SBA lending. For those who have previously relied on SBA loans to support job creation, there are plenty of other lending avenues that will lead to eventual granting of legal status in the United States. We will continue to monitor any updates from the SBA on this matter. Should you need assistance with evaluating potential visa options for your specific circumstance, we encourage you to contact the immigration department at Pasricha & Patel, LLC to schedule a consultation.