The Small Business Administration's campaign to restrict federal lending programs to U.S. citizens reached its broadest scope yet on April 1, 2026, when expanded citizenship requirements took effect for the agency's Microloan and Surety Bond Guarantee programs. The expansion completes a systematic exclusion of lawful permanent residents — green card holders — from every SBA-backed financing vehicle available to American small businesses.
A Rapid Escalation of Restrictions
The SBA expanded its citizenship requirement to cover the microloan and Surety Bond Guarantee programs as of April 1, requiring businesses to be 100% owned by U.S. citizens or nationals to qualify.
The latest policy notice, announced on March 9, builds on a series of increasingly restrictive ownership rules that have unfolded in rapid succession:
- March 2025:
- December 2025:
- February 2026:
- March 2026:
What the New Rules Mean in Practice
The new rule introduces a strict ownership standard that extends across direct and indirect stakeholders, requiring every owner of a business seeking SBA support to hold U.S. citizenship or national status and to primarily reside within the country or its territories.
Even a 1% ownership stake by an ineligible person disqualifies the entire business from receiving SBA financing.
One of the most notable changes is the exclusion of lawful permanent residents — commonly known as green card holders — from SBA ownership eligibility. LPRs may no longer hold any ownership interest in an SBA applicant or borrower, an operating company, or an eligible passive company. This marks a meaningful tightening of prior eligibility standards, as green card holders were previously considered eligible owners under SBA programs.
The programs now affected carry significant weight for small and emerging businesses.
The Surety Bond program allows contractors — particularly those new to federal contracting — to compete for government projects that require bonding guarantees, while the Microloan program operates through approved nonprofit intermediaries that distribute loans of up to $50,000 to small businesses and startups, typically used for working capital, equipment purchases, or other early-stage operational needs.
In FY2024, the SBA guaranteed 11,092 bid and final surety bonds with a total contract value of $9.21 billion.
The Administration's Rationale
SBA Administrator Kelly Loeffler framed the restrictions as a matter of stewardship over limited federal resources.
"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 prioritize American citizens who are building businesses and creating jobs here at home," she said.
In Fiscal Year 2025, the SBA approved 3,358 loans for small businesses owned in part by a lawful permanent resident, largely during the Biden Administration — representing 4% of the agency's total 85,000 loan approvals.
The SBA said the policy revision was created to be consistent with Trump's executive order "Protecting the American People Against Invasion," which is aimed at increasing enforcement actions against anyone in the U.S. illegally.
However, legal observers have noted the disconnect between the executive order's stated purpose and the SBA's application of it.
Green card holders, by virtue of their designation, are in the U.S. legally. Without proper cause, these individuals can't legally be detained or removed from the U.S. Consequently, removing all lawful permanent residents from SBA loan eligibility could be an excessively broad application of Trump's executive order.
Widespread Criticism and Industry Backlash
The expansion has drawn sharp opposition from small business advocacy groups and lawmakers. Small Business Majority Founder & CEO John Arensmeyer warned that the policy would have lasting damage:
"Given that immigrants are twice as likely to start a business as U.S.-born citizens, SBA's lending restrictions will have a negative impact on small business creation throughout this country for years to come. What's more, the timing of SBA's tighter lending eligibility criteria could not be worse as small businesses have struggled for many years to access critical capital."
Democratic members on the U.S. Senate Committee on Small Business and Entrepreneurship also criticized the SBA policy, calling it a "devastating attack on immigrant entrepreneurs."
Sen. Ed Markey and Rep. Nydia Velázquez issued a joint statement declaring:
"The Administration's message to immigrants is clear: you are not welcome to pursue the American Dream."
Carolina Martinez, CEO of CAMEO Network, a network of small business support groups, noted that immigrants start new enterprises at twice the rate of U.S.-born residents, citing research from the University of California and the National Bureau of Economic Research.
The Scale of Impact on Immigrant Entrepreneurs
The data underscores the potential magnitude of these restrictions.
Immigrants own nearly a fifth of all employer companies and almost a quarter of nonemployer businesses — higher than their percentages of the U.S. population or the workforce generally. In 2022, immigrants made up 13.9% of the U.S. population and 18.1% of the workforce, yet owned 19.1% of employer companies.
Immigrants to the U.S. are more entrepreneurial than the native population and overrepresented among high-growth startups and venture-backed tech firms.
In 2025, more than 46% of Fortune 500 companies — a total of 231 out of 500 — were founded by immigrants or their children.
What Green Card Holders Can Still Do
While the SBA door has effectively closed, not all financing avenues are blocked.
The rule does not prohibit non-citizens from owning a business in the United States, accessing conventional bank loans or private financing that does not require a government guarantee, or applying for credit union financing, which may have different eligibility criteria.
The rule change does not impact borrowers who already have SBA loans.
It would, however, apply to future ownership changes.
Practical Guidance for Affected Business Owners
For green card holders and businesses with mixed-status ownership, the path forward requires immediate action:
1. Assess your ownership structure:
Identify all individuals or entities with direct or indirect ownership, regardless of percentage. Verify citizenship status, and gather necessary documentation, such as passports or green cards, before applying for any financing.
2. Explore alternative financing: Private lenders, credit unions, and conventional bank loans that do not carry SBA guarantees remain available. Community Development Financial Institutions (CDFIs) may also offer options for underserved entrepreneurs.
3. Consult legal counsel:
Legal permanent residents seeking SBA-backed loans should speak with their lenders to determine whether the new policy applies to any pending loan applications.
Immigration attorneys and business lawyers can advise on ownership restructuring options and compliance strategies.
4. Monitor legal challenges: Given the questions surrounding the executive order's applicability to lawful permanent residents, legal challenges to the policy remain possible. Affected business owners should stay informed about potential litigation.
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This article is for informational purposes only and does not constitute legal advice. Individuals affected by these policy changes should consult with a qualified immigration or business attorney regarding their specific circumstances.