SBA to bar green card holders from its loan program starting March 1

The U.S. Small Business Administration said green card holders will be ineligible to apply for SBA loans starting March 1, in a policy note released by the agency, according to the Associated Press. The SBA said the eligibility change is part of a broader effort to tighten loan restrictions and restructure the agency.

In an emailed statement, SBA spokesperson Maggie Clemmons said the agency’s approach reflects a focus on supporting “American citizens” in SBA lending. Clemmons said that “effective March 1, the agency will no longer guarantee loans for small businesses owned by foreign nationals” and added that the SBA is ensuring “that every taxpayer dollar entrusted to this agency goes to support U.S. job creators and innovators.”

Although the SBA works with lenders to distribute financing to small businesses—rather than directly issuing most loans—the policy note still changes which borrowers can seek SBA-backed loan terms. SBA loan guarantees typically provide lenders with improved conditions compared with traditional financing, the AP reported.

The policy also follows a sequence of ownership-related tightening steps described by the AP. Last year, the SBA tightened a requirement that businesses applying for loans must be owned by U.S. citizens, U.S. nationals, or lawful permanent residents, moving from a prior 51% standard to a 100% requirement. In December, the SBA issued another policy note that said up to 5% of a business could be non-citizen owned.

The new policy note rescinds that December exception, and it also makes lawful permanent residents ineligible under the SBA’s loan-application rules starting March 1, the AP reported. Small business advocates criticized the change. The Small Business Majority said the move “will limit the growth of small businesses and jobs throughout the United States,” according to the AP.

Small Business Majority CEO John Arensmeyer said in response that immigrants are “twice as likely to start a business as native-born U.S. citizens,” adding that, in his view, the SBA’s “severe restrictions will have a negative impact on small business creation throughout this country for years to come.”