For the first time in its history, the US Small Business Administration (SBA) has blocked immigrant entrepreneurs from getting loans. Legal residents, or green card holders, are now ineligible for SBA-backed loans.

Starting March 1, 2026, the SBA has adopted a “Citizens Only” loan policy. Now, 100% of a business must be owned by US citizens to qualify for SBA 7(a) and 504 loans. Legal permanent residents, Green Card holders, are no longer eligible, even if they hold a small ownership stake. These loans are often used for equipment, real estate, or working capital, and without them, many growth plans are at a standstill.

“The Trump SBA is committed to driving economic growth and job creation for American citizens,” SBA Administrator Kelly Loeffler said in a statement on Friday, according to Fox News.

ALSO READ

Which programs are affected?

The new rule will apply to the Surety Bond and Microloan programs. These programs were added to the earlier reforms in February that restricted SBA’s 504 and 7(a) loans, used by small businesses to fund working capital, equipment, or acquisitions, from going to companies partially or fully owned by foreign nationals. “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.

In 2025, the agency began requiring citizenship verification for all its loan programs. It also decided to move its offices out of sanctuary cities, areas where local governments limit cooperation with federal immigration enforcement.

According to SBA data, about 3,300 loans are currently active for businesses partially owned by lawful permanent residents, mostly approved under the Biden administration. That represents roughly 4% of SBA’s total 85,000 loans.

Keegan McBride, co-founder of SBA Source, told Fox News, “SBA loans are really only meant to be issued in situations where folks wouldn’t be able to get access to credit on similar terms without the government guarantee. It’s challenging because SBA is kind of designed to fill that gap.”

ALSO READ

Many franchise owners are immigrants, a mix of green card holders and naturalised citizens. Under the new rules, even couples launching a business together can’t get an SBA loan if both aren’t US citizen. Other loans exist, but they are harder to get.

McBride explained, “I mean, for most people, you’re not going to be able to get an unsecured line of credit, or at least not a sizable one. You either need home equity, an investment portfolio, or something else to secure the line of credit.”

A big setback for Indian American entrepreneurs

The Indian American community is one of the most entrepreneurial groups in the US. In FY2024, Asian American-owned businesses received over $7 billion in SBA-backed loans.  Many of these are family businesses, where parents hold Green Cards while children are UA citizens. Under the new rule, even a 1% stake by a non-citizen can disqualify the entire business.

“I’m really shocked,” Aneesa Waheed, a restaurateur who moved from India as a teenager and was previously named SBA Small Business Person of the Year, told The Guardian. She added, “Somebody who’s here on a Green Card, they’ve made a commitment… flourishing businesses are employers who pay taxes and make neighbourhoods more vibrant.” Waheed is a naturalised US citizen and runs five Moroccan restaurants called Tara Kitchen across New York and New Jersey. “You think of the SBA as a source of support and strength for small businesses. So you never really think of it in terms of ‘Are you a Democrat? Are you a Republican? Are you an independent?”

The news triggered strong reactions online. On platforms like X (formerly Twitter) and LinkedIn, many Indian American entrepreneurs expressed frustration and worry. “So we pay federal taxes, employ Americans, and wait 10+ years for a Green Card, but we aren’t ‘American’ enough for a business loan? This isn’t just policy; it’s a barrier to entry for the next generation of Indian-led innovation,” one X user wrote.

“The SBA was the only way many of us could afford to move from a small lease to owning our own storefront. By the time I get my citizenship, interest rates and property prices will have doubled. The ladder is being pulled up,” another added.

“Many Indian Americans who supported the administration for its economic stance are now realising ‘America First’ might exclude even the most successful legal residents,” a third wrote.

Groups like the Congressional Asian Pacific American Caucus (CAPAC) have criticised the policy as “xenophobic,” warning it could slow job creation. For Indian American business owners, the timing is especially tough, since the citizenship process can take years.

Trump’s economic agenda at work: Why the change?

“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,” Loeffler explained. The policy is set to take effect 30 days after the announcement.

While helping small businesses is usually a bipartisan issue, the SBA under Loeffler is promoting Trump’s economic agenda. Last June, she changed the rules: now 100% of a business must be owned by US citizens or green card holders to qualify for an SBA loan. Previously, only 51% ownership by citizens or legal residents was needed.

Who is Kelly Loeffler?

Before becoming SBA administrator, Loeffler served as Georgia’s interim US senator for one year, losing her election to Democrat Raphael Warnock in 2022. She and several other senators faced insider trading accusations early in the pandemic, but the Department of Justice cleared her in May 2020.

Loeffler and her husband, Jeffrey Sprecher, CEO of the Intercontinental Exchange and former NYSE chair, have been major Trump donors, giving $13.5 million to his campaigns and related Super PACs since 2020.