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What is the story about?
Green card holders will be excluded from accessing US government-backed small business loans from March 1, 2026, following a tightening of citizenship and residency requirements by the US Small Business Administration (SBA). The revised rules apply to major SBA loan programmes and will impact any business with ownership held by lawful permanent residents, according to an official SBA policy notice issued on February 2, 2026.
Under the updated framework, the SBA now requires 100% of both direct and indirect ownership in a loan applicant to be held by US citizens or US nationals whose principal residence is in the United States or its territories. This effectively disqualifies green card holders from owning any stake in a business seeking SBA-backed financing once the rule comes into force.
The policy notice confirms an amendment to Standard Operating Procedure 50 10 8, which governs SBA lender and development company loan programmes. At the same time, the agency has withdrawn an earlier procedural notice that permitted limited ownership by foreign nationals or certain residents living outside the US.
Also read: Donald Trump admin to re-examine Green Card holders from ‘countries of concern’ after Washington shooting
The SBA stated in the notice: “Legal Permanent Residents (LPRs) will not be eligible to own any percentage interest in an Applicant/Borrower, OC, or EPC.” The agency said the revision is intended to bring its loan eligibility criteria in line with existing federal regulations and a recent executive order.
The move will affect small businesses that are partially or wholly owned by green card holders, making them ineligible for SBA-backed loans, which are widely used by start-ups and small enterprises. Businesses planning to apply for such financing will need to reassess their ownership structures to comply with the new requirements after March 1.
The SBA clarified that the policy will apply to new loan applications submitted from the effective date. It added that queries regarding the updated rules can be addressed to local SBA field offices.
Under the updated framework, the SBA now requires 100% of both direct and indirect ownership in a loan applicant to be held by US citizens or US nationals whose principal residence is in the United States or its territories. This effectively disqualifies green card holders from owning any stake in a business seeking SBA-backed financing once the rule comes into force.
Details of the revised SBA policy
The policy notice confirms an amendment to Standard Operating Procedure 50 10 8, which governs SBA lender and development company loan programmes. At the same time, the agency has withdrawn an earlier procedural notice that permitted limited ownership by foreign nationals or certain residents living outside the US.
Also read: Donald Trump admin to re-examine Green Card holders from ‘countries of concern’ after Washington shooting
The SBA stated in the notice: “Legal Permanent Residents (LPRs) will not be eligible to own any percentage interest in an Applicant/Borrower, OC, or EPC.” The agency said the revision is intended to bring its loan eligibility criteria in line with existing federal regulations and a recent executive order.
Implications for small businesses
The move will affect small businesses that are partially or wholly owned by green card holders, making them ineligible for SBA-backed loans, which are widely used by start-ups and small enterprises. Businesses planning to apply for such financing will need to reassess their ownership structures to comply with the new requirements after March 1.
The SBA clarified that the policy will apply to new loan applications submitted from the effective date. It added that queries regarding the updated rules can be addressed to local SBA field offices.
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