The U.S. Small Business Administration (SBA), a foundational institution for small-business financing, has enacted a dramatic policy shift, effectively barring legal permanent residents—green-card holders—from accessing its loan programs. This unprecedented move, implemented in March, marks the first time in the agency’s history that it has restricted lending solely to firms fully owned by U.S. citizens, directly impacting entrepreneurs like Sayuri Tsuchitani, who successfully launched her Japanese head spa with an SBA loan but would now be disqualified.
The Policy Shift and Its Scope
The SBA’s new directive represents a significant departure from decades of established practice, which previously allowed immigrants with lawful permanent residency to secure critical funding. Sayuri Tsuchitani, who immigrated from Japan 28 years ago, leveraged a pandemic-era SBA program to establish her business, expanding to three locations and employing nine workers. Today, her green-card status would render her ineligible for the very loans that fueled her ‘American Dream,’ as she described it. Eda Henries, who runs a firm that helps small businesses raise and manage funds, expressed the widespread surprise, stating, ‘No one even thought for a second that would be on the table. No one expected that it would include legal permanent residents.’
A Broader Crackdown
This change is not an isolated incident but rather a component of the Trump administration’s broader strategy to curb immigration, extending beyond border enforcement to quietly limit non-citizens’ access to various federal programs, including housing subsidies and commercial trucking licenses. While early announcements from the SBA mentioned ferreting out ‘hostile foreign nationals’ and ‘illegal aliens,’ the actual policy cut off lending to immigrants living legally and permanently in the U.S. Kelly Loeffler, the head of the SBA, has publicly defended the policy, telling Newsmax in March that SBA loans ‘are for American citizens, and we’re unapologetic about it.’ Loeffler cited an audit last year that identified and stopped a six-figure loan approved for a business 49% owned by an immigrant without legal status. In a statement to NPR, agency spokesperson Maggie Clemmons affirmed, ‘The agency’s rule change will help ensure more American citizens have access to funding previously granted to noncitizens.’ This stance persists despite legal permanent residents contributing to the U.S. tax base in the same manner as citizens.
Economic Contributions Under Scrutiny
The policy’s potential economic ramifications are significant, particularly given the historical role of immigrants in U.S. entrepreneurship. U.S. Census data indicates that while foreign-born individuals constitute approximately 15% of the country’s population, they operate between 20% and 25% of all businesses. Furthermore, a new study this month by the nonpartisan National Foundation for American Policy found that immigrants and their children have founded two-thirds of the nation’s startups valued at over $1 billion. Despite these figures, the SBA did not respond to NPR’s inquiries regarding the potential impact of its new policy on future job and business creation within the U.S.
Disrupting a Core Pillar of Lending
Although the SBA reported that loans to businesses involving permanent residents constituted a modest 4% of its total lending last year, this share proved ‘transformative for those companies.’ For many small businesses, the SBA serves as a crucial initial lender, offering affordable rates and a willingness to take risks on entrepreneurs that traditional banks often avoid. Cristina Foanene, who immigrated from Romania 20 years ago with her husband as investors, relied on three SBA loans over a decade to expand her Fresno, California-based glass company, which now employs around 30 people. Foanene emphasized that the first SBA loan was instrumental in making other investors comfortable lending to her business. Without the SBA, small-business advisor Eda Henries warns, ‘The alternative—it’s just really scarce,’ potentially pushing entrepreneurs toward ‘riskier or predatory lending, including merchant cash advances,’ or even deterring them from starting or growing businesses altogether.
Immediate Fallout and Legislative Pushback
The policy’s effects are already being felt across the lending ecosystem. Henries notes that private lenders, which issue SBA loans, are now taking longer to verify every owner’s citizenship status, causing delays and cancellations. ‘I have clients that were in the middle of underwriting,’ Henries explained, ‘and all of a sudden, the lenders put the brakes on.’ These are businesses that ’employ dozens of people and generate revenue, and pay taxes.’ In response to these concerns, a group of Democrats in Congress, including Sen. Ed Markey of Massachusetts and Rep. Nydia Velazquez of New York, has introduced a bill aimed at restoring eligibility for legal permanent residents for SBA loans. The sensitivity surrounding the issue is palpable, with eight legal permanent resident business owners declining to speak to NPR on the record, fearing ‘unwanted attention to their immigration status within the business community.’
Cristina Foanene, now a U.S. citizen, reflects on her journey with a mix of pride and sadness, wondering if SBA leaders would reconsider if they truly understood the ‘honest intention of building a business and creating jobs’ that many immigrants bring. The policy, she suggests, might be inadvertently harming the very country it purports to protect.
