A major shift in U.S. small-business lending policy is drawing criticism from entrepreneurs, lenders, and lawmakers who warn that restricting federal loan access to U.S. citizens could hinder business creation, job growth, and economic investment across the country.
The controversy centers on a new policy implemented by the U.S. Small Business Administration (SBA), which now limits its flagship loan programs to businesses that are fully owned by American citizens. The change marks the first time lawful permanent residents, commonly known as green-card holders, have been excluded from SBA-backed financing, despite decades of eligibility.
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For many immigrant entrepreneurs, the policy represents more than a regulatory adjustment. It effectively closes the door on one of the nation’s most important sources of affordable business capital.
Among those impacted is Sayuri Tsuchitani, a Japanese immigrant who has lived in the United States for nearly three decades. After spending 20 years working as a hairstylist in Los Angeles, she used an SBA loan during the COVID-19 pandemic to launch a Japanese head spa business specializing in scalp treatments and wellness therapies.
What began as a single location quickly expanded into three businesses employing 10 workers. Under the new rules, however, Tsuchitani would no longer qualify for the same financing that helped transform her career.
The SBA’s decision comes amid broader efforts by the Trump administration to tighten access to government-supported programs for non-citizens. While previous lending rules already imposed restrictions on certain immigration categories, lawful permanent residents had historically remained eligible because of their legal status, long-term residency, and tax contributions.
SBA Administrator Kelly Loeffler has defended the policy, arguing that taxpayer-supported lending programs should primarily benefit American citizens.
Agency officials say the change will ensure more funding remains available for citizen-owned businesses and help direct federal resources toward U.S. workers and entrepreneurs.
Critics, however, argue that the policy overlooks the significant role immigrants play in driving innovation and business formation in the United States.
According to U.S. Census data, immigrants account for roughly 15 percent of the country’s population but own between 20 and 25 percent of American businesses. Recent research from the National Foundation for American Policy found that immigrants and their children were involved in launching nearly two-thirds of U.S. startup companies valued at more than $1 billion.
Although businesses involving permanent residents received only about four percent of SBA loans last year, advocates say those loans often serve as a critical lifeline for entrepreneurs who may struggle to secure financing elsewhere.
For many small businesses, SBA-backed loans provide lower interest rates, longer repayment periods, and government guarantees that encourage private lenders to invest in companies they might otherwise consider too risky.
Cristina Foanene, a Romanian-born entrepreneur who later became a U.S. citizen, credits SBA financing with helping her California-based glass manufacturing company grow from a startup into a business employing dozens of workers. Over the years, the loans enabled the company to expand its facilities and attract additional investment.
Business advisers warn that restricting access to SBA funding may push some entrepreneurs toward higher-cost financing options, including merchant cash advances and other forms of alternative lending that can place significant strain on small businesses.
The policy’s effects are already being felt throughout the lending sector. Some lenders have reportedly slowed or paused loan applications while implementing stricter citizenship verification procedures, creating uncertainty for businesses that were already in the financing pipeline.
The move has also sparked opposition on Capitol Hill. A group of Democratic lawmakers, including Senator Ed Markey and Representative Nydia Velázquez, has introduced legislation aimed at restoring SBA loan eligibility for lawful permanent residents.
Beyond the immediate political debate, the policy raises broader questions about the future of entrepreneurship in the United States. For decades, immigrant-owned businesses have contributed significantly to job creation, local investment, and economic expansion. Supporters of the restrictions argue that government-backed lending should prioritize citizens, while opponents contend that limiting access to capital for legal residents could ultimately reduce opportunities for growth and innovation.
As lawmakers, business groups, and federal officials continue to debate the issue, many immigrant entrepreneurs are left wondering whether the pathway that helped them build successful businesses and contribute to the American economy will remain open for future generations.
