What happens when 12.8M green card holders can’t get SBA loans?
The Small Business Administration has issued new rules that shut lawful permanent residents out of its main small‑business loan programs, even if they own just 1% of a company. That shift could pull billions of dollars in affordable credit away from immigrant‑owned and mixed‑ownership firms. For a startup restaurant where a green card holder owns a small stake, that can mean losing a seven‑figure SBA package and facing a shorter‑term bank loan with thousands more in monthly payments.
This analysis by The Kaplan Group examines how that change could reshape small business financing, hiring, and long‑term economic growth, particularly for companies with immigrant owners.
Key Takeaways
- SBA loans backed $44.8 billion in FY2025, so excluding the roughly 12.8 million green card holders puts $2.2–$6.7 billion in annual credit for immigrant‑owned firms at risk.
- Immigrants start businesses at about 80% higher rates than native‑born Americans and helped found 46.2% of Fortune 500 companies, so limiting their access to SBA loans is likely to cut into hiring and innovation.
- SBA loans supported 84,400 businesses in FY2025, and thousands of mixed‑ownership firms now face a choice between restructuring ownership or losing access to these programs, creating new legal, operational, and compliance costs.
How Did SBA Lending Rules Tighten So Quickly for Green Card Holders?
On February 2, 2026, the Small Business Administration announced a major policy shift: lawful permanent residents—the roughly 12.8 million green card holders who live and work in the United States—will no longer qualify for SBA‑backed loans. Under the new rule, even a 1% ownership stake by a green card holder makes a business ineligible for the SBA’s flagship 7(a) and 504 programs. It is the most sweeping tightening of SBA lending eligibility in the agency’s 72‑year history and is likely to send economic ripple effects well beyond the immigrant‑owned firms it directly targets.
The policy did not arrive in a vacuum. It is the third escalation in just over a year. Previously, the SBA required that businesses applying for loans be at least 51% owned by U.S. citizens, nationals, or lawful permanent residents. In 2025, the agency raised that threshold to 100%. Then, in December 2025, a policy note allowed up to 5% ownership by non‑citizens. The latest guidance rescinds that exception entirely and goes further by removing green card holders from the eligibility pool altogether.
“The Trump SBA is committed to driving economic growth and job creation for American citizens—which is why, effective March 1, the agency will no longer guarantee loans for small businesses owned by foreign nationals,” SBA spokesperson Maggie Clemmons said in a statement. The agency framed the move as aligned with President Trump’s January 2025 executive order, “Protecting the American People Against Invasion.”
How Big Is the SBA Loan Portfolio
The SBA’s loan programs are foundational infrastructure for America’s small business economy. In fiscal year 2025, the agency guaranteed 84,400 loans totaling $44.8 billion, a record. That included 77,600 loans through the 7(a) program ($37 billion) and 6,750 loans through the 504 program ($7.8 billion). On an average week, the SBA backs about 1,600 loans worth over $860 million—roughly 320 loans per working day.
These aren’t just numbers on a ledger. SBA loans usually come with lower interest rates and longer repayment terms than most bank loans, which keeps monthly payments down and leaves more cash in the business.
A typical SBA 7(a) loan for a larger borrower carries a maximum rate of prime plus 3% or less, with terms up to 25 years for real estate and up to 10 years for working capital. By contrast, many conventional bank loans run in the 6% to 12% range and must be repaid in three to five years, which means higher monthly payments for the same amount of debt.
For a $400,000 loan, that difference can add up to thousands of dollars more per month and well over $100,000 in extra interest over the life of the loan. SBA loans also usually require less collateral and fewer restrictive covenants, so they are often the only realistic option for newer firms without deep assets or a long credit history.
That is why this policy shift matters so much. Immigrant entrepreneurs who are pushed out of SBA programs are not just losing a government perk; they are being moved into costlier, shorter‑term, and more demanding financing that many early‑stage businesses simply cannot afford or qualify for.
How Much Do Immigrant Entrepreneurs Contribute to U.S. Business Formation?
The economic data on immigrant entrepreneurship is unambiguous. A landmark study co‑authored by MIT economist Pierre Azoulay, which analyzed over one million firms founded between 2005 and 2010, found that immigrants are approximately 80% more likely to start a business than native‑born Americans. The entrepreneurship rate for immigrants was 0.83%, compared to 0.46% for the native‑born—a disparity that held across firms of every size.
These numbers are not relics. As of 2023, immigrants accounted for 23.6% of all entrepreneurs and 25% of all new businesses, despite representing just 14.3% of the U.S. population. Immigrant‑owned businesses generated $116.2 billion in business income that year. The contributions extend to the top of the corporate ladder: 46.2% of Fortune 500 companies—231 firms—were founded by immigrants or their children, generating a combined $8.6 trillion in revenue in 2024 and employing over 15 million people globally.
Among the most recognizable names built by immigrants or their children: Google, Amazon, Apple, Tesla, Zoom, Chobani, Nordstrom, and WhatsApp. Immigrants were also involved in the development of 30% of patents in strategic industries in recent years, and more than half of U.S. billion‑dollar startups were founded by immigrants.
Key figures at a glance
How Much Small‑Business Financing Could the New SBA Rule Put at Risk?
Precise figures on how many SBA loans go to immigrant‑owned businesses are elusive. The agency does not publicly break down approvals by the immigration status of owners. However, industry estimates place the share at 5% to 15% of all SBA lending historically. One Central Valley lender estimated that roughly 10% of their SBA loan portfolio includes legal permanent resident ownership.
Applying even the conservative end of that range to FY2025’s $44.8 billion in guaranteed loans implies that $2.2 billion to $6.7 billion in annual small business financing is directly jeopardized. For individual borrowers in FY2024, the average 7(a) loan of $443,097 and average 504 loan of $1.1 million represent the difference between launching a business or not.
How Could Tighter SBA Rules for Immigrants Affect U.S. Job Creation and GDP?
The stakes extend well beyond the immigrant entrepreneurs themselves. Small businesses with fewer than 500 employees account for 99.9% of all U.S. firms, employ 61.6 million Americans—45.9% of the private‑sector workforce—and contributed 88.9% of total net job creation between March 2023 and March 2024. Small businesses represent 43.5% of the nation’s GDP.
Immigrant‑owned businesses are a disproportionate driver of that job engine. The NBER study found that immigrant‑founded firms had about 1% more employees on average than those founded by native‑born citizens, and immigrant entrepreneurs “appear to play a relatively strong role in expanding labor demand relative to labor supply.” In aggregate, immigrant‑owned businesses employed nearly eight million American workers. The Congressional Budget Office estimates that higher‑than‑expected immigration between 2024 and 2034 will boost GDP by $8.9 trillion.
Restricting SBA financing does not just affect whether immigrant‑owned businesses survive; it also affects whether they hire. And when small-business hiring slows, the pressure is felt disproportionately in sectors like construction, hospitality, healthcare, and professional services, where small firms dominate.
How Will Losing SBA Loans Change Costs and Options for Immigrant‑Owned Businesses?
For immigrant entrepreneurs who can still access capital, the math changes sharply. Without SBA guarantees, borrowers face conventional loan terms that are shorter, more expensive, and harder to qualify for. The higher debt‑service costs reduce the return on investment for equipment purchases, real estate, and working capital—the very categories where SBA financing is most commonly used.
Businesses currently relying on SBA financing that have any green card holder in their ownership structure face a March 1 deadline to restructure or lose access to their credit lines. For partnerships, LLCs, and closely held corporations, this is not a paperwork exercise. It can require buyouts, legal restructuring, and in some cases, the dissolution of business relationships that were central to the enterprise’s founding.
Applications approved before the deadline can close under the old rules, but new applications will not qualify. Lenders must verify ownership before issuing an SBA loan number, creating a compliance burden that will slow processing even for fully eligible applicants.
What Small Businesses Can Do
For small businesses, the new rule is a financing problem that requires a clear plan, not just a legal opinion. Firms with any green card ownership should review how much they rely on SBA credit, check whether key projects or renewals assume SBA terms, and stress‑test cash flow under higher‑rate, shorter‑term conventional loans.
Owners can then map out practical next steps. That may include talking with their lenders about non‑SBA products, exploring options from CDFIs and community banks, or looking at state and local small‑business programs that still serve immigrant entrepreneurs.
Business groups also have an important role. Chambers of commerce, industry associations, and local business alliances can gather simple metrics—deals delayed, expansions canceled, jobs not filled—and share them with lawmakers in plain economic terms.
Advisors and lenders who work with immigrant‑owned or mixed‑status firms will be central in this transition. Their job is to help owners decide when restructuring ownership truly makes sense, when it does not, and how to keep viable companies from being sidelined by a rule change rather than by their fundamentals.
Sources
- U.S. Small Business Administration, “Trump SBA Delivers Record Capital to Small Businesses in FY25,” September 30, 2025. https://www.sba.gov/article/2025/09/30/trump-sba-delivers-record-capital-small-businesses-fy25
- U.S. Small Business Administration, “Policy Notice 5000-876441: Update to SOP 50 10 8 – Citizenship and Residency Requirements,” February 2, 2026. https://www.sba.gov/document/policy-notice-5000-876441
- U.S. Small Business Administration, “Terms, Conditions, and Eligibility: 7(a) Loan Program.” https://www.sba.gov/partners/lenders/7a-loan-program/terms-conditions-eligibility
- U.S. Small Business Administration, Office of Advocacy, “Frequently Asked Questions About Small Business, 2024,” July 2024. https://advocacy.sba.gov/2024/07/23/frequently-asked-questions-about-small-business-2024/
- Associated Press, “SBA to bar green card holders from its loan program starting March 1,” February 3, 2026. https://apnews.com/article/green-card-small-business-2e82cf5fad56ceff18f01e74ca2d000c
- ABC News, “SBA says legal permanent residents will be ineligible for its loan program effective March 1,” February 2, 2026. https://abcnews.go.com/Business/wireStory/sba-legal-permanent-residents-ineligible-loan-program-effective-129822271
- Pierre Azoulay, Benjamin Jones, J. Daniel Kim, and Javier Miranda, “Immigration and Entrepreneurship in the United States,” National Bureau of Economic Research, Working Paper No. 27778, September 2020. https://www.nber.org/papers/w27778
- MIT News, “Study: Immigrants in the US are more likely to start firms, create jobs,” May 9, 2022. https://news.mit.edu/2022/study-immigrants-more-likely-start-firms-create-jobs-0509
- American Immigration Council, “Nearly Half of Fortune 500 Companies in 2025 Were Founded by Immigrants or Their Children,” August 2025. https://www.americanimmigrationcouncil.org/report/fortune-500-companies-founded-by-immigrants-2025/
- American Immigration Council, “Map the Impact: U.S. Immigration Statistics.” https://map.americanimmigrationcouncil.org/locations/national/
- National Foundation for American Policy, “Immigrant Entrepreneurs and U.S. Billion-Dollar Companies,” July 2022. https://nfap.com/wp-content/uploads/2022/07/Immigrant-Entrepreneurs-and-Billion-Dollar-Companies.DAY-OF-RELEASE.2022.pdf
- Congressional Budget Office, “Effects on CBO’s Baseline of the Increase in Immigration Among People Without Permanent Legal Status,” November 2024. https://www.cbo.gov/system/files/2024-11/60988-Immigration.pdf
- Economic Innovation Group, “Immigrant inventors are crucial for American national and economic security,” September 2025. https://eig.org/immigrants-patents/
- U.S. Bureau of Labor Statistics, “Small businesses continue to outpace large businesses in job creation,” May 2025. https://www.bls.gov/opub/ted/2025/small-businesses-continue-to-outpace-large-businesses-in-job-creation.htm
- LendingTree, “The SBA Provides Billions Each Fiscal Year,” January 2025. https://www.lendingtree.com/business/sba-loans-study/
- The Business Journal, “SBA bars green card holders from business loan ownership starting March 1,” February 1, 2026. https://thebusinessjournal.com/sba-bars-green-card-holders-from-business-loan-ownership-starting-march-1/
- U.S. Department of Homeland Security, “Lawful Permanent Resident Population Estimates, January 2024.”
- Forbes, “How The SBA’s New Citizenship Rule Reshapes Lending,” February 11, 2026. https://www.forbes.com/sites/nataliemadeiracofield/2026/02/11/sbas-new-citizenship-rule-reshapes-small-business-lending/
- NerdWallet, “Green Card Holders No Longer Eligible for SBA Loans,” February 3, 2026. https://www.nerdwallet.com/business/loans/news/sba-loan-green-card-holders
- Reuters, “New rule to bar green card holders from US Small Business Administration loans,” February 12, 2026. https://www.reuters.com/world/us/new-rule-bar-green-card-holders-us-small-business-administration-loans-2026-02-12/
