The Trump administration is widening its actions against immigrants by disqualifying all non-U.S. citizens and nationals, including Green Card holders, from borrowing from a key Small Business Administration loan program.
Beginning March 1, eligibility for 7(a) loans will be limited exclusively to U.S. citizens and nationals and to businesses wholly owned by U.S. citizens and nationals, to according to a Feb. 2 policy notice: “SBA is requiring that 100% of all direct and/or indirect owners of a small business applicant be U.S. Citizens or U.S. Nationals who have their Principal Residence in the United States, its territories or possessions.”
The guidance rescinded a previous rule permitting businesses to apply for the loans if no more than 5% of ownership comprised foreign nationals or Green Card holders.
The goal in both cases was to bring the loan program into alignment with President Donald Trump’s 2025 executive order, “Protecting the American People Against Invasion.” While the order focuses mostly on border control and other immigration issues, it also briefly refers to “economic espionage” and the need to protect the “economic well-being of Americans.”
An SBA spokesperson said the agency will scrutinize every program to ensure American businesses are supported, ABC News reported. “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.”
“Today, nearly half of Fortune 500 companies were founded by immigrants or their children.”
Under the 7(a) loan program, small businesses can borrow up to $5 million to provide working capital, acquire buildings and real estate, purchase equipment and machinery, buy office furniture and equipment or to refinance debt, among other uses.
Economic experts describe the 7(a) program as a critical component in the launch and survival of many small businesses, and say it was especially helpful to companies during the COVID-19 pandemic when SBA distributed close to $1 trillion.
And the effects of the new policy will be felt widely.
The number of Latino-owned businesses increased 44% from 2018 to 2023, leading an economic surge that generated more than $650 million in revenue, Fortune magazine reported.
“In recent years, Latino and immigrant entrepreneurs have started new businesses at twice the rate of the general population, building domestic capacity in key industries like construction and manufacturing. Today, nearly half of Fortune 500 companies were founded by immigrants or their children.”
SBA’s 2021 annual performance report estimated 42% of all 7(a) loans that year were granted to minorities, veterans and women, according to a study by the Baker Institute for Public Policy at Rice University in Houston.
John Arensmeyer
The policy change will damage business for years to come, said John Arensmeyer, CEO of Small Business Majority, a network of more than 85,000 businesses nationwide.
“The timing of SBA’s tighter lending eligibility criteria could not be worse as small businesses are struggling with ballooning costs due to tariffs, health care and inflation, as well as the fact that small businesses have struggled for many years to access critical capital,” he explained.
Disqualifying legal immigrants and other foreign nationals is political as well as discriminatory and economically disastrous, some experts said.
Judy Chu
“This is not just bad policy. It reflects a broader pattern of singling out immigrant communities for punishment at the expense of citizens and noncitizens alike. It is xenophobic, economically reckless and a betrayal of the very promise of opportunity that defines the American Dream,” said U.S. Rep. Judy Chu, D-Calif.
“This decision unfairly targets immigrant communities and will harm not only immigrant small-business owners, but the American economy as a whole,” she said, reminding that foreign-born business owners and their employees pay taxes.
Democratic members of the U.S. Senate Committee on Small Business and Entrepreneurship said the new guidance is part of a larger administration effort to punish Trump’s political opponents.
Edward Markey
Nydia Velazquez
“The SBA previously announced it will shutter seven field offices in municipalities considered by the administration to be ‘sanctuary cities’ and restrict SBA loan access for small businesses with certain noncitizen owners and employees,” said U.S. Sens. Edward Markey and Nydia Velázquez. The Trump administration “is playing political games with people’s livelihoods and, once again, recklessly failing to consider the interests of small businesses.”
They also raised questions about possible implications of the new guidance, including whether the policy will encourage business owners “to unduly discriminate against individuals in hiring, firing, promotion or recruitment decisions based on their national origin or citizenship status.”
The new rule did not just materialize out of thin air, stemming instead from SBA Administrator Kelly Loeffler’s 2025 announcement of reforms coming for her agency, including how it selects loan recipients: “We will return our focus to empowering legal, eligible business owners across the United States — in partnership with the municipalities who share this administration’s commitment to secure borders and safe communities.”
One change would require SBA loan applicants to verify citizenship to ensure recipient companies cannot be owned by one or more “illegal aliens,” she said. “Today, I am pleased to announce that this agency will cut off access to loans for illegal aliens and relocate our regional offices out of sanctuary cities that reward criminal behavior.”