The Small Business Administration (SBA) recently posted a policy notice that would prevent legal permanent residents, such as immigrants with green cards, from accessing any SBA financing product effective March 1, 2026. Legal permanent residents are authorized to live and work in the US. To receive an SBA-backed loan, the SBA now requires small businesses to be 100% owned by US citizens or nationals.
This is an abrupt reversal from SBA’s original policy notice released this past December, which would have allowed small businesses that were 100% owned by legal permanent residents to access SBA financing products. Small businesses that have 5% of its ownership held by foreign nationals would also have been able to access these products.
The revised policy comes amid broader national debates over immigration enforcement and its effects on communities and local economies. In some areas, concerns about Immigration and Customs Enforcement (ICE) have contributed to uncertainty for immigrant-owned businesses, leading some to fully or partially close their small businesses across the country.
Taken together, the new SBA loan restrictions and the effects of ICE likely will create additional obstacles for immigrant entrepreneurs seeking to start, sustain or grow small businesses in their communities.
SBA Loans as a Critical Lifeline for Immigrant Entrepreneurs
Immigrant-owned small businesses play an important role in the national economy. They create jobs, generate local revenue and make downtown corridors vibrant with their cultural diversity. Immigrants are twice as likely than native-born, US citizens to start a small business. In fact, nearly 20% of all small businesses in the US are immigrant owned. There is a wide range of immigrant-owned small businesses with a variety of sizes and across multiple industries. Small businesses with majority immigrant ownership made an average of $100,000 to $1 million in revenue in 2024, which was mostly distributed across the accommodation, food and retail trade industries.
“Many immigrants come to this country and turn to entrepreneurship as a way to financially support their families often because of language barriers or because their diplomas and professional certifications from their home countries are not recognized in the United States along with many other challenges,” said Daniella Djiogan, NCRC’s director of small business support services.
Immigrant entrepreneurs are also more likely to face barriers to capital access after arriving in the US. The SBA’s guaranteed loans — 7(a) loans, 504 loans and microloans — are attractive options for small business owners seeking lower interest rates and flexible terms. The 7a and 504 loan programs offer long-term financing for major fixed assets like land, buildings and equipment, while the microloan program offers up to $50,000 for repairs and enhancements.
With SBA’s new citizenship requirements now in place, green card-holding immigrants can no longer access these programs. Furthermore, banks may be compelled to adopt more stringent ownership and citizenship verification procedures, which would not only delay processing times for all small business owners, but also increase administrative costs for lenders. Consequently, predatory lenders may be able to lure immigrant entrepreneurs into borrowing high-interest loans, subsequently trapping them in a debt cycle.
“Access to capital through the SBA may have been one of the only viable pathways for them to start or grow their businesses,” Djiogan said. “That access does not just impact one business owner… It affects job creation, local spending and the greater economic stability within communities.”
ICE’s Impact on Main Street Businesses
Increased immigration enforcement activity has also affected small business operations in some communities across the country. Advocacy organization Small Business Majority conducted a poll that found that 47% of small business owners say increased immigration enforcement actions has had a negative impact on their business by way of less foot traffic, staff reductions and decreased revenue.
“It’s businesses that employ green-card holders and immigrants that are being impacted because they fear going to work or coming out of their home,” said Amber Córdoba, co-chair of the Arizona Community Development Financial Institutions Network and NCRC member. “In some cases in Tucson, we have had two businesses close, [with] one business owner [selling] their business to their partner and mov[ing] out of the country.”
In the long term, the impact of ICE and the SBA loan restrictions likely will deplete a source of income for immigrant entrepreneurs who meaningfully contribute to the economy, which could result in higher prices for goods and services in a time when Americans are burdened by affordability concerns.
In Congress, Senator Ed Markey (D-MA), ranking member of the Senate Committee on Small Business & Entrepreneurship, introduced the Small Business ICE Disruption Fund Act. The bill would allow eligible small businesses affected by immigration enforcement actions to recover up to $1 million in lost revenue. Markey’s office, together with other lawmakers, also sent a letter to SBA Administrator Kelly Loeffler raising concerns about the SBA loan restrictions. The bill is unlikely to become law in the near future.
Whether it’s the Dominican-owned bodega or the Ethiopian-owned cafe, the South Asian-owned corner grocery or the Vietnamese-owned nail salon, immigrant-owned small businesses are an important part of the nation’s economic and cultural landscape. Restrictions on SBA loans may reduce access to programs that support the growth and expansion of these businesses, with potential implications for economic activity nationwide.
Manan Shah is the Policy Advisor with NCRC’s Policy & Government Affairs team.
Photo credit: Alex Boyd via Pexels.
