A recent letter from prominent lawmakers to the Small Business Administration (SBA) has sparked significant discussion regarding new ownership requirements for businesses seeking SBA-backed loans. The agency’s recent policy stipulates that small businesses must be 100% owned by U.S. citizens or nationals, a shift that has raised concerns among small business owners and lenders alike.
On February 24, Ranking Member Edward J. Markey (D-Mass.) and his colleagues expressed their discontent regarding this policy in a letter to SBA Administrator Kelly Loeffler. The lawmakers highlighted that this requirement marks a drastic change from longstanding lending practices that have been in place for nearly 25 years. They argue that the new rule, which excludes businesses with non-citizen ownership from participating in vital loan programs, is counterproductive for both small business growth and community welfare.
The SBA’s Policy Notice 5000-876441, issued on February 2, outlines these stringent requirements. It states that even lawful non-citizen owners will no longer be eligible for the agency’s 7(a) and 504/CDC loan programs. This marks the fourth alteration regarding citizenship guidelines since March 2025, a frequency that has left many small business owners and lenders confused about the compliance landscape.
The lawmakers stress that these changes come at a time when small businesses are already feeling the strain of economic pressures exacerbated by recent federal trade policies. "At a time when President Donald Trump’s tariff and trade policies are putting immense pressure on America’s small businesses, the SBA should be focused on reducing barriers and helping more small businesses access these two important programs," they wrote.
The implications of this policy shift are broad. By constraining access to loans, small businesses could find themselves stifled just as they struggle to recover from recent economic challenges. The letter notes that the new citizenship requirement undermines sound lending practices, which could lead to adverse effects on jobs and services that small businesses provide locally. As many businesses operate with a mix of ownership, lenders may also face increased complexities. The requirement could compel them to undertake time-consuming certification processes regarding the citizenship status of all business owners, potentially disincentivizing lending to firms with intricate ownership structures.
Small business owners may want to weigh the practical ramifications of these changes carefully. “We are deeply concerned that the SBA’s unclear and shifting guidance will drive lenders and program participants to halt new originations under both programs to avoid liability, cutting off access to capital and destabilizing communities and local economies across the country,” the lawmakers continued in their letter.
Furthermore, the new policy also poses challenges for community economic growth. Many small businesses, especially those co-owned by immigrants or international residents, are now at risk of losing vital financial resources necessary to sustain and grow their enterprises.
The lawmakers concluded their letter by urging the SBA to reconsider its position. They advocated for a collaborative approach that would not only restore previous lending practices but also reinforce the capital access programs essential for small business sustainability. “Instead of denying more American small businesses access to necessary affordable capital, we should be working together to strengthen the SBA’s capital access programs and increase financing opportunities for more small businesses in order to improve our local communities and national economy,” they asserted.
The ongoing debates surrounding these ownership requirements may have significant ramifications for the future of small businesses across the nation, especially those reliant on SBA loans to thrive. As business owners navigate this evolving financial landscape, understanding the implications of SBA policies becomes increasingly crucial.
For further details, the original press release is available here.
