SBA’s new loan rules shut out green card holders

TEXAS — The Small Business Administration (SBA) is only allowing 100% U.S. citizen-owned businesses apply for any of their loan programs.

The move from the SBA follows one of President Donald Trump’s first executive orders when he was inaugurated last year. One of his Jan. 20 orders, “Protecting the American People Against Invasion,” called for the “denial of public benefits to illegal aliens,” according to the order.

One business in Austin found out about the policy change when going through a separate hurdle.

“We got our notice in March that our building is being taken for eminent domain for the light rail project,” said Debra Hallum, the owner of 1972 Pub. “While there is a relocation plan to move us and help with that, there are going to be some additional costs.”

Hallum originally looked to the SBA as a potential source of funding last year to help with opening the bar. She decided to wait a year to establish a financial history to show vendors when and if she needed.

“We decided we were going to look at SBA again, and we started talking to the same team we had been talking to before,” Hallum said, referring to the 7(a) loan program offered by the SBA. “He came back to us and said that in March, our current government changed it so that small business ownership had to be 100% citizen, and we are half immigrant owned, and we no longer qualify for SBA funding.”

Hallum’s business partner and wife, Marcene Du Plessis, is a permanent resident green card holder. Hallum referred to the SBA policy update published in February this year, which states, “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 rule came into effect March 1.

However, this isn’t the only change the SBA has made when it comes to citizenship and eligibility.

In the first months of President Trump’s second term, green card holders like Hallum’s partner could apply for an SBA loan. An update to the 7(a) loan operating procedures, effective June 1, 2025, states that eligibility was restricted to U.S. citizens and nationals and permanent lawful residents (green card holders).

After that, however, a Dec. 19, 2025, update stated that ownership by non-citizens or nationals such as green card holders had to be capped at 5% in order to qualify for an SBA loan.

Hallum made it clear she did not want to change the ownership structure of her business.

“One of the questions is change the LLC, and my first reaction to that is I shouldn’t have to,” she said.

Now, with the newest update this past March of businesses needing to be 100% citizen-owned, they no longer qualify for any government-backed funding.

“She’s been here and paid taxes for 20 years. She’s followed the law for 20 years,” Hallum said about her partner.

Despite Du Plessis’s history living and working in the United States, Trump and SBA administrator Kelly Loeffler are set on keeping funding within the country to advance the administration’s “American First” priorities.

“My administration is committed to ensuring that American small businesses have access to the credit and capital they need,” said Trump at a Small Business Summit last month. “Last year, Kelly, our small business administration issued $7 billion in loans to 11,000 new startups, as well as $1.3 billion to 3,000 veteran-owned small businesses”

Kelly Loeffler, when speaking with NewsNation last month, also added the point of rooting out fraud.

“You now have to have a birthdate. You have to have a citizenship check. That has never existed in the 72 year history of the SBA,” said Loeffler.

Spectrum News reached out to every SBA district office in Texas for an interview to discuss the changes.

SBA spokesperson Maggie Clemmons provided a statement that says in part, “The Trump SBA is committed to driving economic growth and job creation for American citizens… Across every program, the SBA is ensuring that every taxpayer dollar entrusted to this agency goes to support U.S. job creators and innovators.”

“To that end,” she continued, “we expect to be able to offer them even more capital in the near future pending legislation to increase SBA loan limits for small businesses that are hiring, building, and producing in America.”

Navigating the eligibility changes from the SBA is another hurdle that some small businesses, like Hallum’s, have had to overcome.

Carlos Soto, from the City of Austin’s Office of Economic Development, says businesses in Austin and across the state are facing a lot.

“People are trying to figure out what to do given the economic landscape, given the policy changes that are coming from federal all the way to local,” Soto said.

“A lot of lessons learned,” Hallum said.

With no government loan options available, Hallum and Du Plessis are looking at other options for funding. They were recently awarded a grant from the National LGBTQ+ & Allied Chamber of Commerce, but it’s only a small step toward their $50,000 goal.

“It’s not enough,” she said.

Hallum is also calling on their patrons and community members to donate to their fund for relocation expenses. Hallum, while hopeful, says this is an issue she and her partner should not be dealing with at all.

“Not allowing immigrants to live a life here, including if they want to open a small business,” she said, “I just think it’s not what America is about.”