Green card holders will no longer be eligible for US government-backed small business loans from March 1, 2026, after the US Small Business Administration (SBA) tightened its citizenship and residency rules. The change applies to key SBA loan programmes and affects businesses with any ownership by lawful permanent residents, according to an official SBA policy notice issued on February 2, 2026.
The SBA said the revised rules require 100% of all direct and indirect owners of a small business applicant to be US citizens or US nationals with their principal residence in the United States or its territories. As a result, lawful permanent residents will be barred from owning any stake in a business seeking SBA-backed loans from the effective date.
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What the new SBA rule says In its policy notice, the SBA said the update revises Standard Operating Procedure 50 10 8, which governs lender and development company loan programmes. It also rescinds an earlier procedural notice that allowed limited ownership by foreign nationals or certain residents living outside the US.
The notice states: “Legal Permanent Residents (LPRs) will not be eligible to own any percentage interest in an Applicant/Borrower, OC, or EPC.” The SBA said the change aligns its loan rules with existing federal regulations and a recent executive order.
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Impact on small businesses The decision means businesses partly or fully owned by green card holders will not qualify for SBA-backed loans, including popular financing options used by small and early-stage firms. Existing and prospective borrowers will need to review their ownership structures to remain eligible after March 1.
The SBA said the policy is effective for new applications from the specified date. Questions related to the notice can be directed to local SBA field offices, it added.