Millions Of Legal Immigrants Are About to Lose Access To Government Loans for Small Businesses

By
Diccon Hyatt
Diccon Hyatt
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Diccon Hyatt is an experienced financial and economics reporter. He's written hundreds of articles breaking down complex financial topics in plain language, emphasizing the impact that economic currents would have on individuals' finances and the market. He has a Bachelor's degree in English from the University of Delaware.
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Published February 03, 2026
05:22 PM EST
Kelly Loeffler, administrator of the US Small Business Administration, speaks at a press conference in Washington, DC, on Oct. 27, 2025.
The Small Business Administration, under the leadership of Kelly Loeffler, will no longer lend to businesses if they have any non-citizen ownership.

Kent Nishimura / Bloomberg / Getty Images

Key Takeaways

  • The Trump Administration is barring businesses with any amount of non-citizen ownership from receiving federal small business loans starting March 1.
  • The new policy excludes lawful permanent residents from obtaining loans, potentially affecting more than 5 million people based on U.S. Census data.
  • Critics blasted President Trump's restrictions on business loans as damaging to the economy and demonizing immigrants.

The Small Business Administration is cutting off lending to any business with any amount of non-citizen ownership, excluding more than 5 million business owners from federal loans.

Starting March 1, the SBA will no longer lend to businesses if any of their ownership is not a citizen, down from the 5% foreign ownership currently allowed. The move, announced Monday, is the latest step in President Donald Trump's efforts to cut off legal immigrants from government funding and services. Before Trump took office again in 2025, the SBA gave out loans to businesses as long as they were at least 51% owned by citizens or lawful permanent residents. (Illegal immigrants were already excluded.)

By removing the ability of lawful permanent residents to receive loans, the SBA is potentially affecting millions of businesses.

The SBA does not publicize how much of the  $44.8 billion its two largest programs lent in fiscal 2025 went to noncitizen business owners. However, according to the Census Bureau, noncitizens make up a significant percentage of small business owners: in 2023, 5.2 million owner-operators were not citizens, or 15.9% of all non-employer businesses in the country.

What This Means For The Economy

Although the SBA did not publicize how many people will be affected by the new policy, the administration's restrictions on business loans could hinder the ability of many small businesses to get funding, which critics say will damage the economy.

The SBA said in its Monday announcement that the changes are consistent with an executive order Trump issued the first day of his presidency titled  "Protecting The American People Against Invasion,"  which started a government-wide crackdown on immigration. In addition to the new restrictions on SBA loans, the administration has made some legal immigrants ineligible for other government benefits such as Medicaid coverage and food stamps.

Critics of the administration say the changes are hurting law-abiding immigrants and businesses with part-immigrant ownership.

related education

How SBA Loans Can Help Your Small Business
Two workers in overalls interacting with a man in a shirt appearing to shake hands in what seems to be a workshop setting
What Is a Resident Alien? Who Is Considered a Resident Alien?
Resident Alien: A foreign-born, non-U.S. citizen who lives in the U.S. legally.

"Small businesses use SBA loans to create jobs and invest in their operations," a group of Democratic lawmakers led by Massachussett Senator Ed Markey wrote in a letter to the SBA in December. "Unfortunately, the Trump administration is demonizing immigrant communities and picking winners and losers, rather than basing lending decisions on a small business’s ability to repay a loan."

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Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

  1. Small Business Administration. "SBA Policy Notice."

  2. Congressional Research Service. "Changes to Small Business Administration (SBA) Business Loan Program Policies in Early 2025."

  3. Small Business Administration. "Trump SBA Delivers Record Capital to Small Businesses in FY25."

  4. Census Bureau. "Nonemployer Statistics by Demographics series (NES-D): Owner Characteristics of Nonemployer Firms by Industry, Sex, Ethnicity, Race, and Veteran Status for the U.S., States, Metro Areas, and Counties: 2023."

  5. White House. "Protecting The American People Against Invasion."

  6. Ed Markey. "Letter To Kelly Loeffler."

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