LOS ANGELES — The U.S. Small Business Administration implemented a policy change in March 2026, restricting loan approvals to businesses fully owned by U.S. citizens. This action reversed decades of eligibility for legal permanent residents to receive loans from the agency.

Kelly Loeffler, the head of the agency, stated the position on the change. "Small Business Administration loans are for American citizens, and we are unapologetic about it," Loeffler said. "The rule change will help ensure more American citizens have access to funding previously granted to noncitizens. Across every program, the Small Business Administration is ensuring that every taxpayer dollar entrusted to this agency goes to support U.S. job creators and workers," agency spokesperson Maggie Clemmons said.

"It was a bit of a shock to the system. No one even thought for a second that would be on the table. No one expected that it would include legal permanent residents,"Eda Henries, a small-business advisor, said. "I have clients that were in the middle of underwriting. We are in the process of doing deals with lenders and small business owners. These are clients that employ dozens of people and generate revenue, and pay taxes. And all of a sudden, the lenders put the brakes on,"Henries said.

Following the policy change, private lenders issuing agency loans have extended verification timelines for owner citizenship status. A prior-year audit identified and halted a six-figure loan to a business partially owned by an undocumented individual, according to the agency.

In response to the change, Senator Ed Markey of Massachusetts and Representative Nydia Velazquez of New York introduced legislation seeking to restore agency loan eligibility for legal permanent residents. Markey serves as the ranking member of the Senate small-business committee, and Velazquez is the ranking member of the House small-business committee.

U.S. Census data indicates that foreign-born individuals constitute approximately 15 percent of the U.S. population and operate between 20 to 25 percent of U.S. businesses. A study by the National Foundation for American Policy found that immigrants and their children established two-thirds of U.S. startups valued at over $1 billion. In the previous year, four percent of all agency loans were issued to businesses involving permanent residents. Eight business owners who are legal permanent residents and had previously received or applied for agency loans declined to speak on the record.