- Key insight: Critics have not been satisfied by the Small Business Administration's latest immigration-related move. The agency loosened its citizenship and residency requirements to allow businesses with 5% foreign ownership to receive SBA-backed capital.
- Expert quote: "While the recent change may not be considered perfect by some, it does expand eligibility slightly, so should be regarded as a good thing." — National Association of Government Guaranteed Lenders President and CEO Tony Wilkinson
- Supporting data: Lending under the SBA's flagship 7(a) program is down 30% year over year since September, though the 2025 results were impacted by the 43-day government shutdown.
The June 1 rules also required businesses to be 100%owned by citizens, U.S. nationals or green card holders, superseding the previous majority-ownership requirement.
On Friday, SBA loosened those restrictions — but only slightly. The new rule permits 5% foreign ownership.
The rule change announced Friday should "empower more small businesses, especially those in manufacturing and related critical industries, to secure needed capital to hire, expand, and invest," SBA spokesperson Maggie Clemmons told American Banker in an email.
The broader limitations, restricting eligibility to citizens, U.S. nationals and green card holders, are necessary to prevent government-guaranteed capital from flowing to "small businesses owned in any part by illegal aliens, or noncitizens from adversarial nations such as China," Clemmons said.
Democratic lawmakers — along with some lenders —
"The Trump SBA is doubling down on their draconian ownership requirements, which will hurt small businesses and surrounding communities by cutting off SBA financing to small businesses, even those that are majority owned by U.S. citizens," Sen. Edward Markey, D-Mass., told American Banker in a statement on Tuesday.
"The Trump SBA is spreading fear among small businesses with legal immigrant owners and employees. The SBA must answer for these concerning changes," Markey added.
Markey and 18 other Democratic senators, including all of the party's members of the Senate Committee on Small Business and Entrepreneurship, blame the more restrictive citizenship and residency requirements for a decline in lending activity since June.
"The new requirements reverse at least a quarter century of SBA policy that allowed small businesses to receive SBA loans if they were majority-owned by U.S. citizens, nationals, and lawful permanent residents.," the lawmakers wrote in a Dec. 18 letter to SBA Administrator Kelly Loeffler.
According to Senate Democrats, lending activity in SBA's flagship 7(a) program declined 46% between June and August 2025.
Lending volume in the 7(a) program since September is down about 31% compared with 2024 numbers, but 2025's results included a 43-day government shutdown that began Oct. 1. Additionally, results between June and August of 2025 were influenced by a
Tony Wilkinson, president and CEO of the National Association of Government Guaranteed Lenders, said Tuesday in an email to American Banker that the SBA's latest policy was likely a response to concerns from lenders "and possibly others who thought that the 100% [ownership] requirement was unduly restrictive."
While acknowledging that some may characterize the new 5% foreign ownership allowance "as not going far enough," Wilkinson said the agency has limited room to maneuver, since the citizenship and residency revisions were put in place in response to President Trump's Jan. 20 executive order declaring an immigration crisis.
"This really is a tough issue for SBA," Wilkinson wrote. "While the recent change may not be considered perfect by some, it does expand eligibility slightly, so should be regarded as a good thing."
