SBA Announces New Policy Banning Foreign Nationals and Non-Citizens from Loans and ‘Prioritize American Citizens’
On Friday, Small Business Administration (SBA) Administrator Kelly Loeffler announced a new policy that would ban foreign nationals and non-citizens from loans through the agency.
Loeffler said in a statement, “The Trump SBA is committed to driving economic growth and job creation for American citizens.”
“The Trump SBA is committed to driving economic growth and job creation for American citizens,” she continued.
“Last month, we made it clear that SBA would not allow foreign nationals to access our core small business loan programs – and today, we are expanding that policy to include all SBA-guaranteed loans. With our lending authority capped annually by Congress and amid record demand for access to capital, our responsibility is clear: the limited resource of SBA financing must prioritize American citizens who are building businesses and creating jobs here at home.”
Effective March 1, 2026, the SBA requires that 100% of all direct and indirect owners of a small business applying for SBA financing must be U.S. citizens or U.S. nationals with their principal residence in the United States, its territories, or possessions.
The new policy eliminates any foreign ownership (even a small percentage, such as the previous allowance of up to 5% in some cases) and explicitly bars legal permanent residents (green card holders/LPRs) from holding any ownership interest in an applicant or borrower business.
In a press release, the agency stated, “Today, in the effort to prioritize American job creators, the U.S. Small Business Administration (SBA) issued a new policy notice to ban foreign nationals and non-citizens from accessing SBA-guaranteed small business loans.”
“The latest notice, which applies to the agency’s Surety Bond and Microloan Programs, builds on the policy change implemented earlier this month – which made any small business owned in whole or in part by a foreign national ineligible for the agency’s flagship 504 and 7(a) loan programs. Small business owners applying for any SBA loan program must be U.S. citizens or U.S. nationals with their principal residence in the United States.”
The requirement will apply to its Surety Bond and Microloan programs and is an expansion of changes made in February to the SBA’s 504 and 7(a) programs — loans for small businesses looking to finance working capital, equipment or acquisitions. Those earlier reforms prohibited SBA loans from going to businesses that are partially or wholly owned by foreign nationals.
The Surety Bond helps new or inexperienced contractors bid for government jobs that require bonding. Similarly, The Microloan program looks to offer small businesses loans of up to $50,000 through approved third-party intermediaries.
The SBA under President Trump has made rooting out fraud, and directing funds toward American citizens, priorities.
In January, Loeffler said the agency discovered, following a review of Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) approvals in Minnesota, nearly $400 million in potentially fraudulent loans—money that was supposed to keep small businesses afloat and American workers employed during the pandemic.
Loeffler said the agency reviewed thousands of pandemic-era loans approved in Minnesota and identified 7,900 PPP and EIDL loans connected to the suspended borrowers and suspended 6,900 Minnesota borrowers after uncovering the suspected fraud.
In February, the agency suspended 111,620 California borrowers connected to $8.6 BILLION in suspected pandemic fraud.
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