The U.S. Small Business Administration has, for the first time in its history, stopped approving loans to firms not fully owned by American citizens, cutting off lawful permanent residents entirely.
The policy shift, enacted in March, marks a significant expansion of the Trump administration’s immigration crackdown into the realm of small business finance and economic opportunity.
Sayuri Tsuchitani, a Japanese-born green card holder who used an SBA pandemic-era loan to open a Japanese head spa in Los Angeles, would no longer qualify under the new rules.
Tsuchitani grew her business from a single location to three, and from one employee to ten, calling the SBA program the foundation of her success in the country she has called home for 28 years.
“The SBA led me to my success of the American Dream,” said Tsuchitani, whose spa offers blood-flow massages, ayurvedic oil treatments and deep scalp cleanses.
SBA Administrator Kelly Loeffler has defended the change publicly, framing government-backed loans as a benefit reserved exclusively for citizens, despite the fact that permanent residents pay U.S. taxes at the same rate as citizens.
SBA small-business loans “are for American citizens, and we’re unapologetic about it,” Loeffler told Newsmax in March, citing a prior audit that uncovered a six-figure loan approved for a business partly owned by an undocumented immigrant.
Agency spokesperson Maggie Clemmons stated that “the agency’s rule change will help ensure more American citizens have access to funding previously granted to noncitizens.”
Eda Henries, who runs a firm helping small businesses raise and manage funds, said the policy caught the entire lending community off guard, as no one anticipated it would reach legal permanent residents.
“It was a bit of a shock to the system,” said Henries. “No one even thought for a second that would be on the table. No one expected that it would include legal permanent residents.”
According to U.S. Census data, foreign-born people make up roughly 15% of the national population but operate between 20% and 25% of all businesses in the country.
A study released this month by the nonpartisan National Foundation for American Policy estimates that immigrants and their children have founded two-thirds of U.S. startups valued above $1 billion.
The SBA reported that 4% of its loans last year involved businesses with permanent resident owners, a modest share that nonetheless represents transformative capital for those firms.
Cristina Foanene, whose Fresno, California glass company received three SBA loans over a decade, said the funding allowed her and her Romanian-born husband to expand their showrooms and manufacturing facilities and hire around 30 workers.
“I don’t know where our business would be without this,” said Foanene, who noted that the first SBA loan gave other private investors the confidence to lend to her business.
Henries warned that immigrant entrepreneurs shut out of SBA programs may be forced toward riskier financing options, including merchant cash advances, or may choose not to expand or launch businesses at all.
“I have clients that were in the middle of underwriting,” said Henries. “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.”
Democratic lawmakers including Sen. Ed Markey of Massachusetts and Rep. Nydia Velazquez of New York have introduced legislation to restore SBA loan eligibility for legal permanent residents.
Eight business owners who are permanent residents and had received or applied for SBA loans this year declined to speak on the record, citing fears of attracting attention to their immigration status.
Foanene, now a citizen, said she hopes SBA leadership will reconsider if they hear more stories like hers, adding: “If they will understand that there are people that are coming here with honest intention of building a business and creating jobs, then I feel like maybe they will say, ‘Actually it is benefiting our country.'”
