Small businesses with immigrant or mixed-status ownership will soon lose access to some of the most affordable financing available to them.
The change will “materially reduce access to SBA financing for many small businesses … that previously qualified,” Jeremy Gilpin, president and CEO of Community Bank & Trust said via email.
Here’s what’s changing with SBA loan eligibility, and what it means for small-business owners.
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New SBA loan ownership requirements
What the SBA loan rule change means for borrowers
For existing borrowers: The rule change does not impact borrowers who already have SBA loans. It would, however, apply to future ownership changes, Gilpin said. If you modify your ownership after March 1, any new owners would need to be U.S. citizens or U.S. nationals to remain compliant with the SBA’s requirements.
How the rule could restrict access to affordable financing
Experts say the rule change could significantly limit access to affordable financing for small businesses owned by lawful permanent residents.
Reduced access to affordable capital can also have negative effects on local economies, dampening business growth, job creation and tax revenue, Carolina Martinez, CEO of CAMEO Network, a national support network for micro businesses, said.
“When small businesses don’t have the capital they need, they can’t reach their full economic potential — especially at a moment when they are facing increased costs of doing business due to tariffs and inflation,” she said in an email.
What affected business owners should do now
Business owners who are in the process of applying for an SBA loan and expect to be affected by the eligibility change should reach out to their lender as soon as possible. Ask whether there are steps you can take to move the application forward and whether they can provide an estimated timeline for approval.
For those who have not yet applied for an SBA loan, it’s unlikely that you’ll be able to submit an application and receive approval before the rule takes effect. In that case, you’ll need to explore alternative financing options.
Online lenders can provide flexible and fast access to capital, but they typically charge higher interest rates. Martinez recommends working with your local Small Business Development Center, Women’s Business Center or another trusted advisor to compare different products and find the best option for your business needs.
