The U.S. Small Business Administration (SBA) has announced a sweeping policy change that will significantly impact thousands of entrepreneurs, particularly legal permanent residents, including many Indian-American business owners.
Effective March 1, SBA business loans will only be available to companies that are 100% owned by U.S. citizens or U.S. nationals. This marks a dramatic departure from long‑standing SBA policy.
What Has Changed?
Under previous rules, businesses could still qualify for SBA financing even if up to 5% of the ownership was held by foreign individuals or entities, including lawful permanent residents (green card holders). That exception has now been eliminated.
The new rule states:
- Green card holders can no longer own any percentage, majority or minority, of a business seeking SBA-backed funding.
- Even a 1% ownership interest by a non‑citizen will disqualify the business.
- Only U.S. citizens and U.S. nationals may hold ownership interests in SBA loan applicants.
This change applies across SBA programs, including the popular 7(a) and 504 loan programs.
Who Is Affected?
This policy will affect:
- Green card holders currently in the process of applying for SBA loans
- Businesses under contract to purchase real estate or assets using SBA financing
- Partnerships where even one owner is not a U.S. citizen
- Startups with mixed ownership structures
- Immigrant entrepreneurs planning to use SBA loans for expansion or acquisition
Given the large number of Indian-origin business owners who rely on SBA financing, particularly in hospitality, retail, and professional services, this rule will have widespread consequences.
Critical Deadline: March 1
Green card holders who are currently pursuing SBA financing must act immediately.
If you are a lawful permanent resident, you must secure full loan approval before March 1. After that date, you will be ineligible unless and until you obtain U.S. citizenship.
If you are:
- Under contract to purchase a business or property
- In underwriting
- Preparing to submit an SBA loan application
- Unsure whether your ownership structure will still qualify
You should speak with an attorney immediately. The new rule may affect your ability to close, your contractual obligations, and your financing strategy.
How Gulati Law Can Help
This policy shift is unprecedented, and many borrowers will need to reassess their timelines, ownership structures, and financing options.
Our team can help you:
- Evaluate whether your current deal can still close
- Explore restructuring options
- Assess risks related to contract deadlines
- Develop a strategy if you are no longer eligible under the new rule
- Understand your path forward until citizenship
If you are a green card holder or a business with non‑citizen owners, contact us as soon as possible to discuss how this change may affect your loan, your transaction, or your long‑term business plans.
