Last Updated February 5, 2026
Many small business owners will face a new hurdle as changes have been announced to Small Business Administration (SBA) loan eligibility. Under the new rules, non-U.S. citizens, including green card holders, will no longer qualify for certain SBA lending programs beginning on March 1, 2026.
The change will affect a significant portion of small business owners who have used these loans to expand operations, stabilize cash flow, and overcome economic uncertainty.
Key Takeaways
- Starting March 1, 2026, SBA loans will be off-limits to green card holders, visa holders, and any business with non-citizen ownership.
- The rule hits hard because immigrants own 18% of U.S. small businesses and employ more than 27 million workers.
- Small business advocates warn the change could slow new business formation and weaken job growth nationwide.
- Excluded owners will be forced toward pricier, higher-risk financing options outside the SBA system.
- Invoice factoring stands out as a lower-risk alternative that offers faster access to capital and relies more on future receivables than borrower credit history.
Who Will Be Affected by the New SBA Rule?
Green card holders and other visa holders, including DACA Recipients (Deferred Action for Childhood Arrivals) and TPS Holders (Temporary Protected Status), will no longer qualify for SBA programs such as the 7(a) loan, 504 loan, and certain disaster relief loans.
All of the following groups will be directly affected:
- Green Card Holders (Lawful Permanent Residents)
- DACA Recipients (Deferred Action for Childhood Arrivals)
- TPS Holders (Temporary Protected Status)
- H-1B Visa Holders
- L-1 Visa Holders (Intra-company Transfers)
- E-2 Visa Holders (Treaty Investors)
- Other Non-Immigrant Visa Holders with work authorization (O visas, TN visas, etc.)
The rule also applies to co-owners and anyone with any sort of stake in a business, meaning any business with partial ownership from the above categories will no longer qualify for SBA financing in March 2026.
Previously, any permanent residents and lawful non-U.S. citizens with work authorization could apply for most SBA loans, which have been an important resource for businesses seeking affordable financing.
Per SBA spokesperson Maggie Clemmons, the decision is intended to support job creation for American-born workers.
“The Trump SBA is committed to driving economic growth and job creation for American citizens – which is why, effective March 1, the agency will no longer guarantee loans for small businesses owned by foreign nationals,” Clemmons said. “Across every program, the SBA is ensuring that every taxpayer dollar entrusted to this agency goes to support U.S. job creators and innovators.”
Economic Impact on Small Businesses
According to a recent SBA Office of Advocacy report, immigrants own 18% of U.S. small businesses, generating more than $1 trillion in annual revenue.
Given more than 27 million people are also employed by businesses owned by foreign-born residents, the new SBA eligibility rules could significantly affect employment and business growth in all communities, impacting overall employment and small business growth.
Industries with high concentrations of immigrant-owned businesses, such as food service, retail, healthcare, and transportation, are likely to be hit hardest by the new SBA restrictions.
What Experts and Other Small Business Community Members Are Saying
The new SBA rule has already sparked concern among certain business groups and advocates.
Some experts, including Small Business Majority CEO John Arensmeyer, point to the fact that immigrants are twice as likely to start a business as U.S.-born citizens, reflecting a significant impact to the economy.
“Given that reality, SBA’s severe restrictions will have a negative impact on small business creation throughout this country for years to come,” said Arensmeyer.
Other small business advocates claim that the recent changes are needlessly strict.
Impact on Small Business Lending Challenges
The new SBA loan restrictions will make it even harder for affected business owners to access capital, which has long been a main challenge for small businesses.
According to the 2025 Small Business Credit Survey, 37% of small employer firms applied for loans or lines of credit in the past year. Of those, 36% received only a portion of the funds requested, and 24% were denied entirely. Fewer than 35% of small business loan applications were approved in full.
With green card holders and other non-U.S. citizens now excluded from SBA programs, these barriers are likely to become even more relevant.
SBA Loan Alternatives
However, for non-U.S. citizen business owners, several financing alternatives remain available.
Private loans, fintech lenders, and lines of credit may help fill funding gaps, though they often come with higher interest rates and stricter repayment terms.
Merchant cash advances can provide short-term liquidity. However, they are typically more expensive than SBA loans and difficult to exit once locked into a deal.
Revenue-based financing is an easy approval form of alternative financing, which involves a lender advancing capital based on monthly revenue rather than credit or collateral. Microloans from nonprofits or local lenders also have lower qualification barriers, though funding amounts may not be sufficient for larger expansion needs.
Grants may also offer relief, particularly programs designed for minority-owned businesses.
Invoice factoring is a particularly common option for fast access to capital, since receivables-based financing often features quicker approvals and fewer credit requirements than traditional loans.
According to altLINE President Gates Little, factoring is one of the lowest-risk alternatives to SBA loans.
“Factoring requires a business to borrow and pay as it goes, so there is not much risk of being caught short in a down business cycle or of borrowing more than you can pay back,” Little said. “Because of this structure, underwriting for factoring is designed around the future growth of a business, not on the credit or past cash flow of the borrower.”
Business owners are encouraged to review cash flow projections carefully and evaluate capital needs before choosing a financing option.
“It is important for a small business owner to consider the use of funds being financed and to be sure that they can repay the debt as agreed,” Little added.
According to Little, choosing the right financial solution mainly comes down to two questions: is the money going to make the business healthier long term, and will the business be able to survive repayment?
“Unfortunately, we see a lot of businesses get money so they can stay alive, only to find out that the structure they chose killed the business faster.”
Looking Ahead
The long-term effects of the new SBA policy change are uncertain. According to the SBA, there are 36.2 million small businesses in the U.S., employing 62.3 million people. Analysts foresee a possible potential decrease in new business formation among non-citizens, and there’s likely going to be a shift toward more alternative financing options.
With immigrant-owned firms representing nearly 20% of businesses, changes in loan access could have wide-reaching implications for job creation and economic activity.
However, with small business advocacy groups already urging Congress to rethink the decision, there’s a chance for future changes.
Michael McCareins is the Content Marketing Associate at altLINE, where he is dedicated to creating and managing optimal content for readers. Following a brief career in media relations, Michael has discovered a passion for content marketing through developing unique, informative content to help audiences better understand ideas and topics such as invoice factoring and A/R financing.
