Highlights:
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SBA rules take effect March 1, 2026
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Lawful permanent residents barred from SBA-backed ownership
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Earlier foreign ownership exceptions fully removed
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Indian immigrants likely among the most affected groups
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Policy aligns with Trump administration’s “America First” agenda
The U.S. Small Business Administration (SBA) has issued a revised policy that could significantly impact immigrant entrepreneurs, including a large number of Indian immigrants, by restricting access to SBA-backed business loans beginning March 1, 2026.
The updated guidance, announced Monday (2), strengthens ownership requirements for small businesses seeking SBA financing. The policy change aligns with President Donald Trump’s broader “America First” agenda and reflects tighter standards around immigration and federal program eligibility. The SBA, which states its mission is helping “Americans start, build, and grow businesses,” said the move is intended to reinforce domestic ownership requirements.
For Indian immigrants who rely on SBA loans to launch or expand small businesses, the new rules represent a major shift in federal lending access.
What the New SBA Rules Mean for Indian Immigrants
Under the revised Standard Operating Procedure (SOP) 50 10 8, which governs SBA lender and development company loan programs, the SBA now requires that 100 percent of both direct and indirect owners of an applicant business be U.S. citizens or U.S. nationals. In addition, all owners must maintain their principal residence within the United States, its territories, or possessions.
The updated rules explicitly exclude lawful permanent residents, commonly known as green card holders, from owning any percentage of a business applying for SBA loans.
“Beginning with the effective date of this notice, Legal Permanent Residents (LPRs) will not be eligible to own any percentage interest in an Applicant/Borrower,” SBA Administrator Kelly Loeffler said in the policy announcement.
This restriction applies regardless of how small the ownership stake may be, effectively cutting off SBA-backed financing for many Indian immigrants who are lawful permanent residents but not U.S. citizens.
Indian Immigrants and the Removal of Previous SBA Exceptions
The new SBA policy marks a clear departure from earlier guidance. A procedural notice issued in December 2025, which has now been revoked, allowed limited flexibility in ownership rules. That guidance permitted up to 5 percent ownership by foreign nationals, U.S. citizens, U.S. nationals, or lawful permanent residents whose primary residence was outside the United States.
The earlier exception also covered individuals with conditional lawful permanent resident status, though Chinese nationals were excluded even under that framework.
With the elimination of these exceptions, Indian immigrants who are not U.S. citizens will no longer qualify for SBA-backed loans, regardless of business size, industry, or length of residence in the United States.
Why Indian Immigrants Are Among the Most Affected
Indian immigrants are expected to be among the groups most affected by the SBA’s revised ownership requirements. India is the world’s largest source of migrants and ranked as the second-largest country of origin for green card recipients in fiscal year 2024, according to U.S. Citizenship and Immigration Services data.
Indian immigrants play a central role in the U.S. small business ecosystem, particularly in industries such as hospitality, where Indian American entrepreneurs own and operate a significant share of hotels and motels nationwide.
More broadly, data from the U.S. Chamber of Commerce shows that as of June 2025, approximately 40 percent of small business owners in the United States were foreign-born, highlighting the reliance of the U.S. economy on immigrant entrepreneurship.
Economic Impact of Indian Immigrant-Owned Businesses
The economic contribution of Indian immigrant-owned businesses is substantial. A 2022 report by the National Foundation for American Policy found that companies owned by Indian Americans generate more than $150 billion in annual revenue and employ over 800,000 people across the United States.
For many Indian immigrants, SBA-backed loans have historically played a key role in accessing startup capital, refinancing debt, and expanding operations. The removal of eligibility for lawful permanent residents raises questions about how these entrepreneurs will finance future growth.
Broader Immigration Enforcement Context
The SBA policy update comes amid broader changes in U.S. immigration enforcement, including expanded deportation efforts and stricter eligibility standards across several federal programs. For Indian immigrants who are lawful permanent residents and have built long-term lives and businesses in the United States, the new rule introduces uncertainty around access to capital.
As the March 1, 2026 effective date approaches, Indian immigrant entrepreneurs and advocacy groups are closely monitoring the policy’s implementation and its potential impact on small business formation, job creation, and local economies that rely heavily on immigrant-owned enterprises.
