U.S. Small Business Administration Says "No Loans Even for Green Card Holders"

Rule change from March: “Support limited to citizens only”

The U.S. Small Business Administration (SBA) has decided to completely restrict non-citizens, including green card holders, from applying for its core loan programs.

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According to the Associated Press on February 4 (local time), the U.S. Small Business Administration (SBA) announced in a policy notice that, starting March 1, green card holders will no longer be able to apply for the SBA’s financial program known as the 7(a) program.

According to the report, this measure comes as the SBA tightens loan eligibility requirements and reorganizes its institutional structure. Last year, the SBA strengthened its ownership-structure requirement for companies applying for loans from “at least 51% owned by U.S. citizens, nationals, or lawful permanent residents” to “100%.”

Subsequently, in December last year, the agency issued a policy notice stating that up to 5% of a company’s equity could be owned by non-citizens, but in the latest policy it withdrew that provision and also excluded green card holders from eligibility.

The 7(a) program is a system in which the government guarantees loans that financial institutions provide to small businesses. Through this program, small businesses can use up to 5 million dollars (about 725 million won) for working capital, debt repayment, equipment purchases, and real estate acquisition or improvement.

SBA spokesperson Maggie Clemons said in a statement, “The Trump Administration’s SBA is committed to economic growth and job creation for American citizens,” adding, “Accordingly, beginning March 1, we will not provide loan guarantees for small businesses owned by foreign nationals.”

She added, “Across all SBA programs, we ensure that taxpayers’ dollars are used to support job creation and innovation within the United States.”

Except for disaster-related loans, the SBA does not provide direct loans; instead, it works with financial institutions to provide loans to small businesses. SBA-guaranteed loans carry lower interest rates than loans from the general financial sector.

In response, the Small Business Majority, a U.S. small-business advocacy group, criticized the measure, saying it will negatively affect small businesses and employment growth in the United States.

John Arensmeyer, Chief Executive Officer (CEO) of the Small Business Majority, said, “Immigrants are twice as likely as U.S.-born citizens to start a business,” and added, “By ignoring this reality, the SBA’s restrictive measure will have a harmful impact on small-business startups in the United States for years to come.”