Small businesses owned by immigrants or mixed status will soon lose access to the most affordable financing available to them.
“This change will materially reduce access to SBA financing for many small businesses,” Community Bank & Trust President and CEO Jeremy Gilpin said via email. “
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 SBA Loan Rule Changes Mean for Lenders
For existing borrowers: The rule change does not affect borrowers who already have an SBA loan. Gilpin said, however, that would apply to future ownership changes. If you modify your ownership after March 1, any new owners will need to become a U.S. citizen or U.S. citizen to comply with SBA requirements.
How this rule may limit 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 housing can also have a negative impact on local economies, reducing business growth, job creation and tax revenue, said Carolina Martinez, CEO of Cameo Network, a national support network for micro-businesses.
“When small businesses don’t have what they need, they can’t reach their full economic potential — especially at a time when they’re facing rising costs of doing business due to tariffs and inflation,” he said in an email.
What should business owners 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 contact their lender as soon as possible. Ask if there are steps you can take to move the application forward and if they can provide an estimated timeline for approval.
For those who have not yet applied for an SBA loan, it is unlikely that you will be able to submit an application and be approved before the rule takes effect. In this case, you will need to look for alternative financing options.
Online lenders can provide flexible and fast access to capital, but they usually 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.
