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A new Small Business Administration policy taking effect March 1 will bar businesses with any legal permanent resident ownership from receiving SBA-backed loans, reversing longstanding eligibility rules and moving in a direction that lenders say will disproportionately affect immigrant-founded businesses, including those in the Central Valley.

The SBA on Monday issued the policy notice, which requires 100% of all direct and indirect owners of a loan applicant be U.S. citizens or U.S. nationals who reside within the United States or its territories.

Legal permanent residents (LPR), commonly referred to as green card holders, will no longer be eligible to own any percentage of a business seeking financial assistance through SBA loans.

The rule applies to borrowers, operating companies and eligible passive companies and includes both direct and indirect ownership interests. Any loan involving an LPR owner must receive an SBA loan number prior to March 1 to remain eligible.

The SBA’s two primary loan programs are 7(a) loans for general business purposes like working capital and equipment, and 504 loans for purchasing commercial real estate and heavy equipment.

Frank Gallegos, executive director of Cen Cal Business Finance Group, said the change came as a surprise.

Cen Cal is a Fresno-based, nonprofit development company that partners with lenders to provide SBA 504 loans. Cen Cal approved $18.6 million in SBA loans from Oct. 1, 2023 to Sept. 30, 2024, according to The Business Journal’s SBA Lenders list published July 2025.

The list of 20 SBA lenders guaranteed a total loan volume of $115.6 million in that period in the Central Valley.

Gallegos estimated that around 10% of their loans include LPR ownership, a segment Gallegos said now faces limited and more expensive financing options.

He pointed to past SBA-financed projects that included international or LPR ownership and delivered major economic benefits locally.

“We had a large nut processor in this area that we did a loan for,” he said. “It was 150 jobs, and they took an old building that had been empty for 15 years.”

With the policy change coming less than a month away, Gallegos said it is unlikely affected borrowers can restructure ownership and complete approvals in time.

“It’s not very realistic at all,” he said.

Gallegos said that some borrowers may be forced to transfer ownership to U.S. citizen family members or seek other conventional financing options with higher down payment options.

He added that the policy runs counter to the SBA’s mission of expanding access to capital.

“This past year has been the opposite direction,” he said. “These people legally immigrate, they come here, they’re living the American dream.”

Gallegos encouraged affected business owners to speak to their elected officials.

Congressional Democrats condemned the policy change, with Senate Small Business Committee Ranking Member Edward Markey (D-Mass.) and House Small Business Committee Ranking Member Nydia Velázquez (D-N.Y.) calling it an attack on immigrant entrepreneurs. The lawmakers noted this is the second reversal of SBA citizenship rules in less than two months — in December, the agency had announced it would allow up to 5% foreign national ownership while specifically barring Chinese citizens, before reversing course entirely with the new policy.

In a joint statement, Markey and Velázquez said the policy contradicts the agency’s mission to support small business growth.

“The Trump administration is stoking the flames of hatred, spreading fear and confusion among immigrants and small business owners,” the lawmakers said. “Rather than support hard-working legal immigrants to start or expand a business, the Trump SBA is choosing hatred by barring green card holders from receiving an SBA loan.”