Bad news: migrants with Green Cards excluded from federal loans

Migrants lose access to SBA loans

SBA tightens loan rules

Impact on small businesses

The U.S. Small Business Administration (SBA) changed its rules and now excludes migrants with green cards from certain loans.

Why it matters: This adjustment reduces access to financing for thousands of entrepreneurs operating businesses in the country.

The change took effect on March 1. The new directive establishes an absolute requirement.

100% of a company’s owners must be U.S. citizens or nationals.

SBA loans for migrants: the change shaking access to credit

SBA loans for migrants with green cards. Photo ChatGPT

The new rules on SBA loans for green card holders significantly tighten eligibility.

They must also have primary residence in the United States.

If there is any ownership by a non-citizen, the application is disqualified.

Even minimal participation invalidates access to the loan.

This includes both direct and indirect owners.

Previously, there was some flexibility in the rule.

Up to 5% foreign or non-eligible ownership was allowed. That exception has now been completely eliminated.

Now the filter is total and without margin. The restriction applies to all SBA-backed loans.

This includes both direct loans and those issued by banks with federal guarantees.

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This reduces the pool of available credit for many migrants.

“The SBA has limited lending capacity,” said Maggie Clemmons.

“The change in the agency’s rules seeks to help ensure that more U.S. citizens have access to the funds,” she added.

Impact in California and migrant businesses

SBA loans for migrants with green cards – Photo Shutterstock

The impact could be strongly felt in California.

The immigrant population and small businesses are key to its economy.

According to Cal Matters, about 220,000 business owners with permanent residency could be affected.

The concern goes beyond access to money.

Organizations warn of risks across multiple sectors.

These include restaurants, daycare centers, transportation, bakeries, and nail salons.

Also clinics and other small businesses.

Lack of financing can slow growth and operations.

“The most important thing for us is to understand that this decision… is really harmful to the U.S. economy,” said Carolina Martínez.

Access to credit is key to starting or expanding businesses.

Without federal backing, the path becomes more complex.

Why the credit restriction raises concern

The limitations on SBA loans for green card holders may have broader consequences.

Specialists warn of a possible side effect.

Entrepreneurs may turn to lenders with harsher conditions.

This would mean higher rates and stricter terms.

For many migrants, the SBA was a clear and accessible option.

Without that alternative, access depends on other networks.

State programs or community lenders do not always offer the same coverage.

“Many of these potential owners will find it much more difficult to raise enough capital,” said Pamela Deans.

“Therefore, the taquería… or the startup… may never open,” she added.

During the pandemic, these loans were crucial.

Thousands of businesses used them to sustain operations. They also helped cover expenses and avoid closures.

The current exclusion not only affects new projects. It also reduces support options in future crises.