Trump Administration’s New Policy on Small Business Loans
The Trump Administration has instigated a new policy that prohibits businesses with any amount of non-citizen ownership from receiving federal small business loans starting March 1. This action potentially impacts over 5 million individuals, based on U.S. Census data, as it excludes lawful permanent residents from obtaining loans. Critics argue that President Trump’s restrictions on business loans can damage the economy and demonize immigrants.
Changes to Small Business Administration Loans
Starting March 1, the Small Business Administration (SBA) will no longer lend to businesses if any of their ownership is not a citizen, a steep reduction from the previously allowed 5% foreign ownership.Source 1. This latest step in President Donald Trump’s efforts to cut off legal immigrants from government funding and services potentially affects millions of businesses. Before his re-election in 2025, the SBA issued loans to businesses as long as they were at least 51% owned by U.S. citizens or lawful permanent residents–illegal immigrants were already excluded.Source 2.
Impact on Non-Citizen Owned Businesses
While the SBA does not disclose how much of the $44.8 billion its two largest programs lent in fiscal 2025 went to noncitizen business ownersSource 3, according to the Census Bureau, non-citizens make up a significant percentage of small business owners. In 2023, 5.2 million owner-operators were not citizens, or 15.9% of all non-employer businesses in the countrySource 4.
Economic Implications
Even though the SBA has not disclosed exactly how many people will be affected by this new policy, the administration’s restrictions on business loans may obstruct many small businesses’ ability to get funding and, according to critics, could damage the economy.
In its announcement, the SBA stated that these changes align with an executive order Trump issued on his presidency’s first day, titled “Protecting The American People Against Invasion.” This order marked the beginning of a government-wide crackdown on immigrationSource 5. In addition to the new restrictions on SBA loans, the administration has also declared some legal immigrants ineligible for other government benefits, including Medicaid and food stamps.
Critics argue that these new changes hurt law-abiding immigrants and businesses with part-immigrant ownership. “Small businesses use SBA loans to create jobs and invest in their operations,” a group of Democratic lawmakers led by Massachusetts Senator Ed Markey wrote in a letter to the SBA in DecemberSource 6. “Unfortunately, the Trump administration is demonizing immigrant communities and picking winners and losers, rather than basing lending decisions on a small business’s ability to repay a loan.”
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