Sayuri Tsuchitani spent two decades cutting hair before a pandemic-era SBA loan helped her open a Japanese head spa in Los Angeles, complete with blood-flow massages and deep scalp cleanses. She expanded to three locations and hired ten people. But under a new Small Business Administration policy announced in March, she wouldn't qualify today - because she's a green-card holder who moved from Japan 28 years ago.
The SBA, for the first time in its history, now restricts its small-business loans to firms fully owned by U.S. citizens. Lawful permanent residents like Tsuchitani are out. The agency framed the change as part of a broader Trump administration push to limit noncitizen access to federal programs - citing audits that found one six-figure loan approved for a business partially owned by an immigrant without legal status. "The agency's rule change will help ensure more American citizens have access to funding previously granted to noncitizens," SBA spokesperson Maggie Clemmons told NPR.
Critics note the irony: permanent residents pay U.S. taxes just like citizens, and immigrants start businesses at higher rates than native-born Americans. Census data shows foreign-born residents - about 15% of the population - run 20% to 25% of businesses. A new study by the National Foundation for American Policy estimates immigrants and their children have launched two-thirds of U.S. startups valued over $1 billion. Yet SBA head Kelly Loeffler remains unapologetic, telling Newsmax: "SBA's small-business loans are for American citizens."
Last year, 4% of SBA loans went to businesses involving permanent residents - a modest slice, but transformative for those firms. Cristina Foanene, who moved from Romania 20 years ago and used three SBA loans to expand her Fresno glass company, says the money allowed her to hire 30 people. "I don't know where our business would be without this," she said. Now a citizen, she chokes up thinking about her naturalization oath.
The policy shift has private lenders slowing down, wary of verifying citizenship status for every owner. Small-business adviser Eda Henries says clients with approved deals suddenly hit a wall. "These are clients that employ dozens of people, generate revenue, and pay taxes," she said. "All of a sudden, the lenders put the brakes on."
Some Democrats in Congress - including Sen. Ed Markey and Rep. Nydia Velázquez - have introduced a bill to restore eligibility for legal permanent residents. Meanwhile, immigrant entrepreneurs face a stark choice: riskier lending, slower growth, or no business at all. As Foanene put it, "If they will understand that there are people coming here with honest intention of building a business and creating jobs, then maybe they will say, 'Actually, it is benefiting our country.'"