Excluding residents from SBA loans will have a major impact in CA

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Green card holders are no longer eligible for small business loans, eliminating a long-standing source of funding for immigrants and, advocates say, will discourage job creation and hurt the economy.

The SBA restricted access to its loans to U.S. citizens and citizens beginning in March and expanded that policy to SBA-guaranteed loans beginning in April. Additionally, no business, even if partially owned by a legal permanent resident with a green card, is eligible for these loans.

California, which has the most small businesses and the largest immigrant population of the country may be most affected. SBA loans have been important to immigrant entrepreneurs because they are typically low-interest and available to those without an established credit history. The agency has also supported loans from private financiers, offering a government guarantee for people banks might consider higher risk. Now all these loans are excluded for owners and aspiring owners of restaurants, bakeries, law offices, medical clinics, taxi licenses, nail salons and other businesses who have a permanent residence card (green card).

According to the California Small Business Administration small business owners are responsible for 99% of net new jobs in the state. Immigrant entrepreneurs make up 40 percent of the state’s business community and generated $28.4 billion in revenue in 2023, according to GO-Biz, the governor’s Office of Business and Economic Development.

Small Business Majority, a national business advocacy group, wrote to the SBA in mid-March urging the federal agency to reconsider the changes. The letter, signed by dozens of state and national groups and chambers of commerce, called the new policies “a misguided approach that ignores important economic data that underscores the immigrant community’s power to create jobs.”

The SBA has limited lending capacity, agency spokeswoman Maggie Clemons said. “The change in the agency’s regulations will help ensure that more US citizens have access to funds that were previously provided to non-citizens,” he said in an email.

According to Clemons, the SBA approved 3,358 loans for small businesses partially owned by legal permanent residents in fiscal year 2025, mostly during the Biden administration. This represents 4% of the 85,000 loans approved by the agency.

In California, the changes could affect about 220,000 small business owners who hold green cards, according to Carolina Martinez, executive director of the CAMEO Network, a national association of organizations that support small businesses.

“The most important thing for us to understand is that this decision by the SBA … is really detrimental to the American economy,” Martinez said.

Chasing the American Dream

Christina Foanene, a Romanian immigrant who came to the United States 20 years ago, was a legal permanent resident (green card) when she received an SBA loan in 2018 that allowed her and her husband to purchase a building and expand their glass company, MCS Glass, in Fresno. They currently have 30 employees.

“The loan has enabled us to create more jobs and make an even greater impact on our community,” Foanene said. Their goal is to produce more products and create more jobs, he added.

He said he doesn’t know where the business would be today without the SBA loans they’ve received over the years. They just signed their third loan last month, Foanene said, their first as American citizens.

She declared her loyalty to this country and said she was sad that others like her may not have the same opportunities to pursue the American dream by getting SBA loans while “following the law.”

“It breaks my heart,” Foanene said. “There are so many good people with good intentions. It seems unfair to me.”

Other entrepreneurs or independent contractors also lose a potential safety net that SBA loans once provided.

“During the pandemic, these loans were critical to the survival of many people,” said Dung Nguyen, director of programs and organizing at the California Healthy Nail Salon Collaborative, an organization that advocates for the rights of Vietnamese immigrants, many of whom work in the nail salon industry. The group signed the Small Business Majority’s letter to the SBA.

Nguyen said nail salon workers and owners who took out those loans during the pandemic are still paying them back.

“A New Kind of Status”

Kenya Zamaripa, a spokeswoman for the San Diego Regional Chamber of Commerce, which also signed the letter to the SBA, said this latest policy change is another example of the increased vulnerability of immigrants after the withdrawal of federal funds for other programs. His group and others are pushing for immigration reform that includes a standardized path to citizenship, he added.

“This is a community doing the right thing by seeking legal recourse,” he said. “It’s like they’re being punished for doing the right thing.”

According to Zamaripa, the SBA changes are pushing green card holders toward informality. “What’s next? What other resources will be taken away? What other ways will immigrants continue to be attacked?”

Others echo this concern.

“This dialogue is a challenge to our concept of what it means to be undocumented,” said Gabriela Aleman, a spokeswoman for the Mission Asset Fund, a San Francisco organization that supports and provides loans to small business owners. “These are community members who are now put in a new situation.”

Mission Asset Fund credit rounds inspired by toilet the Mexican community lending practice, can provide loans of up to $2,500 to small business owners. The group just received its California lender license and, according to Aleman, will eventually be able to offer larger loans.

But it will be difficult for groups like this to fill the void left by the SBA’s new policies for legal permanent residents who want to start or expand their businesses.

“There are no other options of this scale (that the SBA offers),” said Brian Kennedy Jr., director of the entrepreneurial ecosystem at AmPac Business Capital, a Los Angeles community development financial institution and SBA partner. “We’re talking about between $35,000 and $30 million.

what’s next

Many small business owners already use — and can increasingly rely on — community financial institutions and other lenders whose mission is to help people with limited options, bad credit and little savings.

They can also turn to the state for help. State-funded options include a small business loan guarantee program through IBank and treasurer’s office programs that reduce risks for lenders by pledging state funds as collateral or contributing to loan loss reserves.

The Microenterprise Collaborative of Inland Southern California works with lenders, technical assistance providers and community partners to help small business owners in Inland Southern California.

Pamela Deans, the group’s executive director, said the change in SBA policy will change the way the organization guides entrepreneurs to sources of capital. Instead of directing them to a relatively straightforward SBA process, he explained, the group would have to inform them of a more fragmented set of options and warn them about predatory lending.

“Many of these potential owners will find it much more difficult to raise sufficient, secure and affordable capital to lease space, purchase equipment or cover initial working capital, so a start-up taqueria, daycare or trucking business may never open,” Dean said.

Bianca Blomquist, California director of Small Business Majority, is also concerned that small business owners are turning to unscrupulous lenders. She said her organization recently discovered that the owner of a daycare center in downtown Los Angeles had taken out a $10,000 loan at an interest rate she said was 13 percent, when in reality it was nearly 250 percent.

Other advocates hope philanthropy and impact investors will step up and provide more capital to small lenders.

“Women, entrepreneurs, immigrants and communities of color have always had to think outside the box,” said Leticia Landa, CEO of La Cocina, a small business incubator in San Francisco. “I hope, especially in California, that we can find a solution.”