The updated rule expands earlier restrictions and will apply across several SBA-guaranteed lending programmes, including the agency's Surety Bond and Microloan initiatives. Under the revised policy, applicants must be US citizens or US nationals whose principal residence is in the United States.

Kelly Loeffler, administrator of the SBA under Donald Trump, said the agency's priority is supporting economic growth and job creation for American citizens.

The decision follows a policy shift introduced earlier this month that already made businesses owned wholly or partly by foreign nationals ineligible for the SBA's flagship 7(a) and 504 small business loan programmes.

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Officials said the expansion of the rule means foreign nationals will now be barred from accessing all SBA-guaranteed loan programmes, citing strong demand for federal financing and the annual lending limits set by Congress.

According to SBA data, the agency approved 3,358 loans in Fiscal Year 2025 for businesses owned partly by lawful permanent residents or Green Card holders. These approvals accounted for roughly four per cent of the nearly 85,000 loans issued by the agency that year.

Under the updated guidelines, 100 per cent of direct or indirect owners of a business applying for SBA financing must be US citizens or US nationals whose principal residence is in the United States, its territories, or possessions.

The new policy also removes a previous provision that allowed up to five per cent ownership by foreign nationals or individuals living outside the United States. In addition, lawful permanent residents will no longer be eligible to hold any ownership interest in businesses applying for SBA-backed loans.

The SBA said the rule change forms part of broader reforms aimed at ensuring federal loan programmes primarily benefit American small business owners. As part of the initiative, the agency has introduced stricter citizenship verification procedures across its lending programmes.

Separately, the administration has indicated plans to relocate certain SBA field offices from jurisdictions described as sanctuary cities that do not cooperate with the US Immigration and Customs Enforcement (ICE).

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The SBA is the federal agency responsible for supporting small businesses through loan guarantees, counselling services and contracting assistance. Its flagship 7(a) and 504 loan programmes help small businesses obtain financing through private lenders backed by federal guarantees.

The new restrictions will take effect 30 days after the policy is formally published, according to officials.

IANS