Trump Bars Green Card Holders from Federal Loans: Implications and Reactions

Starting March 1st, a significant number of immigrant entrepreneurs will lose access to a crucial financial resource from the federal government: loans from the Small Business Administration (SBA).

The Trump Administration has enacted a new policy that bars permanent residents—those holding Green Cards—from applying for these funds, making them exclusive to U.S. citizens.

This policy shift has been criticized by many analysts as a strategic blunder. It not only withdraws support from a highly entrepreneurial group but also stifles economic growth in local communities, many of which rely on immigrant-owned businesses.

From family-run restaurants to hardware stores, auto repair shops, or salons, these small businesses have been vital for employment and advancement, especially in areas with large immigrant populations.

The measure comes at a sensitive time, as many small businesses are still grappling with the economic fallout from the pandemic and tightening credit conditions.

The decision has sparked a wave of criticism from Democratic lawmakers, small business advocates, and immigrant communities who view the policy as unfair, exclusionary, and damaging to the national economy.

Restrictive Loan Eligibility: A Barrier for Many Businesses

The announcement was made through an official SBA memorandum, which clearly outlined the agency's new stance: only businesses wholly owned by U.S. citizens can access its loan programs.

“Trump's SBA is committed to driving economic growth and job creation for American citizens; therefore, starting March 1st, the agency will no longer guarantee loans for small businesses owned by foreigners,” stated Maggie Clemmons, an SBA spokesperson.

SBA loans, particularly those under the popular 7(a) program, have served as a financial lifeline for numerous small business owners who could not qualify through traditional banking channels. These loans, offered through private lenders but backed by the government, provide attractive terms: lower rates, longer terms, and flexible eligibility criteria.

Exclusionary Policy: A Setback for Economic Inclusion

Previously, it was sufficient for a business to have at least 51% ownership by a U.S. citizen or legal resident to qualify. Last December, the SBA had already tightened this criterion, limiting foreign ownership in applicant businesses to a maximum of 5%.

However, the new rule goes even further, excluding legal permanent residents, regardless of how long they have lived in the country or their tax and business history.

This measure, part of a series of restrictive reforms within the SBA during Trump's tenure, has been described by many as a direct attack on immigrant entrepreneurs.

“The SBA's latest decision ignores the fact that immigrants are twice as likely to start a business as native-born U.S. citizens,” warned John Arensmeyer, CEO of Small Business Majority.

“Given this reality, the SBA's severe restrictions will negatively impact small business creation nationwide for years to come,” he added.

Political Responses: “A Decision Driven by Hate”

Congressional reactions were swift. Senator Edward J. Markey and Representative Nydia Velázquez, both Democrats and key members of the Small Business Committees, openly condemned the decision.

“Instead of supporting legal immigrants who work hard to start or expand a business, Trump’s SBA chooses hatred,” they stated in a joint release.

Markey also noted that since September, he had received direct complaints from lenders about increasingly stringent requirements.

In December, Senate Democrats sent an official letter to the SBA expressing concern over the declining volume of approved loans, with no response received.

Economic and Social Consequences

“The decision will curtail the growth of small businesses and employment across the United States,” cautioned Small Business Majority. “This is not just a bureaucratic change but a direct blow to a proven source of innovation and economic development.”

The official position of the SBA under Trump is clear. According to its spokesperson, “in all programs, the agency ensures that every taxpayer dollar entrusted to this agency is used to support America’s job creators and innovators.”

However, for many equity advocates, this justification masks an exclusionary view of who deserves federal support, leaving out those who, while not citizens, have contributed to the country for years through work, taxes, and job creation.