Washington, Feb 5 (NationPress) Leading Democrats have denounced a recent policy from the Small Business Administration that prevents businesses owned by legal permanent residents from accessing SBA loans.

They argue that this decision adversely impacts immigrant entrepreneurs and local economies.

On Wednesday (local time), Sen. Edward J. Markey from Massachusetts and Rep. Nydia Velazquez from New York stated that this policy reverses decades of established practice and excludes lawful immigrants who operate small businesses.

“The Trump administration is inciting animosity, fostering fear and uncertainty among immigrants and small business proprietors,” Markey and Velazquez asserted.

“Instead of empowering diligent legal immigrants to launch or grow their businesses, the Trump SBA opts for division by disallowing green card holders from obtaining SBA loans. The Administration’s message to immigrants is unmistakable: you are unwelcome in your pursuit of the American Dream.”

The SBA released this policy on February 2, and it will take effect on March 1.

Per the new regulation, a small business must be entirely owned by U.S. citizens or U.S. nationals residing in the United States, its territories, or possessions. Legal permanent residents, known as green card holders, will not be permitted to hold any ownership stake in businesses seeking SBA-funded loans.

The new policy also nullifies a prior SBA announcement from December, which had briefly allowed up to 5 percent foreign ownership, including by legal permanent residents whose primary residence was outside the United States. The SBA has stated that the previous notice is now rescinded.

The December guidance faced criticism, as it categorized several groups as “ineligible persons,” including refugees, asylum seekers, visa holders, and individuals covered by Deferred Action for Childhood Arrivals. It also specifically targeted individuals who were citizens of or resided in China or Hong Kong.

Democratic lawmakers have claimed that these policy changes have created confusion for both lenders and borrowers.

Access to SBA loans has reportedly declined significantly.

In July, Markey and Velazquez alerted the SBA that the new citizenship verification processes were overly stringent and would exclude deserving small businesses. By September, Markey noted that SBA lenders indicated that the regulations were challenging to implement, causing delays in lending.

In December, Markey and other Democratic members of the Senate Small Business Committee sent another letter to SBA Administrator Kelly Loeffler, reiterating their concerns and highlighting a significant drop in lending.

The letter indicated a 46 percent decrease in SBA loan volume from June to August 2025, which lawmakers attributed to the new citizenship regulations introduced earlier that year.

Changes that took effect on June 1, 2025, barred loans for businesses with even minimal ownership stakes held by noncitizens.

This included refugees, asylees, visa holders, and conditional green card holders, even if U.S. citizens owned the majority of the business.

Lawmakers stated that these changes reversed over 25 years of SBA policy. Markey and Velazquez emphasized that SBA loans are vital for small businesses to start, grow, and hire employees. They noted that immigrant-owned businesses depend heavily on such financing.

The SBA has claimed that the new rules align with federal law and an executive order titled “Protecting the American People Against Invasion.” Lenders are now required to verify that no owner of an applicant business is considered an ineligible person.

As of now, the SBA has not publicly addressed the lawmakers' latest criticisms.

For many years, these programs have allowed businesses owned by U.S. citizens and lawful permanent residents to qualify for funding.

Immigrants are integral to the establishment of U.S. small businesses, frequently launching firms that provide jobs for American workers and serve local communities nationwide.