President Trump's SBA Mandates Full US Ownership for Small Business Loans

Advancing American Priorities in Business Lending

The Trump administration has taken a decisive step to ensure that federal support for small businesses benefits American citizens directly. Through the Small Business Administration, a new policy has been introduced that requires complete ownership by US citizens or nationals for eligibility in key loan programs. This initiative aligns with ongoing efforts to safeguard taxpayer dollars and promote economic growth within the nation.

By focusing on American-owned enterprises, the administration aims to foster job creation and innovation among citizens. The policy addresses previous vulnerabilities that allowed limited foreign involvement, now closing those gaps to prioritize domestic interests. This change reflects a commitment to strengthening the American economy from the ground up.

Key Details of the Policy Update

Effective March 1, the SBA will require that 100 percent of all direct and indirect owners of a small business applicant be US citizens or US nationals with their principal residence in the United States, its territories, or possessions. This revision to Standard Operating Procedure 50 10 8 rescinds a prior notice that permitted up to 5 percent ownership by foreign nationals or legal permanent residents. Now, legal permanent residents are ineligible to hold any ownership interest in applicants, operating companies, or eligible passive companies.

The policy is consistent with 13 CFR 120.100 and Executive Order 14159, titled Protecting the American People Against Invasion, which directs federal agencies to enforce immigration laws rigorously. This ensures that SBA guarantees support businesses fully owned by Americans, enhancing accountability in lending programs. The update applies to the agency's primary 7(a) program and the 504 program, which provide financing for various business needs.

In fiscal year 2025, the SBA approved 68,435 loans under the 7(a) program, totaling 33.8 billion dollars. These loans offer guarantees to lenders, enabling small businesses to access up to 5 million dollars for working capital, debt refinancing, equipment purchases, and real estate improvements. By restricting eligibility to fully American-owned entities, the administration seeks to maximize the impact of these funds on domestic job creators.

Addressing Past Fraud and Enhancing Accountability

This policy comes amid efforts to combat fraud in SBA programs, highlighted by recent actions in Minnesota. The agency suspended nearly 7,000 pandemic-era loans involving suspected fraudulent activity, affecting approximately 400 million dollars in Paycheck Protection Program and Economic Injury Disaster Loans. SBA Administrator Kelly Loeffler stated that these borrowers will be banned from all future SBA loan programs, including disaster assistance, and cases will be referred to federal law enforcement for prosecution and repayment.

Loeffler emphasized the importance of holding wrongdoers accountable, noting that after years of oversight lapses, Americans will see justice served. This suspension is part of a broader review, with Minnesota being the first state targeted, signaling potential nationwide audits. Additionally, the SBA recently suspended over 1,000 businesses from the 8(a) Business Development Program due to failure to submit required financial documents, further demonstrating a commitment to program integrity.

These measures address significant losses from previous administrations, where flagged loans were still funded and sometimes forgiven. By tightening ownership requirements, the Trump administration is working to prevent such issues, ensuring that taxpayer resources support legitimate American enterprises and contribute to national prosperity.

Leadership Perspectives on the Change

SBA spokesperson Maggie Clemmons explained the rationale behind the update, stating that the Trump SBA is committed to driving economic growth and job creation for American citizens, which is why, effective March 1, the agency will no longer guarantee loans for small businesses owned by foreign nationals. She added that across every program, the SBA is ensuring that every taxpayer dollar entrusted to the agency goes to support US job creators and innovators.

Clemmons also highlighted future plans, noting that the agency expects to offer even more capital pending legislation to increase SBA loan limits for small businesses that are hiring, building, and producing in America. This forward-looking approach aims to expand opportunities for qualifying American businesses, bolstering their ability to compete and grow.

House Small Business Committee Chair Roger Williams supported the policy, pointing out that oversight has been too loosey-goosey for too long, with a tremendous amount of money missing at the SBA from the Biden administration. He suggested that focusing on core options and building from there could be a practical way forward, acknowledging the challenges but affirming the need for reform.

Implications for American Small Businesses

The new requirements are expected to streamline the lending process by focusing resources on businesses that directly benefit American workers and communities. By eliminating foreign ownership allowances, the policy reduces risks associated with international entanglements and ensures that federal guarantees promote domestic economic stability. This aligns with the administration's broader agenda to protect American interests and foster self-reliance.

For eligible businesses, the change could mean increased access to capital as the SBA reallocates resources. With plans to raise loan limits, American-owned small businesses stand to gain more substantial support for expansion and innovation. This targeted approach is designed to create a more robust environment for entrepreneurship among citizens, ultimately contributing to stronger national economic performance.

Overall, the policy reinforces the principle that federal programs should prioritize Americans, addressing past shortcomings and paving the way for a more secure and prosperous future. As the March 1 effective date approaches, the SBA continues to guide lenders and applicants through the transition, ensuring smooth implementation of these important reforms.