The Small Business Administration just made a major shift that’s hitting immigrant entrepreneurs where it hurts: their wallets. Starting in March and expanding in April, the SBA limited its loan programs to U.S. citizens and nationals only. Even worse, any business with even partial ownership by a green card holder is now ineligible. For California, home to the most small businesses and the largest immigrant population in the country, this is a huge deal.

Here’s why this matters: SBA loans have long been a lifeline for immigrant business owners. They offer low interest rates and don’t require an established credit history, making them accessible to people banks might otherwise turn away. Without access to these loans, thousands of entrepreneurs are suddenly locked out of a critical funding source.

The numbers tell the story. Immigrant entrepreneurs make up 40% of California’s business community and generated $28.4 billion in income in 2023, according to the governor’s office of business and economic development. About 220,000 small business owners in California hold green cards and are now affected by this policy change. In fiscal year 2025, the SBA approved roughly 3,358 loans for businesses with green card owners, 4% of their total lending.

The SBA claims limited lending capacity is the reason for the change. Their spokesperson said the policy “will help ensure more American citizens have access to funding previously granted to noncitizens”. But advocates are calling out the flawed logic. Small Business Majority, a national business advocacy group, wrote to the SBA arguing the policy ignores the reality that immigrant entrepreneurs create jobs and strengthen the economy.

Take Cristina Foanene, a Romanian immigrant who arrived 20 years ago. An SBA loan in 2018 allowed her and her husband to buy a building and expand their glass company in Fresno. Today, they employ 30 people. “The loan gave us an opportunity to create more jobs”, she said. She just became a citizen and signed her third loan last month, as a U.S. citizen, she finally qualifies again.

Now green card holders are being pushed toward riskier alternatives. Community development financial institutions and state programs exist, but they don’t operate at the SBA’s scale, we’re talking loans ranging from $350,000 to $30 million. Without these options, many would-be taquería owners, child care entrepreneurs, and small business hopefuls might never get off the ground.

There’s also the predatory lending problem. When safe, affordable capital dries up, people get desperate. One child care owner in L.A. thought she was taking out a loan at 13% interest, it was actually closer to 250%. Advocates are hoping California steps up with more state-funded options and that philanthropic investors fill the gap. But the reality is clear: the SBA’s decision is punishing people who followed the legal path and are now being told it’s not enough.