Main Street Monday: SBA Relaxes 100% U.S. Citizenship Ownership Standards to 95%
December 22, 2025
by Bob Coleman
Founder & Publisher
Main Street Monday: SBA Relaxes 100% U.S. Citizenship Ownership Standards to 95%
SBA has announced a major change that has held up many SBA 7(a) and 504 loans. Beginning January 1, 2026, SBA will allow a Borrower to have up to 5% ownership by foreign nationals, U.S. citizens, U.S. nationals, or legal permanent residents whose principal residence is outside the United States, its territories, or possessions, as well as by aliens with Conditional LPR status.
The change applies to all 7(a) and 504 applications approved by SBA on and after January 1, 2026. Until SBA updates SBA Form 1919, the lender must collect the required information and include an applicant certification for all loans, as outlined in the attached SOP notice.
Definition of an ineligible person
• Undocumented aliens who are in the U.S. illegally.
• A business concern or entity created, organized, or incorporated outside of the United States, its territories, or possessions.
• An individual who has a principal residence in or is a citizen of the People’s Republic of China, or who has a principal residence in or is a citizen of the Special Administrative Region of Hong Kong.
• Any individual, business concern, or entity on the Office of Foreign Assets Control sanctions list.
• Individuals granted asylum, refugees, visa holders, nonimmigrant aliens, or those under Deferred Action for Childhood Arrivals (DACA).
Note: for purposes of the 5% foreign ownership exception, DACA individuals with Conditional LPR status who fall into any of these categories are not considered an Ineligible Person.