SBA’s New Citizenship Requirements for SBA 7(a) and 504 Loans

March 10, 2025

Bob Coleman
Founder & Publisher

Main Street Monday — SBA’s New Citizenship Requirements for SBA 7(a) and 504 Loans

The first lender policy notice signed by Administrator Kelly Loeffler eliminates the ability of a foreign investor to own up to 49% of a small business and receive SBA financing.

The only acceptable borrowers are U.S. Citizens, U.S. Nationals, and Lawful Permanent Residents who have completed the USCIS process.

Ineligible persons include foreign nationals, individuals granted asylum, refugees, visa holders, those under Deferred Action for Childhood Arrivals (DACA), and undocumented aliens residing in the U.S. illegally.

Foreign investors are not permitted.

Borrowers must: (1) certify on the 7(a) and 504 application forms that none of the Beneficial Owners are ineligible persons, and (2) provide a Lawful Permanent Resident’s alien registration number when applicable.

SBA Lenders are required to document and enter into E-Tran at least 81% of Beneficial Owners (as defined by SOP 50 10 7.1). This includes both entity and individual owners with direct or indirect ownership, to confirm the Applicant business’s eligibility.

Until the 7(a) and 504 application forms can be updated, SBA Lenders must include the certification for Borrowers to sign and collect all applicable alien registration numbers as part of the loan application. The notice also provides instructions for verifying an LPR’s status with USCIS through SBA.

SBA Lenders must certify in E-Tran that no Beneficial Owner of an Applicant business is an ineligible person.

Source: SBA Policy Notice