Senator Edward J. Markey, the Ranking Member of the Senate Small Business and Entrepreneurship Committee, led a group of 18 Senate Democrats in sending a letter to Small Business Administration (SBA) Administrator Kelly Loeffler. The lawmakers are seeking answers about recent changes to SBA’s citizenship verification requirements that they say have negatively affected small business lending, especially for immigrant entrepreneurs.
The new policies, which were put in place in June 2025, prevent SBA loans from being issued to businesses with owners, investors, or key employees who are foreign nationals; recipients of Deferred Action for Childhood Arrivals (DACA); or those with certain lawful noncitizen statuses such as refugees, asylees, visa holders, and conditional green card holders—even if U.S. citizens hold a majority ownership in the business. According to the senators, these policy changes—along with increased minimum credit scores and stricter underwriting—have contributed to a significant decrease in SBA lending between June and August 2025.
In July 2025, Senators Markey and Nydia Velázquez sent an earlier letter to Administrator Loeffler expressing concern about these requirements but have not received a response.
“These new requirements hurt any small business owned or operated even in small part by noncitizens, even when the business employs Americans and operates wholly in the United States. Small businesses use SBA loans to create jobs and invest in their operations. Unfortunately, the Trump administration is demonizing immigrant communities and picking winners and losers, rather than basing lending decisions on a small business’s ability to repay a loan,” the lawmakers wrote.
They added: “We have heard concerns that these requirements unduly bar small businesses with certain lawfully present, noncitizen owners and employees from receiving financing. For example, entrepreneurs stand to lose eligibility for SBA loans if they accept a small amount of start-up funding from friends or family members who aren’t U.S. citizens. Despite the Trump administration’s solicitation of foreign investment in the United States, small businesses with even one percent of foreign ownership can no longer receive an SBA loan. In some instances, businesses that previously received SBA loans have lost eligibility solely based on these new requirements. Lenders have informed us that borrowers may not even bother applying due to confusion or fear around the new requirements.”
The letter concludes: “We urge the SBA to restore its policy of allowing SBA financing for businesses that are majority-owned and controlled by U.S. citizens, nationals, and lawful permanent residents…Without changes, the SBA’s draconian citizenship verification requirements will continue to hurt small businesses, local communities, and the U.S. economy.”
The senators requested responses from Administrator Loeffler by January 8, 2026. They specifically asked how many applications had been denied under the new rules; what guidance has been given to lenders regarding compliance; when borrower forms would be updated; and why individuals with lawful immigration status are now excluded from loan eligibility.
