Sayuri Tsuchitani once realized her dream of owning a business thanks to a small-business loan. She opened a Japanese head spa offering unique treatments. But recent changes in the Small Business Administration’s (SBA) lending policy would disqualify her today.

Changes in SBA Lending Policy

Before launching her business, Tsuchitani spent two decades in the hairdressing industry. The COVID-19 pandemic presented her with a new opportunity. She applied for a loan from the SBA. Tsuchitani called the loan program a key to her success, allowing her to open multiple locations and hire several employees.

However, the SBA has now altered its policy. The agency no longer approves loans for businesses not fully owned by U.S. citizens. This change affects those with green cards, like Tsuchitani, who moved from Japan 28 years ago.

Policy and Its Implications

The change is part of broader efforts to restrict immigration benefits. The SBA aims to ensure taxpayer money supports U.S. citizens. Yet, lawful permanent residents also contribute taxes. Kelly Loeffler, head of the SBA, stated this policy unapologetically ensures funds benefit citizens exclusively.

Research indicates immigrants are more likely to start businesses than native-born citizens. They lead a significant portion of businesses across the U.S. For example, immigrants and their children founded two-thirds of startups valued over $1 billion.

Impact on Entrepreneurs

The SBA claims only 4% of its loans last year went to businesses involving permanent residents. However, for those affected, the impact is significant. SBA loans often provide the first opportunity for small business growth and stability, offering favorable terms. Cristina Foanene, who benefited from such loans, expanded her glass company in California, providing numerous jobs.

With the new policy in place, immigrant entrepreneurs face limited alternatives. Traditional banks may avoid small firms, and risky lending practices like merchant cash advances pose concerns. Democrats in Congress seek to reverse the decision through legislation. Private lenders are now more cautious, extending the verification process and leaving many businesses in uncertainty.

Many legal permanent residents who applied for SBA loans this year are reluctant to speak publicly due to concerns about their status. Foanene, now a citizen, hopes more stories like hers will lead to reconsideration of the policy, which she believes ultimately benefits the country.