Highlights:
- SBA will restrict 7(a) loans to US citizens starting March 1
- Green card holders would lose access to SBA-backed financing
- Hospitality and family-run businesses could be hit hardest
- AAHOA leaders warn of job losses and reduced lending
- Rule may discourage private banks from lending to immigrants
The Small Business Administration’s decision to bar green card holders and other non-US citizens from its primary lending program will affect immigrant entrepreneurs, according to two former chairs of the Asian American Hotel Owners Association. The rule could have long-term consequences for the hospitality industry, which depends heavily on family-run and immigrant-owned businesses.
Beginning March 1, only US citizens or nationals with a principal residence in the United States or its territories will be eligible for the SBA’s 7(a) loan program, the agency’s main financing vehicle for small businesses. Under the new rule, permanent residents fear losing access to opportunities they previously relied on to start or expand businesses. The move has raised concern among immigrant entrepreneurs, including many Indians, who have historically depended on SBA-backed loans.
In a policy notice, SBA Administrator Kelly Loeffler said all direct and indirect owners of a small business applicant must be U.S. citizens or nationals with a principal residence in the United States, its territories, or possessions.
The SBA has long helped immigrants, women, and minorities start and grow businesses, said Mukesh “Mike” Patel, who served as AAHOA chair from 1998 to 1999. That support, he said, should extend to non-citizen residents as well.
“Let’s say someone comes in and works at a hotel on a green card,” Patel said. “If he wants to buy a Dunkin’ Donuts, a Blimpie, or a Subway sandwich shop, he’ll need about $300,000. He might raise some savings, but he still needs a $200,000 loan.”
Under previous administrations, the SBA typically guaranteed 70 to 80 percent of loans, giving banks confidence to lend to applicants with limited credit histories or financial networks.
“That guarantee made a lot of American dreams happen,” Patel said, noting that many immigrants were able to enter gas station, retail, and other small businesses because of SBA support.
Change could block families from hospitality
Bharat Patel, AAHOA chair from 2023 to 2024, said the rule change could block entire families from entering the hotel and hospitality industries.
“What if a hotel owner wants a cousin or uncle to get into the business, but that person only has a green card?” he said. “They may not be a citizen yet, or they may choose not to become one for personal reasons.”
He added that many immigrants retain foreign citizenship because of family or cultural ties. “In India, some families have lived on the same land for 11 generations,” he said. “Some people don’t want to be the last one to give that up.”
Bharat Patel emphasized that the SBA guarantees private loans rather than lending directly and argued that restricting green card holders undermines job creation and private-sector lending.
“We’re talking about permanent residents, not undocumented workers,” he said. “These are people legally living and working in the United States.”
U.S. Citizenship and Immigration Services data show India was the second-largest source of green card recipients in fiscal year 2024. A 2022 National Foundation for American Policy report found Indian American–owned companies generate $150 billion in revenue and employ more than 800,000 people nationwide.
Systemic issues worsen the impact
Mike Patel said broader industry challenges compound the impact of the new rule. Rising construction costs and the SBA’s $5 million lending cap already limit many projects, he said, adding that legislation to raise the cap remains pending.
Banks have also grown cautious amid higher default rates in hotel and commercial real estate loans, further tightening access to capital.
Bharat Patel warned the SBA rule could prompt lenders to avoid financing green card holders altogether.
“When rules like this change, it affects private-sector lending,” he said. “And when that happens, money goes underground.”
For many Indian American entrepreneurs, he said, the American dream is about more than income—it is about building a family business and creating generational wealth.
AAHOA did not respond to a request for comment on the new SBA restriction before publication.
