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Since 1 March 2026, SBA 7(a) and 504 loans need 100% owners who are U.S. citizens or nationals living in the U.S.: E-2 investors and green-card holders are out

By Grig Kochedykov · . Legal points checked against official sources on 3 October 2026.

A glass diner on a desert highway at sunset: every shelf, pipe and corner is visible from outside, and a smiling visitor peeks in before walking through the door.

Since 1 March 2026, an SBA-guaranteed 7(a) or 504 loan goes only to a business whose owners, direct and indirect, are all U.S. citizens or U.S. nationals living in the United States, its territories or possessions. An E-2 treaty investor, any other visa holder, a green-card holder, or a U.S. citizen whose main home is abroad cannot be one of the owners. Not even with 1%. The rule is SBA policy. It was set in notices that took effect on 1 March 2026 and revised the previous rulebook for lenders (SOP 50 10 8); it is now part of SOP 50 10 8.1, effective 1 October 2026, Section A, Chapter 1, Paragraph F ("Citizenship And Residency Requirements"), with the list of excluded people in Appendix 3.

Below, "U.S." includes its territories and possessions, as SBA's text does.

This covers loans to buy an existing business. The same applies to every guarantor SBA requires, with one narrow exception explained below.

The rule controls SBA financing. It does not say who may own or buy a U.S. business with other money.

General information, not legal, tax or immigration advice.

Who can own a business that gets an SBA 7(a) or 504 loan?

Person or companyAllowed as an owner?Where SBA says so
U.S. citizen, born or naturalized, whose principal residence is in the U.S.YesSOP 50 10 8.1, Section A, Ch. 1, Para. F, "Eligible Persons"
U.S. national (born in American Samoa or Swains Island) whose principal residence is in the U.S.YesSOP 50 10 8.1, Section A, Ch. 1, Para. F, "Eligible Persons"
U.S. citizen or U.S. national whose principal residence is outside the U.S.NoAppendix 3, "Ineligible Person", item 4
E-2 treaty investor, or any other visa holder or non-immigrantNoAppendix 3, items 2 and 3
Green-card holder (permanent or conditional)NoAppendix 3, item 7
Refugee, person granted asylum, DACA recipientNoAppendix 3, item 2
Citizen of the People's Republic of China or of the Hong Kong SARNoAppendix 3, item 6
Company created outside the U.S.NoPara. F; Appendix 3, item 5
Person or company on the OFAC sanctions listNoAppendix 3, item 8
Undocumented person in the U.S. illegallyNoAppendix 3, item 1

Item numbers are those of the Appendix 3 list in SOP 50 10 8.1 and in Procedural Notice 5000-876626; both number it 1 to 8. The list "includes, but is not limited to" these groups, so it is not closed.

Naturalized citizens "are not subject to any special restrictions or requirements," the SOP says. "Principal residence" is defined by IRS Publication 523: you have one main home at a time, and the most important factor is where you spend the most time.

What exactly does SBA's rule say?

SOP 50 10 8.1, Section A, Chapter 1, Paragraph F:

"SBA financing is limited to business Applicants with 100% direct and/or indirect owners and SBA-required guarantors, all of whom must be U.S. Citizens or U.S. Nationals who have their Principal Residence in the United States, its territories, or possessions."

The lender must certify it, and the paragraph adds:

"No loan may be made if any direct or indirect owner or SBA-required guarantor is an Ineligible Person."

Why an E-2 investor is caught: item 2 of the Appendix 3 list names "a visa holder, a non-immigrant alien under 8 U.S.C. § 1101(a)(15)", and the E-2 class is defined in 8 U.S.C. § 1101(a)(15)(E). Item 3 also applies, because an E-2 investor is not a U.S. citizen or national.

The test is not a one-time check. The core requirements must be met "at the time of application and throughout loan closing and disbursement" (Section A, Chapter 1).

Since when does the rule apply, and in which document is it?

  • Policy Notice 5000-876441, published 2 February 2026, effective 1 March 2026. It removed an earlier exception that had allowed up to 5% ownership by foreign nationals or by owners living abroad, and said green-card holders "will not be eligible to own any percentage interest in an Applicant/Borrower".
  • Procedural Notice 5000-876626, effective 1 March 2026. Where a lender approves under authority delegated by SBA, the rule applies to loans given an SBA loan number on or after 1 March 2026. Where SBA reviews the application itself, it applies to applications that reach "R1 status" in SBA's loan system (E-Tran) on or after 1 March 2026; applications with a green-card-holder owner that reached R1 status by 28 February 2026 were still processed by SBA.
  • SOP 50 10 8.1, effective 1 October 2026, now in the version "with Technical Policy Updates" announced in Information Notice 5000-882227. Its citizenship text matches the March notice apart from technical wording.

Is this a new law?

No. This is SBA policy, set in its notices and its SOP. SBA's Policy Notice names an executive order (14159) and 13 CFR 120.100 as its basis; it cites no new act of Congress. The SBA regulation on who can get a business loan, 13 CFR 120.100, says nothing about citizenship. The rule still binds lenders: 13 CFR 120.10 counts "SBA Standard Operating Procedures (SOPs)" and "official SBA notices" among the "Loan Program Requirements".

SBA's public 7(a) page lists who can get a loan without mentioning citizenship, so the rule is easy to miss.

What does the rule mean when you buy an existing business?

Purchase loans are covered. Section A, Chapter 1 sets "the core program eligibility requirements that apply to all loans made under either the 7(a) or the 504 Programs". Appendix 15, on 7(a) changes of ownership, adds no citizenship rules of its own.

How many 7(a) loans finance a change of ownership. Between fiscal year 2020 and 30 June 2026, SBA approved 40,555 7(a) loans whose business-age field reads "Change of Ownership". That is my count of SBA's public 7(a) FOIA file (data as of 30 June 2026, 388,338 records). SBA's data dictionary does not define the label; in the SOP, a change of ownership covers buying a business, buying out a co-owner and ESOP or cooperative deals (Appendix 15). These are loan approvals, including 3,458 later cancelled, not all U.S. business purchases, and not only purchases. The file has no field for citizenship, visa or residence, so it cannot show how many of these buyers would be shut out today.

If the seller is not eligible. An owner who is an Ineligible Person makes the business ineligible "unless the Ineligible Person completely divests their ownership prior to the date of issuance of the SBA loan number." A six-month look-back applies too: anyone who owned part of the business in the 6 months before the loan number counts, unless they fully exited before the loan number was issued. The SOP does not spell out how this works for every deal structure (buying shares or buying assets). Ask the lender before you sign.

Guarantors. Every guarantor SBA requires must meet the same rule, with one exception that is about guaranteeing, not owning. When the lender requires a limited or supplemental guaranty for its approval, or SBA requires one to support the pledge of jointly held required collateral, an Ineligible Person (except someone in the U.S. illegally) "may provide a limited guaranty." A possible example: a spouse with a green card who owns no share but co-owns a house pledged as collateral. The lender decides whether it fits.

Existing SBA loans. When an owner or guarantor is replaced later, "the new individual may not be an Ineligible Person."

Does the SBA rule change the E-2 visa rules?

No. USCIS describes the E-2 as letting a national of a treaty country "be admitted to the United States when investing a substantial amount of capital in a U.S. business." The SBA texts above deal with SBA loans only; they do not change the E-2 rules.

For planning the money, the State Department's manual, 9 FAM 402.9-6(B), says:

"Indebtedness such as mortgage debt or commercial loans secured by the assets of the enterprise cannot count toward the investment, as there is no requisite element of risk."

The manual adds that only debt secured by the investor's own personal assets, such as a second mortgage on a home, or an unsecured loan on the investor's personal signature, may be included; a loan secured by the business does not count even if personal assets also secure it. Whether a given loan or seller payment plan counts is for an immigration lawyer to say.

What is still not known?

  • How many foreign buyers lost access. I found no SBA number for E-2 investors. For green-card holders, its 9 March 2026 press release said that in fiscal year 2025 SBA approved "3,358 loans for small businesses owned in part by a lawful permanent resident (LPR)", which it put at 4% of its 85,000 loan approvals. That is SBA's figure, not mine.
  • How many purchases fell away after 1 March 2026. Not measured; fiscal 2026 data mixes months before and after the rule.
  • Loans approved before 1 March 2026. Procedural Notice 5000-876626 applies the rule to loans approved under delegated authority on or after 1 March 2026 and to SBA-reviewed applications that reached R1 status on or after that date. About earlier loans the SOP says only that a new owner or guarantor added later (a servicing request) may not be an Ineligible Person. Whether an earlier loan is affected in any other way is not stated.
  • Taking over a seller's existing SBA loan. Servicing of existing SBA loans is covered by separate SBA rulebooks (SOP 50 57 for 7(a), SOP 50 55 for 504), which I have not read for this question. The rule for a replaced owner or guarantor is the one quoted above.

What should I ask the lender, in writing?

  1. Here are all owners and guarantors, with citizenship and principal residence. Does each meet SOP 50 10 8.1, Section A, Chapter 1, Paragraph F?
  2. If the seller or any current owner is an Ineligible Person, how do the exit rule and the six-month look-back apply to this deal structure?
  3. If a non-citizen family member would give a guaranty or pledge co-owned property, does the limited-guaranty exception cover it?

On a visa? Ask an immigration lawyer, separately, how to pay for the purchase in a way that fits it.

Separate from the citizenship rule, whether the equipment you are buying is pledged to someone else is checked in a state UCC lien search: UCC lien search: how to check whether the equipment comes with the business.

If you buy without an SBA loan, who checks the seller?

If this rule closes the SBA loan to you, you pay for the business some other way, for example with your own money or with a payment plan agreed with the seller, often called seller financing. Whichever way you pay, checking the seller and the business before you pay a deposit is up to you. If you want help with that step, you can order a check from us before the deposit: the €550 report. The price and how to order are on our pricing page.

See a sample reportStart my check

Sources

  1. SBA Policy Notice 5000-876441, Update to SOP 50 10 8 Citizenship and Residency Requirements (page) (retrieved 3 October 2026)
  2. SBA Policy Notice 5000-876441 (PDF) (retrieved 3 October 2026)
  3. SBA Procedural Notice 5000-876626, Revised Applicant Ownership, Citizenship and Residency Requirements for 7(a) and 504 Loans (page) (retrieved 3 October 2026)
  4. SBA Procedural Notice 5000-876626 (PDF) (retrieved 3 October 2026)
  5. SBA SOP 50 10, Lender and Development Company Loan Programs (page; Version 8.1 with Technical Updates, effective 1 October 2026) (retrieved 3 October 2026)
  6. SBA SOP 50 10 8.1 with Technical Policy Updates, effective 1 October 2026 (DOCX) (retrieved 3 October 2026)
  7. SBA Information Notice 5000-882227, Issuance of Technical Updates to SOP 50 10 8.1 (retrieved 3 October 2026)
  8. SBA, 7(a) loans (public page) (retrieved 3 October 2026)
  9. SBA press release 26-35, published 9 March 2026 (retrieved 3 October 2026)
  10. eCFR, 13 CFR 120.100 (as of 29 September 2026) (retrieved 3 October 2026)
  11. eCFR, 13 CFR 120.10 (as of 29 September 2026) (retrieved 3 October 2026)
  12. 8 U.S.C. 1101 (United States Code, 2023 edition, GPO) (retrieved 3 October 2026)
  13. USCIS, E-2 Treaty Investors (retrieved 3 October 2026)
  14. U.S. Department of State, Foreign Affairs Manual 9 FAM 402.9 (retrieved 3 October 2026)
  15. IRS Publication 523, Selling Your Home (retrieved 3 October 2026)
  16. SBA, 7(a) & 504 FOIA data (FOIA - 7(a) FY2020-Present, as of 30 June 2026) (retrieved 3 October 2026)