Letter to SBA Administrator Loeffler, December 18, 2025 — Senator Edward J. Markey et al.

Summary

A letter dated December 18, 2025 to Small Business Administration Administrator Kelly Loeffler from Senator Edward J. Markey, Ranking Member of the Committee on Small Business and Entrepreneurship, co-signed by other United States Senators. The letter objects to citizenship requirements the SBA applied to its 7(a) and 504 loan programs on June 1, 2025, and says these and other changes contributed to a 46% reduction in small business lending from June-August 2025. It describes examples of businesses it says lost eligibility because of minority noncitizen ownership. The senators urge the SBA to restore its prior policy and ask for written answers by January 8, 2026 to questions on loan denials, guidance given to lenders, and the rationale for the requirements. The letter cites 15 U.S.C. § 631(i) and 8 U.S.C. § 1324b(a)(3).

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                                                  December 18, 2025
The Honorable Kelly Loeffler
Administrator
U.S. Small Business Administration
409 3rd Street, SW
Washington, DC 20416

Dear Administrator Loeffler,

       Restrictive citizenship requirements recently issued by the Small Business
Administration (SBA) are cutting off access to SBA loans for American entrepreneurs, which is
hurting the U.S. economy, small businesses, and immigrants lawfully in the U.S. These changes
and others made by SBA contributed to a significant 46% reduction in small business lending
from June-August 2025.1 We write with questions about the impact of these ill-conceived
requirements on SBA lending and urge the SBA to restore its previous guidance.

        On June 1, 2025, the SBA implemented harmful changes to two of its main lending
programs, the 7(a) and 504 loan programs.2 These draconian changes prevent loans from going
to small businesses whose owners, investors, or key employees are foreign nationals; have
deferred action, such as recipients of Deferred Action for Childhood Arrivals (DACA); or have
certain kinds of lawful noncitizen status, including refugees, asylees, visa holders, and
conditional green card holders—even if the business is majority-owned by U.S. citizens. The
new requirements reverse at least a quarter century of SBA policy that allowed small businesses
to receive SBA loans if they were majority-owned by U.S. citizens, nationals, and lawful
permanent residents.

       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.

Below are examples of how these requirements are affecting small businesses:

        A small manufacturer, which produces components to retrofit vans for disabled
         individuals, has received three SBA loans that created jobs. Two minority shareholders


1
  The analysis of loan data is based on publicly available FOIA data on the 7(a) program and SBA’s 7(a) Activity Report.
2
  Lender and Development Company Loan Programs, U.S. Small Bus. Admin., https://www.sba.gov/document/sop-50-10-
lender-development-company-loan-programs.
                                                                                                            Page 2

         who are not citizens own 13% of the business, making the business ineligible for another
         loan.
        A third-generation, family-owned manufacturing business relocated from Canada to the
         United States to expand its American manufacturing operations. The business was an
         eligible borrower when it applied for a loan but is no longer eligible under the new
         requirements because Canadian citizens have a minority stake in the business. As a result,
         the family’s plans to invest in their manufacturing operations in the United States have
         been halted.
        A small business planned to use an SBA loan to help acquire another U.S. small business
         whose owner is retiring. Although two of the three owners of the acquiring business who
         own a majority of the business are U.S. citizens, the third is waiting to receive a green
         card—making the business ineligible for a loan.
        A small business owner interested in an SBA loan was likely eligible as a green card
         holder, but their lawyer recently advised against applying out of fear that submitted
         paperwork “could be used against them.”

        In sum, 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.

        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 and
ask for written responses to the following questions by January 8, 2026:

         1. How many small businesses applying for SBA financing have been denied a loan
            because of the new citizenship verification requirements?

         2. What has SBA communicated to its lenders about complying with these requirements
            and when will the agency update relevant borrower forms? Please provide any
            memoranda, guidance, or other documents that have been provided to SBA lenders on
            the citizenship verification requirements.

         3. SBA’s press release states that the new requirements are to “ensure only legal,
            eligible applicants can access SBA program . . . [and] confirm that applicant
            businesses are not owned in whole or in part by an illegal alien.”3 However, since
            1994, the SBA has already prohibited the use of SBA funds for individuals not
            lawfully present in the United States.4




3
  SBA Highlights Range of New Measures to Stop Fraud, U.S. Small Business Administration (Apr. 10, 2025),
https://www.sba.gov/article/2025/04/10/sba-highlights-range-new-measures-stop-fraud.
4
  15 U.S.C. § 631(i).
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                 Why has SBA made individuals with lawful immigration statuses, including several
                 protected classes under the Immigration and Nationality Act,5 ineligible for SBA
                 loans? Please provide any research, memoranda, or other documents detailing SBA’s
                 rationale for the citizenship verification requirements.

        Without changes, the SBA’s draconian citizenship verification requirements will continue
to hurt small businesses, local communities, and the U.S. economy. We look forward to your
response addressing these important concerns.

                                               Sincerely,




                                      Edward J. Markey
                                      Ranking Member, Committee
                                      on Small Business and
                                      Entrepreneurship




    Mazie K. Hirono                                                  Adam B. Schiff
    United States Senator                                            United States Senator




    Tammy Duckworth                                                  Christopher A. Coons
    United States Senator                                            United States Senator




    Jacky Rosen                                                      Catherine Cortez Masto
    United States Senator                                            United States Senator




5
    8 U.S.C. § 1324b(a)(3).
                                                Page 4




Kirsten Gillibrand      Martin Heinrich
United States Senator   United States Senator




Elizabeth Warren        Cory A. Booker
United States Senator   United States Senator




Jeanne Shaheen          Richard Blumenthal
United States Senator   United States Senator




Alex Padilla            Patty Murray
United States Senator   United States Senator




Ben Ray Luján           Richard J. Durbin
United States Senator   United States Senator




Maria Cantwell          John Hickenlooper
United States Senator   United States Senator


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