SBA Procedural Notice 5000-872050: Update to SOP 50 10 8 – Citizenship and Residency Requirements
Summary
SBA Procedural Notice, Control No. 5000-872050, effective December 19, 2025, to SBA employees, 7(a) lenders and certified development companies, on an update to SOP 50 10 8 on citizenship and residency requirements. It advises of revisions to Standard Operating Procedure 50 10 8, Lender and Development Company Loan Programs with Technical Updates. It states that the revisions are consistent with 13 C.F.R. 120.100 and 13 C.F.R. 120.110, among other authorities.
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SBA Procedural Notice
TO: All SBA Employees, 7(a) Lenders, and CONTROL NO.: 5000-872050
Certified Development Companies
EFFECTIVE: December 19, 2025
SUBJECT: Update to SOP 50 10 8 – Citizenship
and Residency Requirements
The purpose of this notice is to advise SBA employees, 7(a) Lenders and Certified Development
Companies (“CDCs”) of revisions to Standard Operating Procedure (“SOP”) 50 10 8 Lender and
Development Company Loan Programs with Technical Updates. The revisions are consistent
with 13 C.F.R. 120.100, 13 C.F.R. 120.110 and Executive Order 14159 “Protecting the
American People Against Invasion” and will allow a Borrower to have up to 5% ownership by
foreign nationals, U.S. Citizens, U.S. Nationals, or Legal Permanent Residents (LPRs) whose
Principal Residence is outside of the United States, its territories, or possessions, as well as by
Aliens with Conditional LPR status. The changes will apply to all 7(a) and 504 applications
approved by SBA on and after January 1, 2026.
The revisions to SOP 50 10 8 are as follows:
a. The definition of “Ineligible Person” in “Appendix 3: Definitions” is deleted and replaced
with the following:
“Ineligible Person: An Ineligible Person includes, but is not limited to:
1. Undocumented aliens who are in the U.S. illegally;
2. Individuals granted asylum, refugees, visa holders, nonimmigrant aliens under 8
U.S.C. § 1101(a)(15), or those under Deferred Action for Childhood Arrivals (DACA). Note:
For purposes of the 5% foreign ownership exception set forth in Section A, Ch. 1, Para. F
individuals with Conditional LPR status who fall into any of the categories in this subclause
are not considered an Ineligible Person;
3. A business concern or entity that was created, organized, or incorporated outside of the
United States, its territories, or possessions; or
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Must be accompanied by SBA Form 58
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4. An individual who has a Principal Residence in or is a citizen of the People’s Republic
of China or is an individual who has a Principal Residence in or is a citizen of the Special
Administrative Region of Hong Kong.
5. An individual, business concern, or entity on the Office of Foreign Assets Control
(OFAC) sanctions list. See Paragraph J of this Chapter.”
b. The following definition is added to “Appendix 3: Definitions”:
Principal Residence: Principal Residence is defined by IRS publication 523.
c. The heading and first two paragraphs in Section A, Ch. 1, Para. F, “Businesses Owned by
Non-U.S. Citizens,” are deleted and replaced with the following:
“F. CITIZENSHIP AND RESIDENCY REQUIREMENTS
To be eligible for SBA financing: 100% of the direct and/or indirect owners must be U.S.
Citizens, U.S. Nationals, or Lawful Permanent Residents (LPRs) (commonly referred to
as “green card holders”), as defined below, and must have their Principal Residence in
the United States, its territories, or possessions. All SBA-required guarantors must be
U.S. citizens, U.S. Nationals, or LPRs, and must have their Principal Residence in the
United States, its territories, or possessions. Entity owners (whether direct or indirect)
must be created, organized, or incorporated in the United States, its territories, or
possessions.
Nonetheless, the following may be direct and/or indirect owners so long as their
aggregate ownership is no more than 5% of the small business concern: (a) Individuals
who are not U.S. Citizens, U.S. Nationals, or LPRs, and are not Ineligible Persons but are
instead foreign nationals living outside the U.S. (these individuals may also be
Supplemental Guarantors); (b) U.S. Citizens, U.S. Nationals, or LPRs whose Principal
Residence is outside the United States, its territories, or possessions; and (c) Aliens with
Conditional LPR status. Lenders must include supporting documentation for these
individuals within their credit approval.
For any loan, SBA Lenders must certify in E-Tran that, to the best of their knowledge, no
direct or indirect owner or guarantor is an Ineligible Person. No loan may be made if any
direct or indirect owner is an Ineligible Person. Lenders may accept the Applicant’s
certifications on SBA Forms 1919 or 1244 that no more than 5% in the aggregate of the
direct and indirect owners of the Applicant, OC, and EPC, and all SBA-required
guarantors, including entities, have a Principal Residence (as defined by IRS publication
523) in the United States, its territories, or possessions.
SBA Forms 1919 and 1244
SBA is in the process of updating SBA Form 1919, “SBA 7(a) Borrower Information Form”, and
SBA Form 1244, “SBA 504 Borrower Information Form” and will include these 5% foreign
ownership requirements with those updates. Until these updated forms are available, SBA
Lenders must collect all required information and certifications and retain them in the loan file.
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Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
The certifications below will be added to the updated SBA Form 1919 and SBA Form 1244 but
until the updated forms are published the SBA Lender must attach the certifications below as a
supplement to the application to be signed by the Applicant.
The Applicant must certify to the following:
• I certify that none of the direct and indirect owners of the Applicant, OC, and EPC, and
all SBA-required guarantors, including entities of the Applicant, OC, and EPC are
Ineligible Persons. An Ineligible Person includes, but is not limited to: (1.)
Undocumented aliens who are in the U.S. illegally; (2.) Individuals granted asylum,
refugees, visa holders, nonimmigrant aliens under 8 U.S.C. § 1101(a)(15), or those under
Deferred Action for Childhood Arrivals (DACA) (Note: for purposes of the 5% foreign
ownership exception set forth in the subsequent bullet, individuals with Conditional LPR
status who fall into any of the categories in this subclause are not considered an Ineligible
Person); (3.) A business concern or entity that was created, organized, or incorporated
outside of the United States, its territories, or possessions; or (4.) An individual who has a
Principal Residence in or is a citizen of the People’s Republic of China, or is an
individual who has a Principal Residence in or is a citizen of the Special Administrative
Region of Hong Kong; or (5.) An individual, business concern, or entity on the Office of
Foreign Assets Control (OFAC) sanctions list (See SOP 50 10).
• I certify that all direct and indirect owners of the Applicant, OC, and EPC, and all SBA-
required guarantors, including entities, are U.S. citizens, U.S. Nationals, or Lawful
Permanent Residents (LPRs) that have a Principal Residence (as defined by IRS
publication 523) in the United States, its territories, or possessions, and all entity owners
were created, organized, or incorporated in the United States, its territories, or
possessions, except for the following, who may have no more than 5% aggregate
ownership: (a) foreign nationals living outside the U.S.; (b) U.S. Citizens, U.S. Nationals,
or LPRs whose Principal Residence is outside the United States, its territories, or
possessions; and (c) Aliens with Conditional LPR status.
Questions
Questions concerning this Notice may be directed to the Lender Relations Specialist in the
local SBA Field Office.
Thomas Kimsey
Associate Administrator
Office of Capital Access
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Federal Recycling Program Printed on Recycled Paper
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