Non-U.S. Citizens Ineligible for SBA Loans in 2025

Non-U.S. Citizens Ineligible for SBA Loans in 2025

Are you a small business owner or aspiring franchisee hoping to fund your venture with an SBA loan? If you’re not a U.S. citizen, new rules effective June 1, 2025, under the SBA’s SOP 50 10 8 create a significant hurdle. Non-U.S. citizens are now ineligible for SBA loans unless U.S. citizens or lawful permanent residents (LPRs, or green card holders) own at least 51% of the business. This change impacts entrepreneurs seeking to start or expand franchises or independent businesses. Let’s explore why this rule exists, its implications, and how LoanBox can help you find alternative financing to keep your dreams on track.

What You Need to Know

The SBA’s updated SOP 50 10 8, Section B, Chapter 1, Paragraph B, introduces a strict ownership requirement, barring non-U.S. citizens from accessing 7(a) and 504 loans unless the business meets specific criteria. Here’s the breakdown:

The Non-Citizen Ineligibility Rule:

51% Ownership Rule: Businesses must be at least 51% owned by U.S. citizens or LPRs. If a non-U.S. citizen owns 51% or more, the business is ineligible for SBA loans.

Control Matters: Even with less than 51% ownership, non-citizens with significant control (e.g., as a managing partner) may disqualify the business if U.S. citizens or LPRs don’t hold majority equity.

Why the Change?

Program Integrity: The SBA prioritizes U.S.-based businesses to ensure government-backed loans support domestic economic stability.

Federal Policy Alignment: Federal lending programs often restrict funds to citizens or LPRs, aligning with national economic goals.

Ownership Verification: Lenders must verify ownership through documents like operating agreements, reducing risk and ensuring compliance.

Impact on Franchises

For franchisees, the 51% U.S. citizen/LPR ownership rule applies regardless of whether the franchise is listed in the SBA Franchise Directory. Non-citizen franchisees cannot access SBA loans without restructuring ownership to meet this threshold.

Example: A non-U.S. citizen owning 60% of a franchise cannot secure an SBA loan unless U.S. citizens or LPRs acquire a majority stake (51%+).

Implication: Franchisees must carefully plan ownership structures to access SBA financing, which offers favorable terms (e.g., 8.5%–10.5% rates, 7–25-year terms).

Non-citizens must navigate these hurdles to secure financing, often requiring creative solutions or partnerships.

Think Inside the LoanBox

For smart business lending think inside the LoanBox. Just log in, answer questionnaires, complete your loan package, and the platform will match you to the exact right lenders you match 100% of dozens of criteria points. Select which lenders you want to access your loan package and offer a loan proposal. Receive loan proposals from interested lenders, select the winning lender, and always know what’s going on from application to funding and what’s needed next in the loan process. Or have a friendly LoanBox Advisor just handle everything for you.