Earlier this week, the SBA issued new policy guidance tightening eligibility requirements for 7(a) and loans (again).
Specifically, the new guidance requires:
“100% of all direct and/or indirect owners of a small business applicant be U.S. Citizens or U.S. Nationals who have their Principal Residence in the United States, its territories, or possessions.”
This means that as of 1 March 2026, SBA-backed loans will no longer be issued to businesses with ANY beneficial owners who are:
- Non-US Citizens or Nationals
- Legal Permanent Residents (Green Card holders)
- US Citizens/Nationals who do not reside in the US
This update follows what’s been an interesting 2025, with guidelines changing several times from pre-2025 era policies:
- Pre-March 2025: Foreigners could own up to 49%
- March 2025: US Citizens/Nationals OR Green Card holders must own 100%
- December 2025: Foreigners could own up to 5%
- March 2026: US Citizens/Nationals must own 100% (Green Card holders cannot be beneficial owners)
While it’s unclear what impact this update will have on the M&A market, it will likely narrow the buyer pool in certain segments.