Federal Policy
SBA Implements Foreign Ownership Ban
March 19, 2026
The U.S. Small Business Administration (SBA) has enacted a new policy effective April 1, 2026, that prohibits foreign nationals, non-citizens, and lawful permanent residents residing outside the United States from owning any interest in small businesses applying for SBA-guaranteed loans. This restriction applies across the SBA's 7(a), 504, Surety Bond, and Microloan programs, requiring that 100% of ownership be held by U.S. citizens or U.S. nationals with principal residence in the U.S. This policy change significantly impacts eligibility criteria for SBA loans and affects mergers and acquisitions involving SBA financing.
- Procurement professionals and contractors should assess ownership structures carefully to ensure compliance with the new SBA loan eligibility requirements starting April 2026.
- Businesses seeking SBA financing must verify that all owners meet the U.S. citizenship and residency criteria to avoid disqualification.
- This change may influence deal structuring in M&A transactions involving SBA-backed loans, requiring legal and financial due diligence.
- Organizations involved in SBA loan facilitation or advisory services should update guidance and compliance protocols to reflect the new ownership restrictions.
100% of a small business 27s ownership must consist of U.S. citizens or U.S. nationals with their principal residence in the United States.
— PilieroMazza PLLC
Agencies
U.S. Small Business Administration
Contracts
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