Lawmakers Demand Answers as SBA’s New Rules Slash Small Business Lending by 46%

A recent shift in Small Business Administration (SBA) policies has sparked serious concerns among small business owners, particularly those with immigrant ties. According to a letter from Ranking Member Edward J. Markey (D-Massachusetts) and 18 other Democratic lawmakers, new citizenship verification requirements imposed by the The President administration could be significantly stifling access to crucial SBA lending programs.

The changes, which rolled out in June, have led to a staggering 46% reduction in small business lending from June to August 2025. This drop comes on the heels of new eligibility criteria that have tightened the accessibility of SBA loans for businesses with even a single non-citizen owner, investor, or key employee. While many small companies depend on these loans to fuel growth and expansion, the recent standards bar those with Deferred Action for Childhood Arrivals (DACA) status, certain types of visa holders, and others from obtaining financing—even if the business is primarily owned by U.S. citizens.

Markey, alongside other lawmakers, articulated the urgent need for the SBA to reconsider these stringent policies. “These new requirements hurt any small business owned or operated even in small part by noncitizens,” they shared. “Small businesses use SBA loans to create jobs and invest in their operations. Unfortunately, the The President 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.”

The recent changes also include increased minimum credit scores and more rigorous underwriting processes, further complicating the financing landscape for small business owners. This has resulted not only in fewer loans but also in a growing sense of confusion and reluctance among potential borrowers, many of whom may reconsider their applications out of fear or misunderstanding of the new requirements.

For small business owners, particularly those who may be non-citizen entrepreneurs themselves or those with diverse teams, the implications of these policies are profound. Access to capital can often be the linchpin for startups and growing enterprises alike—essential for everything from hiring to launching new products. The restrictions could effectively shut the door on many promising ventures, even those that are committed to creating jobs and investing in the local economy.

One notable point raised in the letter concerns the stumbling blocks that arise when a small business accepts modest funding from a friend or family member who is not a U.S. citizen. Such scenarios could lead to ineligibility for SBA financing, a hurdle that the lawmakers argue serves only to create barriers, rather than promote healthy economic growth.

In a broader context, these policies may impact local communities significantly. As small businesses are often central to local economies, the fallout from reduced lending could ripple outwards, affecting job creation and economic development at the community level.

The lawmakers have issued a call to action, urging the SBA to revert to its previous policy that allowed financing for businesses that are majority-owned by U.S. citizens, nationals, and lawful permanent residents. They emphasize the importance of aligning lending policies with the best interests of small businesses and the economy as a whole.

As they seek answers from the SBA with a deadline set for January 8, 2026, they have posed several key questions, including inquiries into how many businesses have already been denied loans due to the new policies. The lawmakers are also keen to understand the agency’s guidance to lenders regarding compliance with these regulations and why individuals with lawful immigration statuses are being excluded from access to SBA loans.

For small business owners, it’s essential to stay informed about these evolving regulations and to engage with local representatives about the implications of such policies. While the landscape remains uncertain, it’s clear that these changes present both challenges and critical discussions around immigrant contributions to the economy.

For more details, you can access the original press release here.

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