SBA Loan Restriction Bill Bans Asylees, Refugees, and Nonimmigrant Visa Holders from Key Small Business Funding

The new American Entrepreneurs First Act of 2025 is making big changes to who can access certain federal small business funding. Specifically, Section 2 of this bill overhauls the eligibility requirements for Small Business Administration (SBA) loans, including the popular 7(a) loan program and those under Title V. Simply put, it’s adding a hard immigration status check to who gets to borrow money to start or grow a business.

The New Paperwork Hurdle

If this passes, applying for an SBA loan will require more than just a solid business plan. Under the new rules, every individual applicant and every owner of a business applying for the loan must provide their date of birth and certify their status as either a U.S. citizen, a U.S. national, or a lawful permanent resident (LPR). If you’re an LPR, you’ll also need to hand over your alien registration number. The bill makes it clear: if the business or its guarantor is not 100% owned by citizens, nationals, or LPRs, they are out of luck. This means if you have a business partner who is legally present but doesn't meet this specific status, your company won't qualify for these loans.

Who Gets Cut Out of the Capital Line

This is where the bill’s impact hits hard. The Act introduces a new category of “ineligible person” who is completely banned from receiving these loans. This isn't about credit scores or business viability; it’s purely based on immigration status. The list of banned individuals is specific and includes people who are legally present in the U.S. and actively contributing to the economy right now. The bill explicitly bans:

• Asylees
• Refugees
• Anyone issued a visa just to remain in the U.S.
• Nonimmigrant visa holders (like those on H-1B or L-1 visas)
• DACA recipients
• Anyone in the U.S. without lawful status

Think about the entrepreneur who came here as a refugee, built a successful small grocery store, and now needs a 7(a) loan to open a second location. Under this bill, that funding is now inaccessible to them. Similarly, a tech company founder on an H-1B visa who needs capital to scale up their operation would be blocked. This provision, found in Section 2, effectively shuts the door to key federal capital for a wide range of legally present, tax-paying entrepreneurs who are actively running businesses.

Real-World Economic Friction

For businesses already operating, the 100% ownership rule creates a major headache. Imagine two friends—one a U.S. citizen, the other an L-1 visa holder—who co-own a successful construction firm 50/50. If they need an SBA loan to buy new equipment, they can’t get it unless the L-1 visa holder sells their stake to a citizen or LPR. This forces established businesses with mixed ownership to either restructure ownership or forgo crucial financing, potentially stifling growth and job creation. While the stated goal is to prioritize “American Entrepreneurs,” the practical effect is limiting economic access for many who are already working and creating jobs here, simply because their immigration paperwork doesn't fit the new narrow definition.