Washington: The Small Business Administration has rolled out new rules that make it harder for immigrant entrepreneurs to get loans and support. Offices in several big cities are closing, and loan programs now exclude businesses with noncitizen owners or workers. Lawmakers and business owners worry these changes could hurt local economies and small business growth.
Key Takeaways
- The Small Business Administration is closing offices in cities like Atlanta and Boston, which makes it tough for immigrant business owners to get support.
- New rules stop businesses with noncitizen owners or workers from getting 7(a) and 504 loans, used for daily costs and buying property.
- Lawmakers like Senator Ed Markey say these policies hurt local economies and have no proof of misuse by undocumented immigrants.
- Immigrant entrepreneurs may have to use private lenders or crowdfunding, which can bring higher costs and bigger risks.
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SBA Plans Office Closures and New Loan Rules
In March 2025 the Small Business Administration under Administrator Kelly Loeffler, announced it would close seven field offices in cities it calls sanctuary cities. Those cities are Atlanta, Boston, Chicago, Denver, New York City and Seattle. The agency says the closures, tied to an executive order will move offices to places that follow federal immigration laws more closely.
An SBA press release explained the move aims to save money and better serve small businesses. But these cities are home to many immigrant owned firms that depend on SBA help like business counseling or loan guidance.
The bigger change is to loan programs. The SBA’s 7(a) and 504 loans, which help businesses pay for operations or buy property now have stricter rules. Businesses with noncitizen owners, investors or even key employees including legal immigrants or DACA recipients, cannot qualify. A new law, the American Entrepreneurs First Act, passed by the House in June 2025, makes these rules permanent.
According to Newsweek this reverses over 20 years of policy that let businesses owned mostly by U.S. citizens or green card holders get loans. The SBA says it wants to make sure taxpayer money goes to Americans. Critics point out there is no solid proof undocumented people were getting these loans anyway.
Immigrant Business Owners Hit With New Obstacles
Immigrant entrepreneurs own about 19 percent of US businesses with employees, says a 2023 report from the SBA’s Office of Advocacy. They rely on 7(a) loans for day to day costs and 504 loans for things like buying equipment. Microloans which help startups get going are also harder to get now.
A store owner in Chicago with a legal immigrant partner might not get a loan. A DACA recipient running a tech company in Seattle could be blocked completely.
These rules make things tough for immigrants who already struggle with things like building credit or understanding the system. A 2021 Fundera report noted immigrants often turn to SBA loans because banks are less willing to lend. Now some owners might have to look at private lenders, who charge more interest, which can hurt their chances of keeping the business afloat.
The Boston Globe reported a restaurant owner in Boston saying he is worried about expanding because his manager is not a citizen. Senator Ed Markey called the policies a solution looking for a problem arguing they hurt businesses without clear reason.
Lawmakers and Groups Speak Out Against Changes
Lawmakers from both sides are pushing back on the SBA’s new policies. Senator Ed Markey from Massachusetts and Representative Nydia Velázquez from New York sent a letter to Administrator Loeffler. They asked for answers by July 29, 2025 about why these changes were needed.
As the Boston Globe reported they said the policies fix something that was not broken. They noted no evidence shows undocumented immigrants were getting SBA loans. They worry the rules will hurt cities where immigrant businesses create jobs and drive growth.
Advocacy groups agree with the lawmakers. The Bipartisan Policy Center said in a 2022 report that immigrants start businesses at higher rates than native born citizens. They are 80 percent more likely to launch new firms which often bring new ideas and jobs. The Center for American Progress pointed out in 2024 that immigrant owned businesses employ millions and add billions to the economy.
Critics like Velázquez say the SBA’s rules could scare businesses from hiring legal immigrants, even those with work permits. Supporters of the changes, including Loeffler argue the policies protect American taxpayers. They want to focus resources on citizens as stated in the SBA’s March release. But the debate keeps heating up as the deadline for the SBA’s response nears.
Local Economies Feel the Pinch
The changes could hit local economies hard, especially in cities losing SBA offices. Immigrant businesses make up a big part of industries like food service, retail and tech. A 2021 ZenBusiness report said they employ nearly 8 million people across the country. Cutting their access to loans could mean fewer new businesses or slower growth for existing ones.
Cities like New York and Chicago, where immigrants own a large share of small firms, might see less tax revenue and fewer jobs.
A 2025 study from the National Bureau of Economic Research found immigrant founded companies are more likely to create new technologies. They hold 35 percent more patents than other firms. If these businesses struggle the whole country could lose out on innovation.
The New York Times reported in May 2025 that SBA budget cuts and stricter loan rules are already making it tough for small businesses to get help. Some owners might turn to private loans with high interest rates. That could lead to more debt and more businesses closing especially in places hit hard by recent economic challenges.
Paths Forward for Small Business Owners
Immigrant entrepreneurs are looking for ways to deal with these new barriers. Commercial banks offer loans, but they mostly demand strong credit which many immigrants do not possess. A 2021 Fora Financial report highlighted crowdfunding as another option. One immigrant raised over 11 million dollars through platforms like Kickstarter.
Federal grants, like the SBA’s PRIME program support small businesses but are hard to get. State programs and community lenders, known as CDFIs can also help with funding and advice.
Business owners need to stay on top of these changes. Working with immigration lawyers or business advisors can help them meet visa and loan rules. The SBA’s Resource Partners like Small Business Development Centers, still offer free guidance. With lawmakers waiting for the SBA’s response by July 29, 2025 there could be more updates soon. Legal challenges or new policies might change things so keeping informed is key.
The fight over these SBA changes shows how much immigrant businesses matter to America. As the debate continues, entrepreneurs and communities are bracing for what comes next. The outcome will shape the future for millions chasing their business dreams.
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Small Business Trends, Newsweek, Boston Globe, SBA Office of Advocacy, Fundera, Bipartisan Policy Center, Center for American Progress, ZenBusiness, Fora Financial, New York Times, National Bureau of Economic Research.
