SBA chief Kelly Loeffler defends policy giving business loans only to U.S. citizens

The head of the U.S. Small Business Administration on Wednesday defended her decision to prohibit green card holders from getting government-backed business loans, saying they must first become U.S. citizens.

“If they’re a green card holder, become an American citizen and avail yourself of all the benefits and responsibilities of being an American citizen,” SBA administrator Kelly Loeffler said after touring a factory in Hauppauge.

Loeffler, who also serves in President Donald Trump’s cabinet, said the SBA has limited loan guarantees and demand is high for the bank loans because they are often the last resort for borrowers with poor credit scores and high personal debt.

Immigrants with green cards aren’t prohibited from obtaining other types of business financing, she told Newsday.

Since March, SBA has approved loan applications only for businesses that are 100% owned by U.S. citizens or U.S. nationals with their primary home in the United States or its territories.

The policy change will lead to fewer business openings in regions with large immigrant communities, such as Long Island and New York City, and less hiring and investment by existing businesses, experts said. 

On the Island, 34% of small firms in Nassau County are owned by immigrants and 22% in Suffolk County, based on an April report from the Immigration Research Initiative, a nonpartisan think tank in Manhattan.

Responding to Loeffler's remarks, John A. Rizzo, an economist at Stony Brook University, told Newsday, "This policy crushes new business startups before they can even begin.”

Rizzo added that fewer startups mean fewer local jobs, less tax revenue and lower demand for commercial real estate. "Even worse, requiring 100% U.S. citizenship disqualifies established local companies with green card partners from securing expansion capital, threatening existing jobs,” he said.

On Long Island, nearly $462 million in loans were made through SBA’s 7(a) and 504 loan programs in the fiscal year that ended Sept. 30, 2025, an increase of 33% from fiscal 2024, according to agency records.

Green card holders, also called lawful permanent residents, have been authorized to live and work permanently in the United States — and after five years are eligible to become naturalized citizens, according to the U.S. Department of Homeland Security.

The department’s most recent data show more than 14,300 green cards were issued to individuals living on Long Island in 2023, with the largest numbers emigrating from El Salvador, the Dominican Republic and India.

The end of SBA-guaranteed loans for green card holders has alarmed chambers of commerce in the region.

“I have been hearing that [business owners] are getting turned down and have to do other things” to obtain financing, said Phil Andrews, president of the 500-member Long Island African American Chamber of Commerce. 

Andrews said he opposes the SBA policy because “it hurts people who are allowed to be here and to do certain things legally,” such as start a company. “America needs these people and their businesses,” he said in response to Loeffler’s comments.

In April, Democrats in Congress introduced legislation that would allow businesses that are at least 51% owned by U.S. citizens to be approved for SBA loans even if green card holders, refugees or asylum-seekers have a minority ownership stake. The bills are still in committee, according to Congress.gov.

Asked about the legislation on Wednesday, Loeffler said the green-card holder prohibition “is working well right now.”

She added that SBA loans were only approved for 85,000 small businesses last year out of 36 million small businesses nationwide. The bank loans totaled a record $45 billion.

Loeffler spent about one hour visiting Allen Machine Products Inc., a manufacturer of metal parts used in healthcare, semiconductors, defense and transportation. She touted provisions in Trump’s 2025 One Big Beautiful Bill Act that ended federal taxes on overtime pay and provided deductions for equipment purchases by companies.

Eric Lazarus, an owner and managing partner of Allen Machine, said the tax exemption for some overtime pay has been a boon for the company’s 58 employees.

“People were reluctant to work overtime before because they’d look at their check and the government had taken a big chunk of that overtime pay,” he said. “Now, they are really motivated to take advantage of working overtime.”

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.