The SBA's updated Standard Operating Procedure (SOP 50 10 8) introduced a hard eligibility requirement: 100% of business ownership must be held by U.S. citizens, U.S. nationals, or Lawful Permanent Residents (LPRs) who have held that status for at least two years. Any foreign ownership — including minor stakes — now disqualifies the entire application.
Prior to the June 2025 SOP update, the SBA's ownership requirements were more nuanced — certain ownership structures involving non-residents could be accommodated through documentation and lender discretion. The updated rules eliminate that discretion. Foreign ownership is a categorical disqualifier.
Additionally, all owners must now be entered into E-Tran (the SBA's electronic loan application system) with their date of birth verified. This requirement was introduced to address fraud patterns identified during pandemic-era emergency lending, where synthetic identities were used to fraudulently obtain SBA loans.
The requirement applies to all owners — not just those with majority stakes. A business with 95% U.S. citizen ownership and 5% foreign ownership is disqualified. There is no de minimis exception. This affects immigrant-owned businesses where founders have not yet obtained LPR status, businesses with foreign investor stakes, and any ownership structure involving visa holders below LPR status.
Lawful Permanent Residents must have held that status for at least two years to qualify. A recent green card holder who became an LPR within the past two years does not yet meet the requirement. Time the application accordingly.
If current ownership structure includes foreign owners, the options are: (1) the foreign owner transfers their stake to a qualifying U.S. person before the loan application; (2) the business waits until all foreign owners obtain qualifying LPR status; or (3) the business pursues non-SBA conventional financing. There is no SBA waiver process for this requirement.
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