Effective March 7, 2025, the U.S. Small Business Administration (SBA) has introduced stricter citizenship verification requirements for loan applicants.
Key Changes to SBA 7(a) and 504 Loan Programs:
- New Ownership Requirements: To qualify for an SBA loan, applicant businesses must be 100% owned by U.S. citizens, U.S. Nationals, or Lawful Permanent Residents (green card holders).
- Ineligible Owners: The following are now explicitly ineligible to be owners (or partial owners) of businesses applying for SBA loans:
- Visa holders (including all temporary visas)
- DACA recipients
- Refugees and asylees
- Undocumented individuals
- Documentation Requirements: Franchisees will need to:
- Certify that none of their business owners fall into ineligible categories
- Provide alien registration numbers for any Lawful Permanent Resident owners
- Submit to additional verification processes for non-citizen owners
What This Means for Your Franchise Development:
These changes may affect your franchise sales pipeline and existing franchisees’ ability to secure SBA financing for expansions or refinancing. We recommend you:
- Review your prospect database for potentially affected candidates
- Inform franchisees who may be planning expansion financing
- Update your financial qualification processes to screen for these requirements
Our team remains committed to supporting your new and existing franchisees with their financing needs. If you have questions or concerns about how these changes might impact specific franchisee situations, please don’t hesitate to contact us.
Link to SBA Notice: https://www.sba.gov/document/policy-notice-5000-865754-sba-policy-notice-5000-865754
