SBA Policy Change Affects Immigrant Entrepreneurs

Sayuri Tsuchitani used to work as a hairstylist for over 20 years. The job was physically demanding, and she often thought about her future. During the pandemic, she seized the moment to open a business. She applied for a U.S. Small Business Administration (SBA) loan and opened a Japanese head spa, offering massages and scalp treatments. She expanded from one location to three and increased her staff to ten.

Today, Tsuchitani would not qualify for an SBA loan due to a policy change. The SBA no longer approves loans for businesses not fully owned by U.S. citizens. Tsuchitani, a lawful permanent resident from Japan, moved to the U.S. nearly three decades ago. The SBA’s decision reflects a broader effort to limit immigration benefits.

Impact of Policy Change

Eda Henries, who assists small businesses in financial matters, stated that the new rule was surprising. Permanent residents were not expected to be cut off from SBA loans. Kelly Loeffler, the head of the SBA, stated that these loans should support American citizens exclusively, despite permanent residents paying taxes.

Immigrant Entrepreneurs and Their Contributions

Research shows immigrants are more inclined to start businesses compared to native-born Americans. They represent about 15% of the U.S. population but own 20% to 25% of businesses. A recent study found that immigrants and their descendants initiated two-thirds of American startups valued over $1 billion.

The SBA did not address concerns regarding the impact on business creation and job opportunities. Last year, 4% of SBA loans went to businesses with permanent residents. This figure is small but significant for those individual businesses.

The Significance of SBA Loans

Many small businesses rely on the SBA for support. Cristina Foanene, who co-owns a glass company in Fresno, California, benefited from three SBA loans. These loans aided the expansion of her business, which employs 30 people. The initial SBA loan also gave confidence to other investors.

There are concerns about where immigrant entrepreneurs will access capital now. Options remain limited. Traditional banks are often reluctant to finance small businesses. This could drive entrepreneurs toward predatory lenders, hindering their growth.

Legislative Efforts

Some Democrats in Congress seek to reverse the policy. They argue that legal permanent residents should be eligible for SBA loans. While ongoing efforts continue, the immediate effects are already being felt. Financial processes have slowed down as lenders now require proof of citizenship.

Many business owners fear publicizing their immigration status. Cristina Foanene, who is now a U.S. citizen, hopes that more personal stories might change the SBA’s outlook. She believes immigrant-owned businesses help the U.S. economy thrive.