SBA issued Policy Notice 5000-865754, Policy updates to comply with Executive Order 14159 regarding citizenship requirements for obtaining 7(a) and 504 loans. The changes in the notice are effective today, March 7, 2025. This means that any loan application currently in process that does not comply with the revised requirements cannot be approved.  

The notice revises SOP 50 10 7.1 “to comply with section 20 of 90 FR 8443, “Protecting the American People Against Invasion,” issued under the authority of the Immigration and Nationality Act (INA) (8 U.S.C. § 1101 et seq.) and section 301 of title 3, United States Code. Executive Order 14159 [EO], “Protecting the American People Against Invasion”. “The EO directs SBA to identify and stop the provision of any public benefits to any illegal alien not authorized to receive them under the provisions of the INA or other relevant statutory provisions.” The changes to SOP 50 10 7.1 appear in Section A, Chapter 1 [requirement that a business be located in the U.S. (p. 15) and requirements relating to the eligibility of businesses owned by non-U.S. Citizens (pp. 19-21)], with consistent changes made to relevant provisions in SOP 50 10 7.1, Section B, in the various program delivery chapters. 

Under the new requirements, SBA-backed financing is limited to businesses with 100% beneficial ownership by citizens of the U.S., U.S. Nationals, or Lawful Permanent Residents (LPRs). NO degree of beneficial ownership will be permitted for any individual not holding one of those three statuses. 

The new requirements apply to both 7(a) and 504 loans and prohibit SBA from guaranteeing a loan to an applicant business that is “owned in whole or part by undocumented (illegal) aliens”. To assure compliance with this requirement, SBA has amended its procedures to require that lenders document and input into E-Tran information on at least 81% of the beneficial owners of the applicant company (as that term is defined in SOP 50 10 7.1, p. 356) and to certify in E-Tran that NO beneficial owner is an ineligible person (as that term is defined in the notice).  

In addition, the loan applicant now must:

(1) Certify on the 7(a) and 504 application forms that none of its beneficial owners are ineligible persons

 (2) Include a Lawful Permanent Resident’s alien registration number as applicable. 

Per the notice, until SBA issues updated 7(a) and 504 loan application forms, lenders must include the above certifications as part of their SBA loan applications and must collect all applicable alien registration numbers.  

The notice also amends the requirements related to documenting non-citizen status. In addition to obtaining a copy of the individual’s United States Citizenship and Immigration (USCIS) documentation as described in the notice, SBA has reinstated the requirement that lenders submit a USCIS Form G-845, Documentation Verification Request, to the Sacramento Loan Processing Center (SLPC). [This process will require all lenders to register designated personnel with the SLCP following the instructions provided in the notice.] Per the notice, “lenders must receive verification of the status of each individual required to submit USCIS documents prior to submission of the application to SBA or, for delegated processing, prior to submission of the request for loan number”. 

This notice represents a major policy shift. Please read it carefully to assure full compliance with all of the revised program requirements.