SBA Noncitizen Ownership Eligibility

Full Title:
Investing in the American Dream Act

Summary#

This bill, the Investing in the American Dream Act, changes who may qualify a small business for certain Small Business Administration (SBA) loans and guarantees. The main change: a small business can be eligible for specified SBA-backed loans if at least 51% is owned and controlled by U.S. citizens or by certain non‑citizen individuals who are lawfully present and authorized to work in the United States at the time of application. The stated policy goal is to clarify and expand eligibility for SBA covered loans so that eligible noncitizens can access those programs.

  • Covered loan types: SBA 7(a) loans, SBA microloans, certain SBIC (Small Business Investment Company) guarantees, and SBA surety bond guarantees.
  • Who counts as an “eligible individual”: people named in the bill who are noncitizens but meet categories in existing immigration law (for example, refugees, asylees, lawful permanent residents, certain nonimmigrants with valid stay, and people with deferred action such as the 2012 DACA memo). The bill also lists people whose main home is outside the U.S. as eligible individuals.
  • Main eligibility rule: A small business must be located in the U.S. and be at least 51% owned and controlled either by U.S. citizens/nationals or by eligible individuals who, when applying, are lawfully present and authorized to work.
  • Non‑discrimination line: The SBA may not deny a covered loan solely because the business is owned by eligible individuals if the business meets the listed requirements.
  • Limit on future change: The bill says it cannot be read to allow the SBA to raise the 51% ownership requirement.

What it means for you#

  • Small business owners: If your business is in the U.S., you may qualify for SBA 7(a) loans, microloans, SBIC guarantees, or surety bond guarantees when at least 51% is owned and controlled by U.S. citizens or by specified eligible noncitizen individuals who are lawfully present and authorized to work at application time.
  • Noncitizen entrepreneurs: Refugees, asylees, lawful permanent residents, many nonimmigrant visa holders with valid stays, and people granted deferred action (e.g., under the June 15, 2012 memo) are explicitly named. They could use majority ownership to meet SBA eligibility, provided they are lawfully present and work‑authorized when applying.
  • Businesses majority-owned by people living abroad: The bill lists individuals whose main residence is outside the United States as “eligible individuals.” How that interacts with the requirement to be lawfully present and work‑authorized at the time of application is not clearly explained (see “What is unclear” below).
  • Lenders and SBA staff: They will apply these clarified rules when checking borrower eligibility for the listed SBA programs.
  • Citizens and taxpayers: The bill widens who may access SBA programs. Direct effects on taxes or benefits to citizens are not specified in the bill text.

Expenses#

No publicly available information.

  • The bill text does not include a fiscal note or cost estimate.
  • This could mean additional administrative steps to verify lawful presence and work authorization for some applicants, which might raise verification or staff costs for lenders or the SBA.
  • There is no explicit new fee, new spending line, or stated offset in the bill text.

Proponents' View#

  • The bill appears intended to make SBA loan eligibility clearer for noncitizen small business owners who are lawfully present and allowed to work.
  • A possible argument for the bill is that it helps immigrant entrepreneurs access SBA programs that support business start-up and growth.
  • The text names specific immigration categories, which could reduce confusion about which noncitizen groups qualify.
  • The bill also explicitly prevents the SBA from raising the 51% ownership threshold, which could be seen as protecting current eligibility rules.

Opponents' View#

  • One concern is that the bill does not clearly explain how someone whose principal residence is outside the United States can meet the requirement to be “lawfully present” and “authorized to be employed” at application time. This could create inconsistent decisions or delays.
  • The bill does not include a fiscal estimate, so it is unclear how much extra cost the SBA or lenders will incur to verify status or process applications.
  • A possible trade-off is that expanding eligibility to more noncitizen owners could affect how limited loan or guarantee capacity is distributed among applicants; the bill does not address any prioritization.
  • The bill does not change the 51% ownership threshold, but it also does not address other eligibility rules that can affect access (for example, size standards or credit requirements), so some applicants will still be excluded for reasons other than ownership.