A thread on Searchfunder this autumn asked a question many green card holders have been asking privately. The buyer had equity, a target in the trades, and no route to an SBA loan. How are deals like that getting done now?
The answer starts with being precise about the rule, because the rule is broader than most summaries suggest.
What the SBA rule says about green card holders
The SBA published Policy Notice 5000-876441 on 2 February 2026. It took effect on 1 March 2026 and is now part of SOP 50 10 8.1, the lending rulebook in force from 1 October 2026.
Under it, a business owned "in whole or in part" by a foreign national cannot borrow under the 7(a) or 504 programs. Every owner must be a US citizen or US national with a principal residence in the United States. Lawful permanent residents, people holding green cards, fall outside that definition. A week later the SBA extended the same restriction to its Microloan and Surety Bond programs.
There is no minimum stake. The earlier allowance for small foreign ownership was rescinded. A permanent resident holding a sliver of the company makes the whole application ineligible.
Expect the lender to look through entities. Holding the stake through an LLC or a family trust does not change who owns it. Lenders ask who sits at the end of each ownership chain.
The SBA put the scale of the change in its own release. In fiscal 2025 it approved 3,358 loans for businesses owned in part by a permanent resident, about 4% of the 85,000 loans it approved that year.
What it does to the shape of a deal
An SBA 7(a) loan let a buyer put in around a tenth of the price and borrow most of the rest over ten years. Take that away and three things change together.
The buyer needs more equity. The seller is asked to carry more of the price, and on terms that pay out rather than sit on standby. And the lender that does step in will price the risk, set covenants and test them.
None of that kills a deal. It changes who you are negotiating with, and what you need to show them.
The financing that still works
| What it asks of you | What the lender or seller reads | |
|---|---|---|
| Seller financing | A larger share of the price carried by the seller, with real payments | Your plan for the business and your ability to pay from its cash flow |
| Conventional bank loan | More equity, shorter terms, collateral and a personal guarantee | Historical cash flow, coverage and monthly reporting |
| Private credit or cash-flow lenders | A higher interest cost | Earnings quality, customer concentration and covenant headroom |
| Investor equity | Giving up part of the ownership | The investment case and your operating plan |
Most deals now use two or three of these together. A seller note bridges the gap a bank will not fund. Investor equity covers what the seller will not carry.
Earnouts come back into play. SBA rules do not allow them in a change-of-ownership loan. Outside SBA, a conventional lender will often accept one if it can be paid from operating cash flow without breaking a covenant. That gives buyer and seller a way to share the risk on a disputed forecast.
What a non-SBA lender reads
A conventional or private lender is underwriting the business with its own money and no federal guarantee behind it. It reads the numbers harder.
Expect questions about the quality of earnings, and a request to reconcile reported revenue to the bank statements. Expect the debt service coverage ratio to be tested on history, not projections. Expect a monthly reporting package after close, with covenants measured against it.
The buyers who get through this fastest arrive with three things ready. Accrual-basis statements a reviewer can tie out. A proof of cash for the trailing year. And a 13-week cash forecast that shows the debt can be serviced in the weeks that matter, not on average.
What this will not fix
No financing structure changes who owns the business. Putting a citizen relative or partner on the ownership while the green card holder owns it in substance misstates the ownership to the lender. SBA application forms carry criminal penalties for false statements. If ownership is going to change, it has to change for real, with an attorney involved.
This is also not a question finance can answer alone. How you hold the stake, and what that means for your immigration status, belongs with a transactions attorney and an immigration attorney. Bring them in before the letter of intent.
Frequently asked questions
Can a green card holder get an SBA loan in 2026?
No. Since 1 March 2026, the SBA 7(a) and 504 programs require every owner of the borrowing business to be a US citizen or US national with a principal residence in the United States. Lawful permanent residents do not meet that test.
Does the rule apply if the green card holder owns only a small stake?
Yes. The SBA's notice covers businesses owned in whole or in part by a foreign national, and the earlier allowance for small foreign stakes was rescinded. Any ownership by a permanent resident makes the application ineligible.
Which SBA programs does the restriction cover?
The 7(a) and 504 loan programs from 1 March 2026. On 9 March 2026 the SBA announced a further notice extending it to the Microloan and Surety Bond programs.
How are green card holders financing acquisitions now?
Mostly through a mix of seller financing, conventional bank loans, private credit and investor equity. Each asks for more equity or more seller paper than an SBA loan did, and each looks more closely at earnings quality and monthly reporting.
Can a seller earnout be used without SBA financing?
Yes, in most cases. SBA rules do not allow earnouts in a change-of-ownership loan, but conventional and private lenders often accept one if it can be paid from operating cash flow without breaching a covenant.
Where CFOLogic fits
We are not lenders, and we do not give immigration advice. What we do is the finance work a non-SBA lender reads before it says yes, and checks every month after.
That means accrual statements that tie out, a proof of cash for the diligence period, and a covenant package your lender can rely on. Navigator, our software, tracks debt service coverage the way the lender calculates it, so a drift shows up before the covenant test does. More on how we work with buyers is on our acquisition entrepreneurs page.