Impact of SBA Policy Changes on Immigrant-Owned Businesses

Sayuri Tsuchitani, once a hairdresser for two decades, took her first entrepreneurial steps with a small-business loan. She opened a Japanese head spa, a unique salon offering treatments such as blood-flow massages and deep scalp cleanses. But recent changes to the Small Business Administration’s (SBA) lending policy would prevent her from qualifying today.

Tsuchitani’s journey began when the pandemic closed the Los Angeles salon where she worked. She seized the opportunity to apply for an SBA loan, under a program aimed at assisting businesses during that time. Her hard work led to the opening of a successful spa, with three locations and ten employees overall.

However, the SBA has enacted a new rule. Loans are no longer granted to businesses not wholly owned by U.S. citizens. Tsuchitani, having moved to the U.S. from Japan 28 years ago, holds a green card but is not a citizen. This new policy aligns with a broader immigration restriction effort that started under the Trump administration.

“The SBA led me to my success of the American Dream,” Tsuchitani expressed, reflecting on her entrepreneurial path that might not be possible under the new rules.

Eda Henries, who aids small businesses with funding, noted that this shift was unexpected. Permanent residents like Tsuchitani are now classified as “foreign nationals,” and SBA head Kelly Loeffler reinforced this stance, arguing loans should benefit citizens. Despite paying taxes, permanent residents are excluded from these loans.

Statistics illustrate the role of immigrants in igniting entrepreneurial efforts. Though immigrants make up 15% of the U.S. population, they own 20% to 25% of businesses. A significant portion of high-value startups also involve immigrant entrepreneurs.

SBA loans have previously played a critical role for immigrant entrepreneurs, giving companies like Cristina Foanene’s glass company in California the chance to expand and hire. But now, immigrant business owners face difficulty accessing funding, risking their growth and innovation. Henries worries this might push them towards less favorable or more hazardous financial options.

Efforts are underway to counteract this SBA decision. Congressional Democrats, including Sen. Ed Markey and Rep. Nydia Velazquez, introduced a bill to reinstate loan access for legal permanent residents. Meanwhile, private lenders tasked with issuing SBA loans have slowed their processes, leaving businesses uncertain and stalled.

Foanene, now a proud U.S. citizen, laments the potential lost opportunities for others. Reflecting on her own experience, she hopes that sharing similar success stories might sway SBA decision-makers to reconsider the policy’s implications on sincere, job-creating immigrant entrepreneurs.