New SBA Citizenship and Ownership Requirements for 2026: What Small Business Owners Need to Know

Effective March 1, 2026, the SBA is implementing significant changes to citizenship and ownership eligibility requirements that will directly impact businesses seeking SBA loans.

Under SBA Policy Notice 5000-876441, all businesses applying for financing under the 7(a) program must meet stricter ownership standards. These changes affect all 7(a) loans, including the widely used SBA 7a loan program that many entrepreneurs rely on for expansion, acquisition and working capital.

For business owners considering SBA lending in 2026, understanding these changes now is critical.

What Is Changing in SBA Lending?

Beginning March 1, 2026:

• 100% of all direct and indirect owners must be U.S. Citizens or U.S. Nationals
• All owners must maintain their principal residence in the United States, its territories or possessions
• Legal Permanent Residents are no longer eligible to own any percentage of an SBA applicant business
• The previous 5% foreign ownership exception has been rescinded

These updates represent a meaningful tightening of eligibility requirements within the SBA loan program.

Why This Matters for Businesses Seeking SBA Loans

Ownership structure has always been important in SBA lending. Now, it is foundational.

Even a small percentage of ownership held by an ineligible individual can disqualify a business from receiving an SBA 7(a) loan or other small business loans under the 7(a) program.

This change may impact:

• Businesses with minority foreign investors
• Companies with Legal Permanent Resident ownership
• Partnerships structured for real estate acquisition
• Transactions currently under negotiation are expected to close after March 1, 2026
• Small business loans for startups involving multiple founding partners

If your ownership structure does not comply with these updated standards, your application for SBA loans may be declined regardless of credit strength, collateral or cash flow.

How This Impacts the SBA 7(a) Loan Program

The SBA 7(a) loan remains one of the best small business loans available due to:

• Flexible use of proceeds
• Longer repayment terms
• Lower down payment requirements
• Competitive interest rate options

However, eligibility requirements must be met before underwriting and financial strength are even considered.

For business acquisitions, partner buyouts or ownership restructures, these new rules may require advance planning. Waiting until after March 1, 2026, could limit financing options or delay closing timelines.

Planning Ahead Is Critical

If you are:

• Preparing to apply for SBA lending
• Considering bringing on a new equity partner
• Negotiating a business acquisition
• Restructuring ownership percentages
• Launching a startup that may require small business loans for startups

Now is the time to review your ownership structure carefully.

Early evaluation allows for strategic adjustments before submitting an SBA loan application.

A Relationship-Driven Approach to SBA Lending

At Alliance Capital Corporation, we believe business growth changes communities for the better. Our role in SBA lending goes beyond paperwork and approvals. We help business owners structure transactions correctly, anticipate regulatory changes and move forward with clarity.

These new citizenship requirements reinforce why experience matters in SBA loans. Structuring ownership correctly at the beginning can prevent unnecessary delays and protect your financing strategy.

If you are considering an SBA 7(a) loan or exploring small business loans in 2026, our team is ready to help you evaluate eligibility and position your business for success. Alliance is ready to come alongside you in your business journey and show you the difference the right alliance can make.