Impact of SBA’s Policy Change on Immigrant Entrepreneurs

A small-business loan enabled Sayuri Tsuchitani to establish her Japanese head spa. However, due to recent changes in the Small Business Administration’s (SBA) lending policy, she would no longer qualify for such a loan today. Previously, the SBA had provided her with the means to open a salon offering massages, ayurvedic oil treatments, and scalp cleanses. This support helped her expand the business, creating jobs for ten people.

Tsuchitani, a green-card holder, moved to the U.S. from Japan 28 years ago. In March, the SBA introduced a policy that disallows loans to businesses not fully owned by U.S. citizens. This move aligns with broader immigration policy changes limiting noncitizen benefits.

Policy Impact on Entrepreneurs

The change has affected entrepreneurs like Tsuchitani, who relied on SBA loans during the pandemic to achieve their business goals. Eda Henries, a small-business funding expert, described the policy shift as unexpected. The SBA’s stance is that these loans should exclusively benefit American citizens. Kelly Loeffler, the SBA head, articulated this view during a public address.

Research consistently shows immigrants are prominent business founders in the U.S. Despite only making up 15% of the population, they run 20% to 25% of businesses. A study noted that immigrants and their children have been pivotal in launching successful startups.

SBA Loans as a Crucial Resource

Historically, SBA loans have been an essential resource for small businesses, offering affordable options where traditional banks might hesitate. Cristina Foanene’s glass company is a testament to this. After receiving SBA loans, she expanded her operations, employing dozens, including a recent retiree of 19 years. This demonstrates how vital these loans are to business sustainability and growth.

With the policy shift, immigrant entrepreneurs face limited alternatives for financing, potentially pushing them towards less favorable lending options. Some policymakers are responding to this challenge. Led by Sen. Ed Markey and Rep. Nydia Velazquez, efforts are underway to reverse the SBA policy, aiming to restore loan eligibility for legal permanent residents.

Current Uncertainty

Henries outlined the challenges businesses face, including increased delays as lenders verify citizenship statuses. Loans mid-process have been halted, leaving business operations and plans in jeopardy. Many immigrant business owners are reluctant to speak publicly, fearing repercussions related to their immigration status.

Foanene, now a U.S. citizen, reflects on the importance of SBA support in her journey. She hopes more stories of immigrant entrepreneurs might influence policymakers’ perspectives. Highlighting the positive impact of immigrant-owned businesses could potentially inspire a policy reassessment.