Green card holders, including on Long Island, shut out from key small business loan programs

Green card holders need not apply.

That’s the message from the U.S. Small Business Administration to some entrepreneurs who are seeking bank loans guaranteed by the federal government for their companies. The loans are often the last resort for those with poor credit scores and high personal debt. 

Starting Sunday, the SBA will only approve loan applications for businesses that are 100% owned by U.S. citizens or U.S. nationals with their primary home in the United States or its territories, according to an agency memo dated Feb. 2.

The exclusion of green card holders will lead to fewer business openings in regions with large immigrant communities, such as Long Island and New York City, and less hiring and investment by existing businesses. The difficulty in obtaining capital also will prevent immigrants from entering the middle class, experts said. 

John A. Rizzo, an economist and Stony Brook University professor, predicted the new SBA regulation will shrink the size of the Island's economy because 25,000 small businesses here, or about 28% of the total, are owned by immigrants. 

The SBA's move is "cruel" and "out of touch with the best interests of the people it is supposed to be serving," he said. "This will have a significant contractionary effect on Long Island's economy."

SBA officials countered that the new rule will ensure the agency's marquee loan programs — 7(a) and 504 — help the most deserving applicants, who in turn will create the greatest number of jobs. 

“The Trump SBA is committed to driving economic growth and job creation for American citizens,” agency spokeswoman Maggie Clemmons told Newsday. 

The 7(a) program offers bank loans of up to $5 million and the 504 program offers bank loans of up to $5.5 million. 504 loans are specifically for purchasing fixed assets like real estate and equipment with low down payments and fixed rates, while 7(a) loans are more versatile, covering everything from working capital to business acquisitions with potentially variable rates.

Green card holders, also called lawful permanent residents, have been authorized to live and work permanently in the United States. After five years, they are eligible to become naturalized citizens, according to the U.S. Department of Homeland Security.

The department’s most recent available statistics show that more than 14,300 green cards were issued to individuals living in Nassau and Suffolk counties in 2023, with the largest numbers emigrating from El Salvador, the Dominican Republic, India, China and Honduras. They are among 1.6 million green card holders in New York State.

'What wrong have they done?'

Leaders of local groups that represent immigrant businesses expressed alarm and frustration about the SBA regulation, saying it will cause discrimination, keep people from accumulating wealth and stifle creativity. 

“This administration is trying to stop the progress of immigrant communities,” said Zeshan Hamid, chairman of the New York South Asian Chamber of Commerce, which has about 200 members.

Green card holders “are working hard, making enough money and then going out and opening up legitimate businesses,” said Hamid, who owns Shaheen Caterers and is a partner in Shaheen Restaurant, both in Hicksville.

“What wrong have they done? They’re legal," he said.

Luis Vasquez, chief executive of the 300-member Long Island Hispanic Chamber of Commerce, agreed, adding, “What is the purpose of this rule change? It’s going to have a negative impact in our community.”

Echoing his colleagues, Phil Andrews, president of the Long Island African American Chamber of Commerce, said many of the chamber's 500 members probably haven't heard about the new SBA regulation but they will be upset when they do.

"This is going to have a very negative effect because SBA loans are often the only financing available to business owners," said Andrews, who also owns a public relations firm in Queens.

The exclusion of green card holders comes on the heels of the SBA backing a record number of loans in Nassau and Suffolk in the fiscal year ended Sept. 30. Nearly $462 million in 7(a) and 504 loans were approved, an increase of 33% from fiscal 2024, according to SBA records. 

Fewer loans will be made

Bankers told Newsday they expect to make fewer loans this year — up to 9% less — because of the new restrictions.

At Pursuit, an Albany-based lender with an office in Melville, chief executive Chris Levy predicted the number of 7(a) and 504 loans that it makes will be reduced by 5%. He added that Pursuit closed on 212 loans through the two programs last year in New York, New Jersey and Pennsylvania. Thirty-seven of the loans were on Long Island.

Pursuit and other lenders vet borrowers for the SBA loans and then seek approval from the agency for those loans. The government guarantee reduces the risk of supporting borrowers with credit problems.

Going forward, green card holders will be forced to use other types of bank loans and rely on support from friends and family.

"It's going to be about what alternative, creative solutions are out there," said Levy, "because a very important tool is being taken away from [green card holders] that don't qualify anymore."