The Rule in SOP 50 10 8.1
Every owner, direct or indirect, and every SBA-required guarantor must be a U.S. citizen or U.S. national with a principal residence in the United States. That is 100%, with no minority carve-out.
The rule sits in Section A, Chapter 1, Paragraph F, "Citizenship And Residency Requirements." In the SOP's words:
"SBA financing is limited to business Applicants with 100% direct and/or indirect owners and SBA-required guarantors, all of whom must be U.S. Citizens or U.S. Nationals who have their Principal Residence in the United States, its territories, or possessions. All entity owners (whether direct or indirect) must be created, organized, or incorporated in the United States, its territories, or possessions."[1]
The lender must certify in the SBA system that no owner or SBA-required guarantor is an "Ineligible Person." The SOP then says: "No loan may be made if any direct or indirect owner or SBA-required guarantor is an Ineligible Person."
Section A holds the core requirements for both programs, so this applies to SBA 7(a) loans and SBA 504 loans alike.
Green Card Holders Are on the Ineligible List
Appendix 3 of SOP 50 10 8.1 names lawful permanent residents as Ineligible Persons, including conditional residents. A green card does not qualify you as an owner.
The SOP defines Ineligible Person in Appendix 3. The list names green card holders directly:
"A Lawful Permanent Resident (LPRs) (commonly referred to as “green card holders”), including individuals with permanent (Unconditional) LPR status, and Conditional LPR status"[2]
The same list includes visa holders, people granted asylum, refugees, and those under DACA. It also includes anyone, U.S. citizens included, whose principal residence is outside the United States.
What Changed From the Old Rule
SOP 50 10 8 (effective June 1, 2025) let green card holders own the business and guarantee the loan. An SBA notice ended that on March 1, 2026, and SOP 50 10 8.1 (effective October 1, 2026) writes it into the SOP.
The old paragraph was titled "Businesses Owned by Non-U.S. Citizens." It allowed owners "that are U.S. citizens, U.S. Nationals, or who are Lawful Permanent Residents (LPRs) (commonly referred to as “green card holders”)," and it said plainly: "LPRs may be owners and/or guarantors of the business."[3]
Even then, there were limits. The lender verified each LPR's status through USCIS, and a holder of the 2-year conditional card was not eligible. SOP 50 10 8.1 drops the LPR category entirely and moves conditional and unconditional residents onto the Ineligible Person list.
SBA Citizenship Rule: Old SOP vs. Current SOP
| Who | SOP 50 10 8 (June 1, 2025) | SOP 50 10 8.1 (October 1, 2026) |
|---|---|---|
| U.S. citizens (born or naturalized) | Eligible, with a U.S. primary residence | Eligible, with a U.S. principal residence |
| U.S. nationals | Eligible, with a U.S. primary residence | Eligible, with a U.S. principal residence |
| Lawful permanent residents (10-year card) | Eligible as owners and guarantors | Ineligible Person |
| Conditional permanent residents (2-year card) | Not eligible | Ineligible Person |
| Visa holders, asylees, refugees, DACA | Ineligible Person | Ineligible Person |
Applies to owners and SBA-required guarantors. Both versions require 100% of owners to qualify and a U.S. residence. Source: SOP 50 10 8 and SOP 50 10 8.1, Section A, Ch. 1, Para. F and Appendix 3.
For detailed calculations and real examples, see the FUNDED Series.
Which SOP covers your application
SBA Information Notice 5000-882227 says SOP 50 10 8.1 applies "to all applications received by SBA on or after" October 1, 2026, and that lenders "must continue to use SOP 50 10 8 for 7(a) and 504 applications submitted through September 30, 2026." Any application received now falls under 8.1. Federal regulation also requires lenders to follow SBA's Loan Program Requirements "as such requirements are revised from time to time."[4]
Who Counts as a U.S. National
People born in American Samoa and Swains Island are U.S. nationals at birth but not automatically U.S. citizens. They are eligible owners.
SOP 50 10 8.1 cites 8 U.S.C. § 1408 and 8 U.S.C. § 1101(a)(29) for this group. When a non-citizen U.S. national owns the business, the lender must document that it reviewed evidence of that status, such as a birth certificate or passport, and enter the person's Social Security Number into the SBA system.
Two other groups are eligible. People born in the fifty states, the District of Columbia, Guam, Puerto Rico, the Northern Mariana Islands and the U.S. Virgin Islands are generally U.S. citizens. Naturalized citizens are eligible "and the naturalized citizens are not subject to any special restrictions or requirements."
Citizenship Is Not Enough Without a U.S. Home
A U.S. citizen whose principal residence is outside the United States is also an Ineligible Person under SOP 50 10 8.1.
The residency test applies to everyone, not just non-citizens. Appendix 3 lists "An individual (including U.S. Citizens and U.S. Nationals) who has their Principal Residence outside of the United States, its territories, or possessions." The SOP defines principal residence by IRS Publication 523.
If you split time between countries, ask your lender early how it will document where your principal residence is.
Free: The 27-Point SBA Loan Checklist
See every eligibility item a lender checks before you spend money on a deal, including ownership and guarantors.
✓ You're in!
Your 27-point SBA loan checklist is downloading now, check your downloads folder. We've also added you to the list for SBA updates from Hartwell Labs.
Enter your email and we'll send you the free 27-point checklist instantly.
Enter your email and we'll send you the free 27-point checklist instantly.
No spam. Unsubscribe anytime. We'll also notify you of new book editions.
Buying With a Green Card Partner
No ownership percentage keeps a green card partner in an SBA deal. The business is ineligible unless that partner completely divests before the SBA loan number is issued.
SOP 50 10 8 also required 100% of owners to qualify, but green card holders were in the eligible group, so a green card partner could own any share. Since March 1, 2026, and now under SOP 50 10 8.1, the same partner at any share makes the business ineligible. A 5% owner and a 50% owner are treated the same.
The SOP gives one way through: "If a direct or indirect owner is an Ineligible Person, the business is ineligible unless the Ineligible Person completely divests their ownership prior to the date of issuance of the SBA loan number."[5]
A six-month lookback also applies. Anyone who owned part of the business in the 6 months before the loan number issues is counted, unless they completely divested before that date. Indirect ownership counts too, so holding the stake through another company does not get around the rule.
If you want that partner to keep any role in the business after the sale, raise it with your lender before you sign anything. The SOP does not spell out a safe role for a divested owner in this paragraph.
Spouses and Guarantors
A green card spouse cannot own any share. The SOP allows one narrow role: a limited guaranty when the lender requires one, or when SBA requires one to support a pledge of jointly held collateral.
Under the 100% rule, any share held by a green card spouse makes the business ineligible, the same as any other owner.
Required guarantors face the same test as owners. The exception is narrow: "When a limited or supplemental guaranty is required by the Lender for their approval, or by SBA to support the pledge of jointly held required collateral, an Ineligible Person (except for undocumented aliens who are in the U.S. illegally) may provide a limited guaranty."[6]
The SOP's own example is a non-owner spouse "who is required to provide a limited guaranty in order to secure a lien on jointly owned personal real estate." For a non-owner spouse, the SOP limits a guaranty secured by jointly held collateral "to the spouse’s interest in the collateral."
For a worked example, our SBA salon financing guide follows a nail tech who planned to own her new salon 50/50 with her green-card-holder husband. She owns 100%, he can still work in the salon, and he signs the collateral documents on their jointly owned home.
Our SBA coffee shop financing guide has a second example: a first-time owner purchasing a downtown coffee shop whose cousin, a green-card holder, wanted to put in money for 25% of the business. The cousin can't own any share, so the purchaser owns 100%.
Your Choices Outside the SBA
The citizenship rule governs SBA 7(a) and 504 loans. Conventional bank loans and seller financing are not covered by this SBA rule, and their terms are set by the lender or the seller.
If an owner in your deal is not eligible, you have three broad paths to weigh.
Restructure the ownership
Only owners who meet the rule hold the business, and the ineligible person fully divests before the loan number issues. The trade-off: that person gives up their stake, and the lookback and divestiture terms have to be met.
A conventional bank loan
A bank lending its own money without an SBA guaranty is not bound by this SOP. The trade-off: without the guaranty, the lender sets its own down payment, term and collateral, and those terms are the lender's call.
Seller financing
A seller can carry part or all of the price on terms the two of you agree. The trade-off: you are relying on the seller's willingness and the seller's terms.
Confirm Your Status First
This page explains the SBA's lending rule. It is not immigration or legal advice. Confirm your status with an immigration attorney before you plan a deal around it.
The SOP sorts people by status: citizen, national, permanent resident, visa holder and so on. Which group you are in is a legal question about your own case, and an immigration attorney is the right person to answer it.
Once your status is clear, bring the eligibility question to your lender at the first meeting, before you pay for a valuation or a deposit on a deal. The full list of what lenders check is in our SBA loan requirements guide, and every rule that moved on October 1, 2026 is in What Changed in SOP 50 10 8.1.
Related SBA Lending Guides
- SBA Loan Requirements, credit, equity, cash flow and eligibility
- What Changed in SOP 50 10 8.1, the October 1, 2026 rule changes in one place
- SBA Loan Down Payment, how much you put down by deal type
- SBA Collateral Requirements, what lenders take and when your home is in play
- The FUNDED Series, one SBA lending guide per industry