Effective March 1, 2026, 100% of direct and indirect owners must be U.S. citizens or U.S. nationals with principal residence in the United States, its territories or possessions. Lawful permanent residents cannot hold an ownership interest under this policy. Read the SBA ownership notice.
Trace ownership through every entity
A holding company does not end the eligibility review. Prepare a diagram that starts with the borrowing business and traces every ownership chain through holding companies to the ultimate owners. The policy covers direct and indirect ownership, not only owners who must sign a personal guarantee.
| Item | What the lender needs to establish |
|---|---|
| Ownership chart | Each entity and person, percentage held, and every indirect ownership chain |
| Entity records | Operating agreements, stock/member registers and amendments matching the chart |
| Identity and citizenship evidence | Documentation requested by the lender for each owner under SBA requirements |
| Principal residence | Evidence addressing the policy requirement; a mailing address alone may not settle it |
| Affiliates and changes | Other controlled businesses, recent transfers and pending ownership transactions |
Example: a small indirect interest still matters
Illustrative structure: a holding company owns 40% of the applicant, and a person owns 25% of that holding company. That person has a 10% indirect interest in the applicant. Review that ownership chain even though 10% is below the usual 20% personal-guarantee threshold. The guarantee test and the ownership-eligibility test are different.
If an owner is a lawful permanent resident
The March policy does not allow that ownership interest for covered 7(a) and 504 applicants. Ask the lender to evaluate the actual structure under the controlling policy. Do not conceal an owner or assume an undocumented transfer solves eligibility. Any proposed ownership restructuring needs appropriate legal and lender review.
Eligibility extends beyond citizenship
Citizenship is one part of an application. The lender also reviews size and affiliation, permitted use of proceeds, credit elsewhere, repayment ability and program-specific conditions. Use the manufacturer application checklist and NAICS guide alongside this ownership file.
Policy checked September 7, 2026 against notice 5000-876441. This guide covers the specified 7(a)/504 policy, not every federal assistance program or immigration category. For approvals after October 1, ask the lender to apply SOP 8.1 and applicable notices.
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