As small business owners continue to navigate a turbulent economic landscape, a recent press release from the U.S. Committee on Small Business & Entrepreneurship sheds light on critical policy changes by the U.S. Small Business Administration (SBA) that could significantly impact access to capital for many entrepreneurs, particularly those in “sanctuary cities.”

The SBA has announced plans to shut down seven field offices in municipalities designated as “sanctuary cities” and has implemented new loan restrictions. This policy shift specifically affects small businesses with certain noncitizen owners and employees, including legal immigrants, asylum seekers, and DACA recipients, who rely on SBA programs like 7(a) and 504 loans, as well as Microloans.

Ranking Member Edward J. Markey (D-Mass.) and House Small Business Committee Ranking Member Nydia M. Velázquez (NY-07) expressed significant concerns in their letter to SBA Administrator Kelly Loeffler. They argue that these changes break with over 25 years of precedent and threaten both local economies and national growth. “SBA’s policy changes are a solution in search of a problem,” they wrote, emphasizing that they have not seen credible evidence to support claims that undocumented individuals are obtaining SBA loans.

The decision to restrict loan access could have far-reaching implications. For small businesses led by immigrants or employing noncitizens, this move could shutter avenues for crucial funding. Many small businesses may find themselves at a disadvantage, particularly in urban areas where immigrant entrepreneurship is a significant driver of economic activity.

One of the most pressing questions raised by the lawmakers is whether this policy shift might lead to discrimination in hiring practices. Markey and Velázquez worry that the stringent requirements could compel small business owners to make employment decisions based on citizenship status, which could further entrench inequities in the workforce.

Access to capital is paramount for small businesses looking to grow or sustain operations, especially in a climate where many entrepreneurs face challenges from inflation and economic instability. Barbara Corcoran, a well-known entrepreneur, once said, “The best way to ensure your success is to go out and get it.” However, if small business owners are now constrained by new lending criteria, achieving that success may become increasingly difficult.

Another concern is how the closure of SBA field offices in specific cities will impact service availability. With many entrepreneurs relying on in-person guidance and resources, the geographical relocation of these offices could create barriers to support for immigrant business owners. Expert advice and mentorship are often the pillars that support small business growth, and reducing access could further exacerbate the challenges faced by this demographic.

The lawmakers posed several critical questions to the SBA, including the reasoning behind the deviation from nearly three decades of policy and how these decisions might impact the economic framework that small business owners rely on. This inquiry has a deadline for response by July 29, 2025, indicating a sense of urgency as the implications of these changes unfold.

Markey and Velázquez warn that these policy changes are not merely administrative but rather politically charged actions that threaten the livelihoods of millions of small business owners who have already borne the brunt of unstable economic policies. Without addressing these issues, the SBA risks eroding trust within the small business community, particularly among immigrant entrepreneurs who may already feel marginalized.

For small business owners, understanding these changes will be crucial. While the intent may be framed around national security or local governance, the impact on economic opportunity and growth for countless businesses cannot be overlooked.

As these developments become clearer, small business owners should prepare to adapt to the shifting landscape. Whether through alternative funding sources, reevaluating hiring practices, or seeking updated guidance from remaining SBA resources, proactive strategies will be necessary to navigate the challenges ahead.

For further reading, you can find the original press release here.

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This article, “SBA Policy Changes Threaten Funding and Support for Immigrant Entrepreneurs” was first published on Small Business Trends