California Small Businesses Thriving in 2023 Economic Climate
The Small Business Administration has narrowed loan eligibility. Permanent residents with green cards can no longer receive SBA or SBA-backed loans. The agency introduced the citizenship-only rule in March and expanded it in April.
Policy changes and scope
The SBA limited access to loans to U.S. citizens and nationals only. The restriction now also covers SBA-backed private loans.
Any company partially owned by a lawful permanent resident is ineligible. In fiscal year 2025, the SBA approved 3,358 loans for businesses partly owned by permanent residents.
Those approvals represented roughly 4% of the agency’s 85,000 loans that year. An SBA spokesperson said the agency has constrained lending capacity.
Potential impact in California
California could see heavy effects because of its large immigrant population. The state also hosts the nation’s highest number of small businesses.
Small firms accounted for 99% of net new jobs in California, according to the Office of the Small Business Advocate. Immigrant entrepreneurs make up 40% of the state’s business community.
GO-Biz reports immigrant-owned businesses generated $28.4 billion in income in 2023. CAMEO Network estimates about 220,000 California small business owners hold green cards.
Types of businesses affected
- Restaurants and bakeries
- Medical and legal practices
- Service firms like nail salons and taxi operations
- Small manufacturers and retail shops
Voices from owners and advocates
Cristina Foanene arrived from Romania two decades ago. As a green-card holder, she used an SBA loan in 2018 to expand her Fresno glass company.
Her business now employs about 30 people. The family recently took another SBA loan after gaining U.S. citizenship.
Advocates say pandemic-era loans were critical for survival. Many borrowers are still repaying those emergency supports, they say.
Advocacy groups raise alarms
Small Business Majority led a mid-March letter urging the SBA to reverse the rule. Dozens of state and national groups signed the appeal.
Groups argued the change ignores data on immigrant job creation. Local chambers and business advocates echoed those concerns.
San Diego chamber leaders warned the policy could push people into informal work. They also called for a clear path to citizenship.
Alternatives and gaps
Community development financial institutions may serve more borrowers. These lenders focus on people with limited credit histories.
Mission Asset Fund runs lending circles that provide small loans up to $2,500. The group recently secured a California lending license to expand offerings.
But experts say no other source matches the SBA’s scale. AmPac Business Capital noted the agency supports loans from $35,000 up to $30 million.
State tools and risks
California offers programs that can lower lenders’ risk. Options include IBank loan guarantees and treasurer office collateral programs.
Community groups fear the change will fragment referral pathways. They also worry about increased predatory lending targeting desperate borrowers.
One cited case involved a $10,000 loan marketed at about 13% interest. The true cost equaled an annual rate near 250%.
Looking ahead
Advocates hope philanthropy and impact investors will expand capital to community lenders. Incubators and technical-assistance providers plan to adapt referral practices.
Leaders urge policymakers to consider the economic consequences. They point to the central role of California small businesses during the 2023 economic climate.
Stakeholders say coordinated solutions are needed to prevent job losses and stalled startups.
This article was originally published on Filmogaz.com.
