For decades, immigrants who are legal permanent residents in the U.S. could get loans through the Small Business Administration, a core pillar of small-business lending. Not anymore.

AILSA CHANG, HOST:

Much of America runs on small businesses. And if you ask the people who run those businesses, what their success means for them, they might say something like this.

SAYURI TSUCHITANI: That's my American dream, and that's my American story.

CHANG: That is Sayuri Tsuchitani from California. Her turning point was a loan a few years ago, from the U.S. Small Business Administration. But today, she would not be able to get it because the agency has stopped lending to anyone who is not a citizen, including green card holders, as NPR's Alina Selyukh reports.

ALINA SELYUKH, BYLINE: Before Sayuri Tsuchitani became an entrepreneur, she spent 20 years on her feet, cutting hair, coloring and styling.

TSUCHITANI: You know, hairdressing is really labor-intensive work.

SELYUKH: So when the pandemic shut down the salon where she worked, an opportunity changed her life. She qualified for a loan from the Small Business Administration for a company of her own.

TSUCHITANI: It's called Japanese Headspa (ph).

SELYUKH: A head spa, which is exactly what it sounds like - a salon for your scalp and hair with treatments and scrubs and very fancy massages. With the SBA loan, Tsuchitani opened one location, then two more, hired one worker, then nine more, made a million dollars in sales. She raved about the lending program to anyone who'd ask her advice.

TSUCHITANI: You can have a brick and mortar like me, or you can have a American dream just like I did.

SELYUKH: But now she has to stop herself because the people asking her are other immigrants. Tsuchitani moved here from Japan 28 years ago. She has a green card, which means she's a permanent resident. But in March, the SBA, for the first time in its history, stopped approving loans to businesses unless they're fully owned by American citizens and only citizens.

EDA HENRIES: It was a bit of a shock to the system.

SELYUKH: Eda Henries runs a firm that helps small businesses raise and manage funds.

HENRIES: No one expected that it would include permanent residents, legal permanent residents. No one even thought for a second that would be on the table.

SELYUKH: This seemed part of the quieter side of the Trump administration's push to discourage immigration. Many agencies are limiting how people who aren't citizens can qualify for programs like housing subsidies or commercial trucking licenses. SBA loans to immigrants were already restricted, mainly to those living here permanently and legally, and that's what they cut.

(SOUNDBITE OF TV SHOW, "FINNERTY")

KELLY LOEFFLER: These are for American citizens, and we're unapologetic about it.

SELYUKH: That's the head of the SBA, Kelly Loeffler, on Newsmax.

(SOUNDBITE OF TV SHOW, "FINNERTY")

LOEFFLER: Just like you should be a U.S. citizen to vote in our elections, you should be a U.S. citizen to get our government benefits.

SELYUKH: The SBA now tends to refer to permanent residents as foreign nationals and says they shouldn't benefit from American taxpayer dollars, except permanent residents also pay federal taxes just as citizens do. In a statement to NPR, the agency says the new rules will ensure that more of its limited resources will go to American citizens instead of noncitizens. Last year, about 4% of SBA loans went to businesses involving permanent residents. It's a small share, but for those business owners, like Cristina Foanene, it's transformative.

CRISTINA FOANENE: I don't know where our business would be without this.

SELYUKH: She and her husband run a glass company in Fresno, California. They make and install windows and doors. They'd moved from Romania 20 years ago as investors, meaning they brought hundreds of thousands of dollars with them to start this firm. They've gotten three SBA loans to buy more and more space for showrooms and manufacturing, and they've hired so far 30 people from their town. One gentleman recently retired after 19 years with their company.

FOANENE: And if we wouldn't be able to get all these loans and expand, that will affect them as well.

SELYUKH: Foanene is now a citizen. She says it was one of her proudest days and chokes up just thinking about it. And she feels like maybe if the SBA heard more stories like hers...

FOANENE: If they will understand that there are people that are coming here with honest intention of building a business and creating jobs, then I feel like maybe they will say, actually, it's benefiting our country.

SELYUKH: Federal data shows about 15% of people in the U.S. are foreign born, but they run 20 to 25% of businesses. And one estimate says they've launched two-thirds of the most valuable startups worth over $1 billion. And for small businesses, the SBA is a core pillar. It's often the first lender with affordable rates to take a risk on an entrepreneur.

HENRIES: The alternative is just really scarce.

SELYUKH: Eda Henries, the small business adviser, says the SBA's lockout of permanent residents was so abrupt, it left many owners in a lurch.

HENRIES: I have clients that were in the middle of underwriting. We're in the process of doing deals with lenders and small business owners, and all of a sudden, you have the lenders put the brakes on.

SELYUKH: And she worries that without SBA loans, more business owners will turn to riskier or predatory lending. Some may not grow their companies or not start them in the first place, which would hurt the U.S. economy as a whole. Alina Selyukh, NPR News.

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