LA County Supervisors Move to Challenge New SBA Rule Limiting Loans to U.S. Citizens

Los Angeles County supervisors voted Tuesday to pursue legal options challenging a new federal rule that would prevent lawful permanent residents — green card holders — from obtaining Small Business Administration-backed loans.

The Board of Supervisors approved a motion directing the county’s legal staff to explore litigation after the SBA announced the policy change.

Under the SBA policy change, businesses seeking SBA-backed loans must be 100 percent owned by U.S. citizens or U.S. nationals, which means businesses owned by lawful permanent residents are no longer eligible

The agency announced the rule Feb. 4 at the request of the Trump administration, according to the motion. The policy was scheduled to take effect March 1.

Supervisors said the rule reverses a longstanding practice under which both U.S. citizens and lawful permanent residents — including green card holders — were allowed to apply for SBA-backed loans.

Supervisor Hilda L. Solis said the change could affect immigrant entrepreneurs who operate small businesses throughout the county.

“SBA’s new rule limiting small business loans to only U.S. citizens — excluding permanent residents — threatens the survival of immigrant-owned small businesses that have long contributed to our local economies,” Solis said in a statement.

Supervisor Holly J. Mitchell said the rule reflects a broader pattern of federal policies affecting immigrant communities.

“This is not accidental. We are witnessing the deliberate construction of a systematically racist system designed to marginalize immigrant communities and communities of color,” Mitchell said.

The motion also raises concerns about a separate action by the U.S. Department of Education that county officials say could affect eligibility for the federal Public Service Loan Forgiveness program.

According to the motion, the Education Department has proposed changes that could remove certain employers from eligibility if they are deemed to be engaged in illegal activity, a determination the county said could occur without clear guidelines. County officials warned that such changes could affect workers in professions such as nursing and social work and could have consequences for families across Los Angeles County.

The supervisors’ motion directs County Counsel to evaluate legal options regarding both federal actions.

It also instructs the county Departments of Economic Opportunity, Human Resources, and Consumer and Business Affairs to report back to the board within 90 days on how the policies could affect workforce development programs.