A small-business loan allowed Sayuri Tsuchitani to open a Japanese head spa. The Small Business Administration (SBA) now has a new lending policy that affects entrepreneurs like her.
Before entering entrepreneurship, Tsuchitani spent over 20 years as a hairstylist. The pandemic shuttered her Los Angeles workplace, presenting a new opportunity. She applied for a loan from the SBA’s pandemic-era program to start her own business. This led to the success of opening a Japanese head spa offering unique services. Her business expanded to three locations and ten employees.
Under new rules, the SBA disqualifies Tsuchitani from accessing its loans. As a lawful permanent resident from Japan, she is affected by the SBA’s decision to stop approving loans to companies not fully owned by U.S. citizens. Previously, the SBA’s lending rules were more inclusive for legal and permanent residents.
SBA Policy Changes and Reactions
These changes are tied to policies limiting noncitizen access to government programs. The SBA framed permanent residents as “foreign nationals.” Kelly Loeffler, the agency head, stated that loans are reserved for American citizens, citing the need to prioritize taxpayer money for national benefit despite immigrants paying taxes too.
Research suggests immigrants are entrepreneurial, starting many U.S. businesses. Two-thirds of billion-dollar startups in the U.S. have immigrant founders. The SBA’s recent policy impacts the trajectory for future job creation and entrepreneurship.
The Role of the SBA in Small Business Growth
Last year, 4% of SBA loans went to businesses involving permanent residents. These loans significantly impact small companies as the SBA is often their initial lender. For instance, Cristina Foanene’s glass company in Fresno benefited from SBA loans, facilitating expansion and job creation.
Henries, a small-business advisor, warns of a shift towards risky lending as traditional banks may not fill the gap left by the SBA’s policy. This could restrict business growth or deter new ventures.
Political and Entrepreneurial Responses
Some Congress members, including Senator Ed Markey and Representative Nydia Velazquez, are pushing to reverse the policy, allowing permanent residents loan eligibility.
According to Henries, private lenders now take longer to verify citizenship, slowing down processes. This impacts clients already engaged in business deals. Eight business owners declined interviews with NPR, fearing immigration-related scrutiny.
Foanene, now a citizen, recalled her emotional citizenship ceremony, underscoring the importance of immigrant contributions. She hopes SBA officials recognize the positive impact of immigrant entrepreneurs on the economy.
NPR’s Katie Daugert contributed to this report.
Leave a Reply