Small-business loans are now harder to obtain due to significant changes in the Small Business Administration's lending policies, impacting entrepreneurs like Sayuri Tsuchitani.
Key points
Small-business loans are harder to obtain now.
The Small Business Administration changed its lending policies.
Sayuri Tsuchitani benefited from a loan to open her business.
Trump's immigration crackdown influenced these policy changes.
Immigrant entrepreneurs face increased barriers to financing.
Mentioned in this story
Sayuri TsuchitaniSmall Business Administration
A small-business loan helped Sayuri Tsuchitani open her own storefront: a Japanese head spa. But today, she wouldn't qualify because the Small Business Administration has dramatically changed its lending policy.
A small-business loan helped Sayuri Tsuchitani open her own storefront: a Japanese head spa. But today, she wouldn't qualify because the Small Business Administration has dramatically changed its lending policy.
Courtesy of Sayuri Tsuchitani
Before Sayuri Tsuchitani became an entrepreneur, she spent two decades on her feet: cutting, coloring and styling hair. Hairdresser's work is physically tough, and Tsuchitani often wondered how she'd manage as she grew older.
When the pandemic shut the Los Angeles salon where she worked, she recognized a chance to make a change: She applied for a loan from the U.S. Small Business Administration, or the SBA, for a business of her own.
"The SBA led me to my success of the American Dream," said Tsuchitani, who took advantage of a pandemic-era funding program to open a Japanese head spa: a salon offering blood-flow massages, ayurvedic oil treatments and deep scalp cleanses. She launched one location, then two more; hired one worker, then nine more.
Q&A
What changes did the Small Business Administration make to lending policies?
The Small Business Administration has dramatically altered its lending policies, making it more difficult for some small businesses to qualify for loans.
How has Trump's immigration crackdown affected small-business loans?
Trump's immigration crackdown has led to stricter lending policies that disproportionately affect immigrant entrepreneurs seeking small-business loans.
Who is Sayuri Tsuchitani and how did she benefit from a small-business loan?
Sayuri Tsuchitani is an entrepreneur who used a small-business loan to open a Japanese head spa, but now she wouldn't qualify under the new lending policies.
What impact do the new lending policies have on immigrant entrepreneurs?
The new lending policies create barriers for immigrant entrepreneurs, limiting their access to the financial resources needed to start or grow their businesses.
But today, the SBA would disqualify Tsuchitani from its loan program because of a new policy. Tsuchitani is a green-card holder, also known as a lawful permanent resident; she moved from Japan 28 years ago. And in March, the U.S. small-business agency, for the first time in its history, stopped approving loans to firms that are not fully owned by U.S. citizens — and only citizens.
'Unapologetic about it'
The change is part of the quieter side of the Trump administration's push to discourage immigration. As many agencies have limited how noncitizens can qualify for programs — like housing subsidies or commercial trucking licenses — the SBA moved to do the same. Early announcements said the agency would ferret out "hostile foreign nationals" and "illegal aliens." But the SBA's rules had long restricted lending to immigrants, mainly to those living here legally and permanently. And that's what the SBA cut.
"It was a bit of a shock to the system," said Eda Henries, who runs a firm that helps small businesses raise and manage funds. "No one even thought for a second that would be on the table. No one expected that it would include legal permanent residents."
In announcing the policy change, the SBA referred to permanent residents as "foreign nationals." And the head of the agency, Kelly Loeffler, has argued they shouldn't benefit from American taxpayer dollars. Though permanent residents pay taxes to the U.S. government just as citizens do.
Kelly Loeffler, the head of the U.S. Small Business Administration, speaks at the White House during an event with small business owners in May.
Kelly Loeffler, the head of the U.S. Small Business Administration, speaks at the White House during an event with small business owners in May.
Mark Schiefelbein/AP
Mark Schiefelbein/AP
SBA's small-business loans "are for American citizens, and we're unapologetic about it," Loeffler told Newsmax in March. She has cited an audit last year that found — and stopped — one six-figure loan approved for a business 49% owned by an immigrant without legal status.
In a statement to NPR, agency spokesperson Maggie Clemmons said: "The agency's rule change will help ensure more American citizens have access to funding previously granted to noncitizens. Across every program, the SBA is ensuring that every taxpayer dollar entrusted to this agency goes to support U.S. job creators and workers."
Historically, research has found immigrants are much more likely to start businesses than native-born Americans. Of all the people in the country, about 15% are foreign-born, but they run 20% to 25% of businesses, according to U.S. Census data. A new study this month by the nonpartisan National Foundation for American Policy estimates that immigrants and their children have launched two-thirds of the country's startups valued at more than $1 billion.
The SBA did not respond to NPR's questions about the potential impact of its policy on future job and business creation in the U.S.
Sayuri Tsuchitani spent two decades as a hair stylist before an SBA loan opened the door for her to launch her own business.
Sayuri Tsuchitani spent two decades as a hair stylist before applying for an SBA loan that enabled her to launch her own business.
Courtesy of Sayuri Tsuchitani
Courtesy of Sayuri Tsuchitani
SBA is a core pillar of small business
Of all SBA loans last year, the agency said 4% went to businesses involving permanent residents. It's a modest share, but transformative for those companies. For small businesses, the SBA is often the first lender, with affordable rates, to take a risk on an entrepreneur.
"I don't know where our business would be without this," said Cristina Foanene, whose glass company in Fresno, Calif., has received three SBA loans over a decade. The money allowed the company to expand its showrooms and manufacturing facilities to make windows and doors.
Foanene and her husband moved permanently to the U.S. from Romania 20 years ago as investors, bringing with them hundreds of thousands of dollars to start their business. So far, they've hired some 30 people, with more planned. One of their employees recently retired after 19 years with the company.
And it was that first SBA loan that made other investors feel comfortable lending to Foanene's business, she said.
So where will immigrant entrepreneurs turn for big cash infusions now?
"The alternative — it's just really scarce," said Henries, the small-business advisor.
Businesses denied loans mid-deal
Traditional banks often hesitate to deal with small firms. And Henries worries that the new SBA policy will push more business owners toward riskier or predatory lending, including merchant cash advances. Some may not grow their companies, or not start them in the first place.
Similar concerns have some Democrats in Congress trying to reverse the policy. The group — which includes Sen. Ed Markey of Massachusetts and Rep. Nydia Velazquez of New York, as ranking members of the Senate and House small-business committees respectively — introduced a bill to restore the eligibility of legal permanent residents for SBA loans.
The impact is already rippling out, said Henries. The private lenders, such as banks, that issue SBA loans now take longer to verify every owner's citizenship status, she said, and some businesses are left in the lurch.
"I have clients that were in the middle of underwriting — we're in the process of doing deals with lenders and small business owners," Henries said. "These are clients that employ dozens of people and generate revenue, and pay taxes. And all of a sudden, the lenders put the brakes on."
Eight business owners who are legal permanent residents and had received or applied for SBA loans this year declined to speak to NPR on the record, for fear of drawing unwanted attention to their immigration status within the business community.
Foanene is now a citizen and chokes up just thinking about the day she took the oath, calling it one of her proudest moments. She wonders if leaders at the SBA might have a change of heart if they heard more stories like hers.
"It really made me sad," Foanene said. "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 is benefiting our country.'"
