SBA SOP 50 10 8.1, A.Ch1.F — Citizenship And Residency Requirements

SOP 50 10 8.1 A.Ch1.F

Effective 2026-10-01 · publisher's stamp for this provision

F. Citizenship And Residency Requirements SBA financing is limited to business Applicants with 100% direct and/or indirect owners and SBA-required guarantors, all of whom must be U.S. Citizens or U.S. Nationals who have their Principal Residence in the United States, its territories, or possessions. All entity owners (whether direct or indirect) must be created, organized, or incorporated in the United States, its territories, or possessions. For any loan, SBA Lenders must certify in the SBA Loan System that, to the best of their knowledge, no direct or indirect owner or SBA-required guarantor is an “Ineligible Person” as defined in Appendix 3 of this SOP. No loan may be made if any direct or indirect owner or SBA-required guarantor is an Ineligible Person. Direct/Indirect Owners: If a direct or indirect owner is an Ineligible Person, the business is ineligible unless the Ineligible Person completely divests their ownership prior to the date of issuance of the SBA loan number. Undocumented aliens who are in the U.S. illegally may not be an officer, director, or employee of the Applicant business. Six-month lookback: The Applicant business is ineligible if any direct or indirect owner of the business commencing 6 months prior to the date of issuance of the SBA loan number is an Ineligible Person, unless the Ineligible Person completely divests their ownership interest prior to the date of issuance of the SBA loan number. Guarantors (including Supplemental and Limited Guarantors): If any SBA-required guarantor (including an OC for a project structured as an EPC/OC), including direct and indirect owners, are Ineligible Persons, the Applicant is ineligible, with the following exception for limited or supplemental guaranties. When a limited or supplemental guaranty is required by the Lender for their approval, or by SBA to support the pledge of jointly held required collateral, an Ineligible Person (except for undocumented aliens who are in the U.S. illegally) may provide a limited guaranty. When the applicant business has other businesses that report their taxes on the Applicant business’s tax returns, all the businesses on the tax return are subject to these requirements. However, affiliate businesses and partially owned subsidiaries that do not report their taxes on the Applicant business’s tax returns are not subject to these requirements. For servicing requests (e.g., substitution of an owner or SBA-required guarantor), the new individual may not be an Ineligible Person. Eligible Persons: The following categories of individuals are eligible for SBA financing: 1. U.S. Citizens - Citizens born in an American territory: Generally, those born in an American territory are U.S. citizens. This includes but is not limited to the fifty U.S. states, the District of Columbia, Guam, Puerto Rico, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands, but does not include outlying possessions of the United States (i.e., American Samoa and Swains Island). 2. U.S. Nationals - People born in American Samoa and Swains Island are considered U.S. Nationals at birth but are not automatically U.S. citizens. 8 U.S.C. § 1408 and 8 U.S.C. § 1101(a)(29). When making a loan to a business owned by a non-citizen U.S. National, the SBA Lender must document in the loan file that the SBA Lender has reviewed evidence of the person’s status as a U.S. National (e.g., birth certificate or passport) and must enter the U.S. National’s Social Security Number on the application and into the SBA Loan System. 3. Naturalized Citizens - Businesses owned by Naturalized Citizens are eligible, and the naturalized citizens are not subject to any special restrictions or requirements. No further verification of status is required if an individual is reflected as a U.S. Citizen on the SBA application. Documenting Applicants’ Eligibility: The SBA Lender must enter into the SBA Loan System 100% of the Applicant’s direct and indirect owners, which includes entity and individual owners with direct or indirect ownership. SBA Lenders must also follow this process for guarantors and for servicing actions (e.g., for requests to substitute an owner or SBA-required guarantor). The ownership percentage of married spouses and minor children must be combined. SBA prohibits businesses where a minor child owns 20% or more of the business because minors are legally prohibited from providing a guaranty.

Source: SBA SOP 50 10 8.1, A.Ch1.F — Citizenship And Residency Requirements · source URL · snapshot 0fb0c4692cf52938