SBA rules · SOP 50 10 8.1
Can a business with a foreign investor or foreign parent company get an SBA loan?
No, a business with foreign ownership, foreign investors, or a foreign parent company cannot qualify for an SBA 7(a) or 504 loan unless the ineligible owner completely divests prior to the issuance of the loan number.
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- 100% U.S. ownership requirement: SBA financing is limited to Applicants where 100% of direct and indirect owners and SBA-required guarantors are U.S. Citizens or U.S. Nationals who maintain their principal residence in the United States, its territories, or possessions, and all entity owners must be created, organized, or incorporated in the United States, its territories, or possessions.
- Foreign entities and non-citizens: Ineligible persons include any business entity created, organized, or incorporated outside the United States, any non-resident alien, any individual with a principal residence outside the United States, and Lawful Permanent Residents.
- Divestiture and six-month lookback: If a direct or indirect owner is an ineligible person, the business is ineligible unless that owner completely divests prior to the date the SBA loan number is issued; the business is also ineligible if any direct or indirect owner within the 6 months prior to loan number issuance was an ineligible person, unless completely divested before loan number issuance.
- Affiliates and subsidiaries: When an applicant business has other businesses reporting taxes on its tax returns, all of those businesses are subject to these requirements; however, affiliate businesses and partially owned subsidiaries that do not report taxes on the applicant's return are not subject to citizenship and residency requirements, provided they hold no direct or indirect ownership in the applicant.
The source
What the SOP says
“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.
“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.
“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.
“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.
“A business concern or entity that was created, organized, or incorporated outside of the United States, its territories, or possessions;
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More on owners and citizenship
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Related reading
This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.