SBA rules · SOP 50 10 8.1

Can an undocumented immigrant work for or run a business with an SBA loan?

No, an undocumented immigrant cannot own, manage, or work as an employee for a business receiving an SBA loan.

Quoted from SBA SOP 50 10 8.1Every quote checked word for word

In detail

Ownership: Undocumented aliens are defined as Ineligible Persons, and SBA financing requires 100% of direct and indirect owners to be U.S. Citizens or U.S. Nationals with their principal residence in the United States. An undocumented owner must completely divest all ownership prior to the issuance of the SBA loan number.
Management: Undocumented aliens who are in the U.S. illegally are expressly barred from serving as an officer or director of the applicant business.
Employment: The applicant business is prohibited from employing undocumented aliens who are in the U.S. illegally. Even in ESOP transactions where employees are otherwise permitted to remain after a change of ownership, an express exception excludes illegal aliens.
Guaranties: While certain Ineligible Persons may provide a limited guaranty to support pledged jointly held collateral, undocumented aliens who are in the U.S. illegally are specifically excluded from doing so.

The source

What the SOP says

“Undocumented aliens who are in the U.S. illegally may not be an officer, director, or employee of the Applicant business.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Direct/Indirect Owners (lines 533-537)✓ Verified

“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.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Direct/Indirect Owners (lines 533-537)✓ Verified

“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.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Citizenship And Residency Requirements (lines 530-532)✓ Verified

“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.

SOP 50 10 8.1, Chapter 1: Primary Applicant Eligibility Requirements > Direct/Indirect Owners (lines 533-537)✓ Verified

“Undocumented aliens who are in the U.S. illegally;

SOP 50 10 8.1, Appendix 3: Definitions > Indirect Export (lines 4326-4335)✓ Verified

“When an SBA loan is used to purchase a business owned by an ESOP resulting in a change of ownership where the ESOP is being dissolved, the employees (owners of the ESOP), except for illegal aliens, may remain as employees of the business despite other provisions in this SOP to the contrary.

SOP 50 10 8.1, Chapter 2: Special Transaction Structures > SBA may guarantee a 7(a) loan to an ESOP for two purposes: (lines 730-731)✓ Verified

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