Official Source
5000-872050
On This Page
Overview#
On December 19, 2025, the SBA issued Procedural Notice 5000-872050, updating citizenship and residency requirements for 7(a) and 504 loan programs. This notice introduced a narrow exception allowing limited foreign ownership.
Key Changes#
5% Ownership Exception#
The notice amended SOP 50 10 8 to extend 7(a) and 504 loan eligibility to businesses that have no more than 5% direct and indirect ownership (in the aggregate) held by:
- U.S. Citizens whose Principal Residence is outside the United States
- U.S. Nationals whose Principal Residence is outside the United States
- Lawful Permanent Residents (LPRs) whose Principal Residence is outside the United States, its territories, or possessions
Effective Date#
These changes were effective for 7(a) and 504 applications approved by SBA (receiving an SBA loan number) on and after January 1, 2026.
Important Notice#
This notice has been superseded. SBA Policy Notice 5000-876441, effective March 1, 2026, rescinds this procedural notice and removes the 5% ownership exception. Please refer to the current guidance for updated requirements.
Historical Context#
This notice was issued in response to feedback from lenders seeking clarification on ownership requirements for applicants with minor foreign ownership stakes. However, subsequent policy changes have made these provisions obsolete.
About the Author
VerSquare Editorial Team
The VerSquare editorial team provides insights, guides, and analysis for business buyers, sellers, and advisors navigating M&A transactions.
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