Elimination of green card buyers took away 'best paying clients'
Last month, the US Small Business Administration announced a major change to the qualification requirements for its SBA-guaranteed small business loans.
As of March 1, green card holders, also known as lawful permanent residents, would not be eligible for SBA 7(a) or 504 loans. The new policy required that a business have 100% US citizen or US national ownership.
While the stated goal of the policy was to prioritize American job creators, two veteran commercial mortgage brokers were not fans of the new change.
Terry Luker (pictured top left) and Jeff Luker (pictured top right), co-founders of the Commercial Loan Broker Association (CLBA), discussed why the changes hurt small businesses, which needed those loans to help stay in business.
“I think some of your SBA lenders have tightened up a little bit with the changes,” Terry Luker told Mortgage Professional America. “It was, sadly, almost comical about all the changes that have been made in this administration to SBA. And SBA is a lifeline to small businesses. And small businesses are what I believe is the backbone of America.
“If we're really going to keep making it harder and harder for people to get SBA loans, you're going to hurt what is the backbone of America, which is the small business owners.”
‘Wow, that’s crazy’
Terry Luker relayed a story that they were told by lenders about the effects of this change to SBA loan eligibility.
“I'll give you an example. We had lenders tell us that the SBA changed the rules to say you can't be a green card holder and get an SBA loan,” Terry Luker said. “In years past, you could. We've had several SBA lenders tell us that borrowing base, that sector of people, were the best paying clients they had. There was such a low default rate, and we took that away.”
According to the release issued by the SBA announcing the change, just 4% of the agency’s 85,000 loans in 2025 were issued to lawful permanent residents, or just 3,358 loans.
These loans, backed by the SBA, typically offer longer repayment terms and larger dollar amounts than non-SBA loans. The SBA also caps the rates that can be charged on the loans. In addition to loan funds, the SBA also offers support to the businesses that have secured the loans.
It was a stunning development to Terry Luker, and one he thinks will hurt businesses owned by green card holders.
“This administration took that away,” Terry Luker said. “And I'm like, ‘Wow, that's crazy.’ We're on the front lines out here trying to help small business owners, and we're looking at what the administration is doing and scratching our heads, going, ‘What are you trying to accomplish here?’ Those changes have really affected SBA and have made it harder. It's now a longer process. It’s uncharted waters there for us, and SBA is a big lending tool across the whole country.”
Other headwinds in commercial
In addition to the challenges posed by the SBA changes, several sectors in the commercial real estate space are continuing to struggle. The sector at the top of that list is office.
“Right now, the kiss of death is an office building,” Terry Luker said. “And it's been that way for about three years now, and hopefully it's making a comeback, but it hasn't yet. No commercial lender wants to look at an office building because of all that's going on with it. A residential broker may think, ‘I've got a great deal. This thing's at 60% loan to value.’ This should be a no-brainer. Anybody should do this deal. Yeah, nobody's doing office buildings right now.”
Another sector that has struggled is the hospital sector. Jeff Luker noted that changes to Medicare and Medicaid have caused issues, especially in rural areas.
“As far as headwinds go, we haven't done a lot of these, but hospitals with some of the changes, especially Medicare and Medicaid coverages, which can affect especially rural hospitals,” Jeff Luker told Mortgage Professional America. “We looked at one a while back, and we really tried to help them, but we just couldn't get comfortable with where they were going.”
Whether it’s in a challenging sector or in a strong-performing one, the Lukers both noted that the experience level of the borrower can make a huge difference as to whether a deal gets approved or not.
“In everything that we do, one of the things we have to look at right away is what's the experience of the borrower?” Terry Luker said. “These lenders aren't looking for first-timers. If it's the first time this guy's going to develop a property, that's a hard deal to get done, no matter what the leverage is, because of the failure rate of first-time performers.
“They're really looking for people with a successful track record who have done these types of projects before, who also have the liquidity if there's a hiccup to be able to manage it.”
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