Buying a US Small Business as a Canadian: What Changed in 2026#
SBA financing was the backbone of a lot of cross-border acquisition plans. As of March 1, 2026, it's gone for foreign buyers, full stop, and that single change has quietly stalled or killed deals that were already in motion.
What Actually Changed#
On February 2, 2026, the SBA issued Policy Notice 5000-876441, revising SOP 50 10 8 to require that 100% of a small business's direct and indirect owners be US citizens or US nationals residing primarily in the US. The old 5% foreign-ownership carve-out is gone. Green card holders are explicitly excluded too, not just non-resident foreign nationals. The rule took effect March 1, 2026, and applies to both 7(a) and 504 loans, the two programs that fund the vast majority of sub-$5M business acquisitions in the US.
If your acquisition plan assumed you'd close with an SBA-backed loan, that plan no longer works. This isn't a tightening of paperwork requirements. It's a full exclusion.
Two Ways This Catches Canadian Buyers Off Guard#
Failure mode 1: building the offer around financing that isn't available. A buyer gets a letter of intent signed, tells the seller SBA pre-approval is coming, then discovers mid-diligence that the loan path is closed. The deal either collapses or gets renegotiated from a weaker position, usually with the seller now wanting more cash up front.
Failure mode 2: buying through the wrong entity. Canadian buyers often default to a US LLC because it's the fastest thing to set up. The problem is Canada doesn't recognize the LLC's flow-through tax treatment. The Canada Revenue Agency treats a US LLC as a corporation, which can block access to reduced withholding rates under the Canada-US tax treaty and trigger a 25% branch profits tax on distributions in some structures, as accounting firm BNN details. Get the entity wrong before signing, and the tax cost shows up years later, after it's expensive to unwind.
The Fix: Building a Deal That Still Closes#
1. Confirm your visa path before you build the deal. If you plan to actively run the business from the US, the E-2 treaty investor visa remains open to Canadian citizens, with no annual cap and no lottery. It requires a substantial, at-risk investment and either majority equity or real operational control, not a passive stake. If you're financing the purchase, the E-2 process allows a purchase agreement to be signed contingent on visa approval, with funds held in escrow until a decision comes back.
2. Rebuild the financing stack around what's actually available. With SBA off the table, the realistic mix is seller financing (commonly 20-30% of the purchase price carried as a note), non-SBA bank or private acquisition loans, asset-based lenders, or a US citizen or permanent-resident partner who can still access SBA financing on the business's behalf. Expect to bring more personal capital to the table than an SBA deal would have required.
3. Get the entity structure right before you sign. Whether you hold the business through a US LLC, a US C-corp, or a Canadian holding structure changes your withholding exposure, your CRA reporting obligations (including Form T1135 for foreign property over CAD 100,000), and whether you can actually claim treaty benefits. This decision should happen with a cross-border tax advisor before the purchase agreement is signed, not after.
Where Openfair Fits#
Openfair works with Canadian buyers regularly, including through our referral partnership with La Pointe Consultants, a Quebec-based CPA firm that supports Canadian buyers and sellers through the cross-border pieces of a deal. Our buyer vetting process includes a proof-of-funds review early, specifically so financing gaps like the SBA change surface before an offer goes out, not after.
If you're a Canadian buyer evaluating US listings, start with a real look at how the deal gets funded. Explore active listings on Openfair or reach out for a straight answer on what financing path fits your situation.
FAQ#
Can Canadians still get SBA loans to buy a US business? No. As of March 1, 2026, SBA policy requires 100% US citizen or national ownership, residing primarily in the US, for both 7(a) and 504 loans. There is no exception for minority foreign ownership or green card holders.
Do I need a visa to buy a US business as a Canadian? Not to own it passively, but you do need work authorization to actively run it from inside the US. The E-2 treaty investor visa is the most common path for Canadians actively managing a US acquisition.
What's the minimum investment for an E-2 visa? There's no fixed dollar minimum. USCIS applies a proportionality test: the investment must be substantial relative to the total cost of the business, so smaller businesses generally require a higher percentage invested.
Should I buy through a US LLC? Not automatically. An LLC is convenient to set up but Canada taxes it as a corporation, which can create double-taxation and treaty-access problems. Get a cross-border tax advisor's input before choosing an entity.
Is seller financing common in these deals now? Yes, and increasingly necessary. With SBA financing closed to foreign buyers, sellers who want to close with a Canadian buyer are more often carrying part of the purchase price as a note.