The ring-shaped structural-maintenance-of-chromosomes (SMC) complexes condensin and cohesin extrude loops of DNA as a key motif in chromosome organization. It remains, however, unclear how these SMC motor proteins can extrude DNA loops in chromatin that is bound with proteins. Here, using in vitro single-molecule visualization, we show that nucleosomes, RNA polymerase, and dCas9 pose virtually no barrier to DNA loop extrusion by yeast condensin. Strikingly, we find that even DNA-bound nanoparticles as large as 200 nm, much bigger than the SMC ring size, can be translocated into DNA loops during condensin-driven extrusion. Similarly, human cohesin can pass 200 nm particles during loop extrusion, which even occurs for a single-chain version of cohesin in which the ring-forming subunits are covalently linked and cannot open up to entrap DNA. These findings disqualify all common loop-extrusion models where DNA passes through the SMC rings (pseudo)topologically, and instead point to a nontopological mechanism for DNA loop extrusion.