The Small Business Administration (SBA) is facing significant challenges and changes, particularly with the impending transition in its leadership and recent drastic actions by the Department of Government Efficiency (DOGE).
Former Senator Kelly Loeffler is set to take over as the SBA Administrator, a role that will be crucial given the current turmoil. Her appointment comes at a time when the SBA is reeling from the aftermath of DOGE's actions, led by billionaire Elon Musk. In an unprecedented move, DOGE has gutted the SBA, slashing hundreds of critical staff positions. This decision has sparked widespread outrage among small-business owners and advocates, who warn of devastating consequences for entrepreneurs who rely on the SBA for capital, disaster relief, and mentorship.
The cuts implemented by DOGE are expected to have immediate and far-reaching impacts. Small-business owners can anticipate longer wait times for loan approvals, which could jeopardize the survival of local businesses. There will also be reduced disaster assistance for businesses affected by natural disasters, weakened support for government contractors, and fewer technical resources for historically underrepresented business owners. These changes are particularly concerning for veterans, women, and Black and Latino entrepreneurs, who already face systemic barriers to funding[1].
Additionally, there are concerns about the access DOGE has been granted to SBA systems. Representative Maggie Goodlander and other lawmakers have demanded clarification on the extent of Elon Musk’s DOGE access to SBA systems, including HR, contract, and payment systems. This access raises significant concerns about the potential threat to critical SBA programs, the agency's network of lenders and resource partners, and the private data of small business owners. The lawmakers fear that this unauthorized access could block critical SBA services and endanger the private information of small business owners and SBA partners[4].
In the midst of these challenges, the SBA has also made recent regulatory changes. A new rule effective as of January 16, 2025, clarifies the role of minority equity holders in small businesses, particularly within the 8(a) program. This rule expands the permissible controls that minority owners can have without triggering affiliation or disqualification under the program. This includes allowing minority shareholders to take extraordinary actions to protect their investments without impeding the majority's control over the business operations[5].
As the SBA navigates these complex issues, the incoming Administrator, Kelly Loeffler, will face the daunting task of addressing the fallout from DOGE's cuts, ensuring the security and integrity of SBA systems, and implementing new regulations to support the diverse needs of small businesses across the country. Her leadership will be pivotal in restoring the confidence of small-business owners and advocates who are fighting to reverse the cuts and restore SBA funding.
