The U.S. Small Business Administration is an important partner for many regional economic development strategies, and organizations therefore are concerned for what the next four years hold for the agency. From 2017-2020, we saw first Trump administration regularly propose to limit SBA’s funding, particularly for programs designed to assist entrepreneurs. However, Congressional appropriations and Administrator Linda McMahon largely kept the agency on track and then utilized SBA as a critical source of emergency assistance in 2020. The next Trump Administration has not offered an explicit statement for its small business plans, but several signals point to a preference for a smaller but functional agency.
Proposed leadership
Former Senator Kelly Loeffler is president-elect Trump’s pick to manage SBA. While Loeffler had controversy around her Senate tenure, which began with her appointment in January 2020 and ended in January 2021 following an election loss, she currently is not facing the type of scrutiny being applied to other nominees and will likely be confirmed once the Senate turns to SBA.
Loeffler’s Senate career did not leave much of a substantive track record on small business policy, which makes sense for a new senator serving on other committees. Only one of her 57 sponsored bills was assigned to the small business committee and would have removed size restrictions for nonprofit organizations seeking to use the Paycheck Protection Program.
Another bill sponsored by Loeffler is of greater interest to the economic development community. The bill sought to reprogram $7 billion of CARES Act’s CDFI funds, permanently extend New Markets Tax Credits, and authorize the Minority Business Development Agency, in addition to changes to SBA that include:
- Requiring SBA’s entrepreneurial assistance programs (e.g., Small Business Development Centers) to train representatives in Opportunity Zones rules, and
- Creating a “domestic production recovery facility” for the Small Business Investment Company that included selling bonds with equity-like features from the funds back to SBA.
People can reasonably disagree about the merits of each of these provisions, but they are proposals that speak to an interest in using federal authorities to expand public-private partnership approaches to economic development.
Of course, this bill aside, it is not easy to tell what direction Loeffler’s leadership at SBA may take, particularly in the context of the next Administration.
2024 Republican Platform
The 2024 Republican party platform does not explicitly mention “small business,” let alone SBA. Companies certainly would be affected by tax, tariff, and immigration changes, but SBA likely would have a minimal role in implementing these policies.
The platform does call for “championing innovation,” and it is possible that SBA’s policy oversight of the Small Business Innovation Research (SBIR) program or its work with innovative companies through the Regional Innovation Clusters and Growth Accelerator Fund Competition will be relevant to the Administration’s goals in this area. For example, while the platform pledges to overturn Joe Biden’s executive order on artificial intelligence, perhaps the Trump White House would keep Biden’s plans to prioritize a portion of SBA’s cluster and accelerator funding for AI.
Project 2025
The Heritage Foundation’s Project 2025 proposals for SBA are less extreme than what it proposed for the Department of Commerce.
Project 2025’s Mandate for Leadership chapter on SBA was written by Karen Kerrigan, the President and CEO of the Small Business & Entrepreneurship Council and someone who has been active with World Economic Forum, National Association of Women Business Owners, and the Center for International Private Enterprise. Given this background, it is hardly surprising that the chapter largely proposes expanding SBA’s role in curtailing regulation, ending the agency’s use of unauthorized programs and program eligibility for marginalized groups, and maintaining SBA’s role in providing emergency capital.
Kerrigan even devotes a section to SBIR, recommending that SBA and the Administration:
- Continue SBIR
- Expand the set aside
- Enact stricter requirements for spending SBIR funds in the U.S.
Despite this support for SBIR, two other sets of recommendations could cut against tech-based economic development strategies.
First, the call to curtail unauthorized programs could spell trouble for SBA’s clusters and accelerators initiatives. Both are operated under the agency’s contracting authority and have never received formal authorization from Congress—although the legislatures willingness to continue providing appropriations specifically for these programs is a strong statement of congressional intent. The White House budget during Trump’s first term regularly proposed eliminating these programs as “duplicative” and even some Democratic Members of Congress have proposed defunding clusters, accelerators, and other SBA initiatives in favor of small business center programs. Interest in advancing American innovation aside, Project 2025’s proposals align with efforts to eliminate SBA’s innovation programs.
Second, Kerrigan wants to “refocus [SBIC] support on small businesses rather than technology startups.” This is a surprising statement because while SBIC data broken out by sector is disappointingly uncommon, SBA and GAO reports through 2014 showed manufacturing and wholesale trade as two of the top sectors. Still, the chapter’s sentiment that Congress should make SBIC “more favorable to capital-intense investments” would be welcomed by many emerging technology sectors.
What to watch
Organizations interested in working with SBA under the next Administration should keep a close eye on (a) Loeffler’s confirmation process, (b) the Administration’s early executive actions and other policy statements, and (c) Congressional action from the small business committees and relevant appropriations subcommittees. Prior statements aside, these will be the more directly-relevant indicators of what SBA will do for the next four years.
What to do
Practitioners interested in supporting SBA’s programs, particularly the innovation programs that have a less secure footing, should consider the following actions:
- Collect data and stories illustrating program impacts. Members of Congress want to see your data and talk about your stories. Be sure to have both when you reach out to explain why the region’s innovative companies need your support.
- Strategy to communicate with Congress. Focusing your attention on Congress makes sense both because appropriations are what ultimately drive most agency actions and because Congressional attention can help drive agencies’ priorities. The confirmation process and budget hearings are good times for friendly members to ask leading questions of political appointees about how programs will be managed.
If you need assistance creating effective materials, working with Congress, or understanding how your region could better leverage SBA’s initiatives, Excel Regional Solutions can help. Contact us today to get started.