A couple of members, including the ranking member, of the Senate Small Business and Entrepreneurship Committee brought up serious objections to a rule proposed under the leadership of Trump’s handpicked SBA Administrator Kelly Loeffler, that would make significant revisions to the federal government’s 8(a) BD Program. This would include formally removing the presumption that members of socially and economically disadvantaged racial and ethnic groups are specifically eligible and qualified to be a part of the program.

In the letter dated July 13^th to Administrator Loeffler, Senator Ed Markey (D-Mass.), the committee’s ranking member, and Senator Mazie Hirono (D-Hawaii), both Democrats, said the SBA’s intented changes “contravene the statutory intent of the 8(a) program, including by ignoring barriers to entrepreneurship in minority communities.”

The SBA has continued to state that the regulatory update is needed, in part, because of the Ultima court ruling in 2023 that found the “rebuttable presumption” of 8(a) eligibility for minority business owners, as implemented in SBA’s regulations, was unconstitutional. Since this ruling, the agency has been taking it upon themselves to operate using an individualized approach while making eligibility determinations when deciding whether prospective applicants have faced the social or economic disadvantages that Congress had in mind when it initially created the program in 1978.

“SBA recognizes, however, that from the time the regulatory rebuttable presumption was established in 1986 until its demise in 2023, the 8(a) BD program unconstitutionally categorized and favored certain individuals solely on the basis of race and ethnicity,” the agency wrote in its rulemaking notice. “Practically speaking, these regulations, both the text and its application, rendered white Americans almost totally unable to participate in the program. Further, this practical reality persisted until 2025 when certain related practices and policies were terminated.”

The two senators, in their letter, argued that the 8(a) BD Program has always been open to all American small business owners who face socioeconomic hurdles, regardless of race. They contend that the SBA’s proposed rule goes way further than it needs to in order to comply with the Ultima decision.

“Although the rule’s language may be facially neutral, we are concerned that there will be disparate outcomes in its implementation with certain groups receiving favorable treatment. The use of examples centered on white individuals, as opposed to any other groups, may discourage non-white individuals from applying to the program. In the proposed rule’s examples, it appears that SBA is claiming to implement a “race neutral” standard while focusing on identifying instances of harm to white Americans,” he wrote. “‘We are concerned about the potential selective application of discrimination or bias determinations given the nature of the examples provided by the agency in the proposed rule. SBA has provided no guidance or details for how the agency will make determinations regarding the evidence applicants are required to provide to prove discrimination.”’

In designing what it says now will be a self-certification program and a new test for making social disadvantage determinations, the SBA says it will look to whether an individual faced discrimination or bias in their lifetime by a federal, state or local government or a university or corporation — or whether one of those entities gave favorable treatment to a racial or ethnic group the applicant is not a member of.

“Examples of such discrimination would include, but are not limited to: unlawful diversity, equity, and inclusion programs or policies; unlawful affirmative action programs or policies; race-based quotas, set-asides, or hiring targets; or, any government or private entity policies or programs that favored some groups over others on the basis of race,” SBA wrote in its notice. “To provide two specific examples, an individual American citizen may establish that his or her group experienced discrimination, bias, or harm by showing evidence that his or her group experienced a barrier to accessing a federal program or contract that other designated groups did not (e.g., was not eligible for the rebuttable presumption in violation of the Constitution), or that the citizen’s racial or ethnic group was disadvantaged in college or university admissions decisions or otherwise discriminated against by a private entity in an unlawful manner.”

The Senators allege that in addition to providing only cursory information on how the SBA would even administer the new test they speak of, the agency very obviously is deviating substantially, possibly irreparably, from the 8(a) BD Program’s original intent.

“SBA’s proposed rule ignores present-day barriers that entrepreneurs from minority and underserved communities face. Discrimination is not dead; minority entrepreneurs continue to face reduced access to contracting opportunities and capital, as well as racial threats and targeting, including unequal treatment, refusal by others to work with minority-owned firms, being called racial slurs, and bias in the workplace,” they wrote. “These barriers lead to wide underutilization of, and less revenue for, minority-owned businesses compared to majority-owned businesses, as supported by decades of disparity studies. The proposed rule diminishes the history of systemic racial and ethnic discrimination in the United States by claiming that remedies for discrimination create discrimination in and of themselves.”

The proposed rule, issued on June 11, and asking for public comment, applies to the portion of the 8(a) Business Development Program that’s meant for individually owned firms only. Those that entered the 8(a) program as Native American, Alaskan Native and Native Hawaiian-owned companies, will not be impacted.

SBA acknowledged that the new test would be a significant change from how the agency had made 8(a) determinations, while offering no specifics on how it would go about doing it, even since the Ultima ruling three years ago.

“SBA believes that this new test would not only remedy the federal government’s unconstitutional discrimination against members of groups who were not subject to the rebuttable presumption, but will also allow into the 8(a) BD program a member of any racial, ethnic, or cultural group who has been targeted by any governmental or private entity’s discrimination and who has been harmed by such targeting,” officials wrote. “SBA believes it is appropriate to require evidence of government or private entity discrimination or bias so that program eligibility is underscored by objective criteria. SBA further believes self-certification of group membership and individual harm would appropriately balance requiring individual harm while also preserving the statute’s group-based construction and SBA’s limited resources.”

Since Trump took office for the second time, his administration has veered the SBA and other agencies to take actions that cast doubt on the future of the 8(a) BD Program, certainly as it originally looked and was intended.

4,300 current 8(a) participants last year were asked for various information and data as part of an overall audit of the program. This included lists of the company’s employees, bank statements for the last three fiscal years, copies of all the firms’ 8(a) contracts, etc., etc., etc..

Ironically, on June 11 as well, a new report issued from Sen. Ed Markey (D-Mass.), found that since January 2025, when President Donald Trump took office, agencies have reduced spending with small business contractors by $47 Billion and more than 6,500 firms have actually left the federal space. Set-aside contract dollars to firms in the 8(a) BD Program were down 29%, and that 8(a) Certification approvals for small businesses owned by socially and economically disadvantaged individuals were down 92%. This is not good, but folks, including myself and my colleagues, are focused on reversing this course.

If you have interest in exploring the 8(a) BD Program, taking advantage of the diminishing numbers, and/or would like to examine all federal certifications and modes of entry into the federal marketplace, I would recommend contacting an industry expert such as ez8a. They do not charge for an initial consultation.