SBA transforms 8(a) program to be race neutral, but did it go too far?

The Small Business Administration finalized new rules for the 8(a) business development program in record time.

In 60 days, SBA went from proposal to reviewing more than 100 comments to final regulation that will transform the 73-year-old program.

The fast timeline is one of several concerns experts have about the new 8(a) regulations and why it adds to their questions about the program’s long-term viability.

“I think the SBA turned the 8(a) program into a regular small business program. They spent last month reading comments, but I don’t think they meaningfully responded to them. I think this was all a forgone conclusion,” said Anna Sanders, the director of certification and eligibility for GovConPros, a small business consulting firm. “If you read the new regulations, they moved some things around and added the ability to submit additional documents as evidence, but their explanation for responding to the comments didn’t come through in this regulations.”

The SBA issued the proposed rule on June 11, received 114 comments and released the final rule on Aug. 11. Experts says 60 days from proposal is final rule is unheard of in the federal rulemaking process. This includes getting it approved by the Office of Information and Regulatory Affairs (OIRA), which in and of itself could take 30-60 days for review.

“I would’ve expected more comments given the challenges around the 8(a) program and the administration’s focus on it,” said John Shoraka, chairman of GovConPros and a former SBA associate administrator of Government Contracting and Business Development. “The time frame they allowed for public comment is usually 60-to-90 days, which would give associations long enough to brief their members and get feedback. But all of that disappears when you collapse the comment period to 30 days. It was an incredible disservice to the small business community to only have a 30-day comment period. But it wasn’t only the 30-day time period, but the time period for reviewing comments, getting it to OIRA and back in final format, I’ve never seen regulations go so quickly at SBA.”

Sam Le, a former SBA director of policy, planning and liaison and director of procurement policy, said the number of comments wasn’t surprising to him, and he believes the SBA did make some substantial changes to the final rule based on the comments.

“The proposed rule and SBA’s press release really focused on prior exclusions of white Americans, but in final rule, SBA refers to the program as race neutral. That seems to be a change in the terminology SBA is using,” Le said. “I think that the SBA saw that several large organizations filed comments like the NAACP, the Asian Americans Advancing Justice and the Minority Business Enterprise Legal Defense and Education Fund (MBELDEF) and they made this argument that SBA is moving from a one-race preference program to identifying white Americans as a group who could receive admissions to the reformed program. I think SBA saw that they could face legal challenges. That may be why SBA chose to take a race neutral approach in the final rule.”

Evidence of discrimination required

The new regulations detail three new requirements for small businesses to apply for the program.

First, the person must self-attest that they are a member of a particular group that faced public or private sector discrimination or bias based on actions, policies, rules, regulations or other practice. Then, the person must again self-attest they suffered “material harm,” which SBA says means they faced a loss of access to or diminished opportunities related to economic advancement … think of loans or financing or contract awards.

Then, third, they must establish that they are socially disadvantaged. Shoraka, Sanders and Le say this is the biggest change in the final rule.

SBA is now requiring the business owner show evidence like “documentation of specific actions, policies, rules, regulations or other practices of the governmental or private entity favoring or disfavoring an identifiable group, including but 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 policies or programs that favored some groups over others on the basis of race.”

This final rule takes effect Sept. 10.

Le said he was pleased to see that SBA added flexibility for businesses to submit “other adequate” evidence demonstrating bias or discrimination. He said he believes this is in response to comments that said the evidentiary requirements in the proposed rule were too high of a bar.

Sanders said one challenge with the new requirements is the lack of specificity from SBA.

“We requested SBA give a definition of what a ‘culture group’ is because it is not defined anywhere in SBA regulations, and on the surface, it’s a pretty broad definition,” she said. “It feels like SBA lowered the bar to get into the program which is why it’s now more of a small business program rather than a minority development program. Really anyone can point to something they don’t like and that may be enough.”

Le said two other changes SBA made in the final rule were also important.

“In responding to questions from women-owned businesses, SBA clarified how this would apply to them. The proposed rule focused only on race and stated the agency was opening up the program to businesses owned by white entrepreneurs, but there was no discussion on how women-owned businesses would apply under this standard,” Le said. “In the final rule, SBA addressed those concerns about this omission by saying women-owned businesses are able to apply under same standard.”

Current 8(a) firms need more clarity

The second change SBA made was clarifying how these new regulations would apply to companies already in the 8(a) program.

Le said unlike what happened in 2023 after the Supreme Court’s Ultima decision, existing 8(a) firms do not have to reestablish eligibility.

At the same time, Sanders said it’s unclear whether the rules will apply when current 8(a) firms have to re-certify on their anniversaries.

“When you submit for your annual review, you are certifying you comply with all eligibility regulations. Some individually-owned firms after Sept 10 may not be able to certify that,” she said.

Shoraka added that individually-owned firms have to be concerned about misrepresenting themselves when they recertify, which could cause them additional problems.

“Every year when SBA does their annual review of 8(a) firms, the participants say that they do comply with the program’s regulations, one of which is meeting the social disadvantage requirement. If SBA replaces the current requirement with the new one, then you are not really compliant with it because you didn’t get in under the new regulations,” he said. “What SBA really has done is entirely changed the qualification requirements for what it means to be socially disadvantaged. That would not only upend the process and eligibility, it also is lowering the bar to significant degree. If SBA’s intent was to tighten and make the program more restrictive, they would’ve created a higher bar for eligibility and added more scrutiny on the program. These new regulations have removed any and all of that.”

New House bill supporting 8(a) program

Democrat lawmakers seem to agree with Shoraka.

Rep. Nydia Velázquez (D-NY), ranking member of the Small Business Committee, said in a statement to Federal News Network that SBA rushed the final rule and ignored most of the commenters who believed these new regulations would be a mistake.

“The rule trades clear standards for confusion and offloads oversight onto self-certification to ‘preserve SBA’s limited resources’ at the very moment SBA has gutted its own capacity to review anything. The result will not be a uniform standard or fairness for small businesses applying to the program. It will be less competition and fewer contracting opportunities in the federal marketplace,” she said. “Time and again, this administration has chosen extremist ideology over the small businesses it claims to champion, and entrepreneurs are paying the price.”

Sen. Edward Markey (D-Mass.), ranking member of the Small Business and Entrepreneurial Committee, also expressed similar concerns.

“I am disappointed in the Trump SBA’s decision to quickly finalize this proposed rule, despite receiving significant opposition from small businesses nationwide,” he said in a statement. “The 8(a) program was created to address racial discrimination and systemic barriers faced by socially and economically disadvantaged individuals. With this rule, Trump’s SBA has created additional barriers that will undermine the ability of our most vulnerable small businesses to compete for and win federal contracts and pursue the American dream. This rule grossly diminishes the history of systemic racial and ethnic discrimination in the U.S.”

Velazquez and Rep. Gil Cisneros (D-Calif.) introduced legislation on Wednesday to protect 8(a) participants from these regulatory changes, compliance burdens and the ongoing terminations of small business contracting opportunities:

Among the provisions of the 8(a) Small Business Integrity and Stability Act of 2026 are a requirement for SBA to extend the eligibility of all 8(a) firms in the program as of Jan. 20, 2025, for another year.

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