Did You Know?
“The 2025 Presidential Transition Project is the conservative movement’s unified effort to be ready for the next conservative Administration to govern at 12:00 noon, January 20, 2025.”
This document, coordinated by the Heritage Foundation is not simply a “wish list of ideas”
Chapter 25 of Project 25, beginning on page 745, focuses on the strategies to transform the U.S. Small Business Administration (SBA) into the vision of conservative thought leaders and former government officials, outlining specific policy initiatives that the SBA should refocus their efforts and resources around under the incoming President.
Who Wrote It?
Just as it was structured in 1980, each section of this iteration of “Mandate for Leadership” is written by leaders in trade associations, think tanks, privately funded entities at universities, and nonprofit organizations that play an instrumental role in developing and promoting these ultra-conservative ideologies. It is important to note the organizations listed in the “Acknowledgements,” many of which have innocuous sounding names but drive policies that could be detrimental to your businesses and communities.
Project 2025 is more than just a policy blueprint. It is also includes robust recruiting, vetting, and staffing components designed to fill roles and begin implementing the policy initiatives on “day 1.” It is important to identify the authors of the agency chapters, as they are the people likely being positioned to take leadership roles in an upcoming Administration, at the same Federal agencies they are writing about, to implement these recommendations.
Karen Kerrigan is President and CEO of the Small Business & Entrepreneurship Council and has advocated for entrepreneurship and global business growth for 28 years. She has been appointed to numerous federal advisory boards, including the National Women’s Business Council, and serves as Chair of the Small Business Roundtable.
If implemented, what would it do?
There are a number of proposed changes and improvements to SBA governance and management that are long overdue and have been hamstrung by the inconsistent funding and repeated attempts to reorganize the agency, as described in the document. Adopting procedures to reliably capture programmatic data, and greater transparency and accountability around IT investments, systems development, and security controls are all good governance models that should be applied at SBA and throughout the Federal government. Creating a “medium-sized business” category has been a goal of business advocates for decades, as it would foster business growth in size and capacity of firms and address the arbitrary limits to program eligibility created by the current “small vs other-than-small” structure. Further, proposals such as expanding the SBIR/STTR programs and developing strategies to increase domestic manufacturing would foster technological innovation and drive US global competitiveness.
However, there are also a number of proposals that will have a direct adverse impact on the small and diverse business community currently being served by the SBA. One of the primary overarching themes throughout Project 2025, in addition to gutting the federal workforce, is eliminating any program, initiative or office that promotes DEI from all federal operations including federal rules, agency regulations, contracts, grants, and legislation. This includes abandoning efforts to advance and legally defend affirmative action and DEI policies within military academies and federal minority contracting programs. This specifically applies to the programs and initiatives at the SBA that aimed at creating opportunities for contracting and capital access for minority-owned companies.
Eliminate the Community Navigator Pilot Program:
The Community Navigator program was created in 2021 to reduce the barriers faced by underserved communities in accessing SBA programs. The program provides $100M to 51 organizations and over 400 community groups across the nation to connecting small businesses to Federal, state and local resources by leveraging the networks and relationships within deeply trusted community-based organizations. The Project 2025 plan states that the creation of these “duplicative channels” for the delivering business training rather than working through existing counseling partners. Plan further states that the program is “largely duplicative of private, state and local government, and educational system offerings” even though these existing programs were not reaching the underserved and underrepresented communities targeted by Community Navigators and received significant
support from the Tri-Caucus, Members on the House and Senate Small Business Committees, and national business and advocacy organizations when it was announced.
End SBA direct lending and consider moving the disaster loan program to another agency:
While the SBA only makes low-cost direct loans in the case of businesses and homeowners recovering from a federally declared disaster, the proposal directs Congress to move the program to another agency and transition loan management to the private sector where the cost to the borrower is likely to significantly increase. The SBA EIDL direct loan program, administered by SBA’s Office of Disaster Assistance (ODA), offers long-term, low-interest loans to eligible small businesses, private non-profit organizations, and agricultural businesses that have suffered substantial economic injury because of a declared disaster. The proposal justified restructuring the program by highlighting challenges in the COVID-19 related loans despite the fact that it delivered almost $800B in 11.5 million loans to keep businesses afloat during the pandemic.
Expand the role and utilization of the Office of Advocacy:
The SBA Office of Advocacy (Advocacy) is an independent office within the SBA that serves as a repository of extensive research data, advances the interests of small businesses before Congress and throughout the Federal government, and is the primary body responsible for enforcing the Regulatory Flexibility Act of 1980 (RFA), which requires agencies to consider alternative ways to reduce the economic impact of their regulations on small entities. The Project 2025 proposal would double the budget of the Office of Advocacy and significantly increase its authority, turning from simply an advocate on behalf of small business and into a bottleneck and watchdog of regulations being proposed by all other Federal agencies.
The Project would “amend the RFA so that all agencies are required to provide a copy of any proposed rule along with initial regulatory flexibility analysis to the Office of Advocacy at least 60 days before a notice of proposed rulemaking is submitted for publication in the Federal Register.” While Advocacy was created to limit the burdensome and disproportionate economic impact some regulations have on small businesses, such a change could essentially weaponize the office as a tool against the protections and rules instituted by Federal agencies (e.g. food safety, worker protections, workplace safety, environmental regulations, etc.).
Another recommendation would increase the budget for Advocacy by approximately 50%, adding $4.6M to the current $10.2M budget in 2023, to hire 25 additional attorneys. This is a noteworthy goal but should not come at the expense of other programs within the already underfunded agency. The proposal recommends freezing or cutting SBA’s budget while, at the same time increasing the Advocacy budget, robbing Peter to pay Paul and undermine the ability for the SBA to meet the needs of the nation’s small businesses.
Conclusion:
Overall, Project 2025’s proposed policies could lead to reduced support, increased competition, and greater economic challenges for minority-owned businesses. The elimination of affirmative action and minority-focused programs, combined with broader deregulation and changes to labor laws, could create a more challenging environment for these businesses to thrive and compete. The proposal includes plans to abandon affirmative action and minority contracting programs that have historically provided critical opportunities for minority-owned businesses to compete for and secure government contracts. The attack of regulatory protections for minority businesses would remove protections that help ensure fair competition and prevent discriminatory practices. Finally, small and minority-owned businesses, already more financially vulnerable, are likely to face greater challenges in a market increasingly dominated by larger corporations with more resources.