SBA Ends Biden-Era Expanded Race-Based, DEI Loan Approvals

In February, the White House announced plans for a new anti-fraud task force targeting welfare abuse in California and other states, and assigned Vice President J.D. Vance, Andrew Ferguson of the Federal Trade Commission (FTC), and the Attorney General.

California Attorney General Rob Bonta fell all over himself claiming that the California Department of Justice was working to tackle fraud in the state. He even “pushed back” against the Trump Administration’s characterization that California programs are overrun by fraud and that state government is somehow facilitating this fraud.

Bonta was quickly upstaged by Small Business Administration Administrator Kelly Loeffler when she announced the SBA had already uncovered $8.6 billion in suspected fraud tied to COVID-era relief lending in California and has suspended more than 111,000 borrowers in the state.

Loeffler said the borrowers were suspected of improper activity involving federal pandemic programs, including Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) funds.

Now Loeffler has outdone herself – Thursday the U.S. Small Business Administration announced they are ending race-based SBA loan approval.

The SBA “released a proposed rule to end racial discrimination in the 8(a) Business Development Program and dismantle the race-based admissions framework that previously barred Americans of certain races from accessing 8(a) set-aside and sole-source contracting opportunities.”

You read that right. The Biden SBA was handing out SBA loans to DEI candidates who checked the right box – and not to those who had legitimate businesses and actual need of SBA loans to help grow their businesses.

The SBA 8(a) program was dramatically expanded during the Biden Administration as a vehicle for partisan and DEI preferences in federal contracting – crowding out legitimate job creators, especially white Americans, the SBA said.

“Even after a federal court ruled in 2023 that the rebuttable presumption providing de facto race-based 8(a) eligibility for certain minority groups was unconstitutional, the Biden SBA continued using race and ethnicity to steer exclusive contracting opportunities to favored groups. From 2021 through 2024, the Biden Administration approved roughly 2,100 new 8(a) firms, compared with just 65 approved to date under the Trump Administration.”

Even after the 2023 federal court ruling in Ultima Services Corp. v. USDA declared the racial presumption unconstitutional, the Biden SBA continued practices steering opportunities by race, crowding out non-preferred groups, and especially White-owned businesses.

The SBA explains the new rule:

Under the new rule, individuals will no longer be considered “socially disadvantaged,” and therefore eligible for the 8(a) program, simply because they are a member of a racial minority group. Likewise, no individual may be barred from the 8(a) program simply because they are white. Instead, all applicants will be required to prove their social disadvantage status by submitting verifiable, fact-based evidence.

“The Biden Administration weaponized the 8(a) program as a vehicle for partisan and DEI preferences in federal contracting, using race to steer exclusive opportunities to favored groups while shutting out other deserving Americans,” said SBA Administrator Kelly Loeffler. “This proposed rule will dismantle the race-based admissions framework of the past and replace it with one standard for all applicants, rooted in verifiable, fact-based evidence of social disadvantage. It will restore equal treatment under clear, objective criteria and help ensure the program serves legitimate job creators instead of political friends, shell companies, or bad actors.”

Equal treatment under the law is a foundational principle of justice. It holds that individuals should receive the same legal rights, protections, procedures, and consequences regardless of irrelevant personal characteristics—such as race, ethnicity, sex, religion, wealth, social status, or political connections.

Explicitly in the 14th Amendment of the U.S. Constitution, it states, “No State shall… deny to any person within its jurisdiction the equal protection of the laws.”

The 5th Amendment’s Due Process Clause and the Declaration of Independence both say “all men are created equal.”

The Trump administration is making America great again.

Since last year, the Small Business Administration has taken the following actions:

• In February 2025, on the first day of Administrator Loeffler’s term, the Trump SBA cut the Small Disadvantaged Business contracting goal back to its statutory 5% and ended the practice of approving firms based solely on unsubstantiated claims of racial discrimination.
• In June 2025, SBA launched the first-ever audit of the 8(a) Program in its nearly 50-year history – initiating an investigation into all high-dollar and limited-competition contracts going back over a period of fifteen years.
• In July 2025, the agency rescinded the independent 8(a) contracting authority of the U.S. Agency for International Development (USAID) after a DOJ investigation uncovered a $550 million bribery scheme involving several 8(a) contractors.
• That same month, SBA issued a letter of warning to all federal contracting officers, outlining the penalties for failing to report suspected fraud, waste, and abuse within the 8(a) Program.
• In October 2025, SBA debarred numerous 8(a) contractors following allegations of fraud involving more than $253 million in previously issued contract awards.
• In November 2025, SBA cleared the Biden-era backlog of 2,700 Veteran Small Business Certification (VetCert) applications, which accumulated after the prior Administration diverted all resources away from VetCert to increase certification approvals for the 8(a) Program.
• In December 2025, SBA ordered all 4,300 8(a) contractors to produce three years’ worth of financial documents for review by the agency in the effort to root out pass-through abuse and fraud by shell companies.
• In January 2026, SBA suspended over 1,000 contractors from participation in the 8(a) Program after they failed to submit the documents SBA requested in December.
• In February 2026, SBA took action to terminate over 150 Washington, D.C.-based 8(a) firms that failed to meet “economic disadvantage” eligibility requirements.
• In March 2026, SBA initiated termination proceedings to remove another 620 firms that refused to submit the documents SBA requested in December.