The Small Business Administration has released new formal guidance to its program officials emphasizing that the use of race-based criteria in the 8(a) Business Development Program violates constitutional and legal standards.
What Is the New SBA Guidance?
The action is part of a broader effort initiated under SBA Administrator Kelly Loeffler in 2025 to revise the operation of the 8(a) Program, the SBA said Thursday. This follows court rulings and Department of Justice guidance stating that race-based eligibility presumptions are unconstitutional. It also aligns with efforts to end diversity, equity and inclusion initiatives.
“The SBA is ending DEI in federal contracting – and our programs will remain open to all eligible job creators in compliance with federal law,” Loeffler said.
The agency emphasized that eligibility for the 8(a) Program is not determined by race and that small businesses are not excluded or denied access on that basis. It clarified that membership in a minority group does not automatically establish social disadvantage for purposes of the program.
SBA stressed that all applicants, regardless of background, must demonstrate eligibility using substantiated, case-specific information. The agency also removed a guide issued under a prior administration related to demonstrating social disadvantage, citing the need to avoid confusion about current standards.
How Is SBA Addressing Fraud & Abuse in the 8(a) Program?
In addition to addressing racial discrimination issues, the SBA is taking steps to curb widespread fraud and abuse in the 8(a) Program. In January 2026, the agency suspended more than 1,000 firms from the program after they failed to provide financial records requested the prior month as part of a broader review. This action followed a series of enforcement steps taken throughout 2025, including audits, contractor suspensions and expanded oversight.
