How Trump’s SBA Diverged From Harris’s Vision For Black Entrepreneurs

Deals from the Small Business Administration (SBA) secured by Black-owned businesses are being terminated as new rules from the Trump administration are making it harder for them to maintain, Forbes reports. 

To make SBA-backed loans safer for the government, some of the new rules, effective June 1, are stricter than they were during President Donald Trump’s first term. One new rule requires any business receiving an SBA loan to be 100% –up from 51% — owned by U.S. citizens, who must be permanent residents for at least six months. 

The agency announced “SBA Eliminates Disastrous Biden-Era Underwriting Standards,” labeling an “era of irresponsible lending.” Business owners can expect tighter credit checks, tougher requirements on down payments, and less room to move around debt service coverage ratios. 

Some rules affect SBA’s popular 7(a) and 504 loan programs, offering government-backed financing for small businesses. The 7(a) program permits loans of up to $5 million for general business needs such as working capital, equipment, or purchasing a company. The 504 program also goes up to $5 million and is geared toward fixed assets like real estate or large machinery. Standing on its plan, Trump’s SBA claims the 7(a) program resulted in a “negative cash flow of about $397 million” in 2024, its first loss in 13 years.

The move greatly differs from what was expected if former Vice President Kamala Harris secured the Oval Office. On the campaign trail, she promised to make things easier for Black business owners to thrive with the “Opportunity Agenda.” According to CNBC, Harris wanted to work with the SBA to give Black entrepreneurs one million fully forgivable loans of up to $20,000 to start a business. 

Her campaign planned to finance them through partnerships with “mission-driven lenders,” the SBA, and community-based banks. 

However, since Trump is here, industry experts like Eric Pacifici of SMB Law Group, which advises small businesses, wonder if the SBA changes are really about safer lending or just a massive attempt to scrub away anything that will remind business owners of an easier time, spearheaded by former President Joe Biden. It’s one-part signaling a return to tighter underwriting, but also reads as a somewhat political reset rather than a coherent policy shift,’’ the founder said.

Regardless, Pacifici feels the changes will be risky for the SBA, as stricter lending standards and rules could squash good deals. Instead of increasing the economic status of business owners who may support Trump, his administration is hurting them with unnecessary moves.

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