Why It Matters
Kelly Loeffler, administrator of the Small Business Administration (SBA), defended the Trump administration's proposal to cut the agency's budget by 67 percent. She testified on July 14 before the House Appropriations Subcommittee on Financial Services and General Government.
The proposal would also eliminate 15 of the SBA's 16 entrepreneurial development programs, cutting off services that reach nearly 1 million small businesses a year. Lawmakers on both sides of the aisle used the hearing, which was Loeffler's first appearance before the subcommittee, to question how the administration squares the cuts with the financial pressure small business owners are already facing.
The Big Picture
Small businesses employ more than 62 million people, or 45.9 percent of the private sector workforce, according to the SBA's own Office of Advocacy. That backdrop has sharpened scrutiny of the administration's budget plan, which, beyond the entrepreneurial development cuts, would impose a new fee on SBA borrowers and comes as 7(a) lending has already declined 32 percent under separate administration lending restrictions, according to Sen. Ed Markey (D-MA), the Senate Small Business Committee's ranking member. The plan would also eliminate funding for the Minority Business Development Agency.
The cuts arrive as small business bankruptcy activity climbs. Subchapter V elections, a Chapter 11 restructuring track used mainly by smaller companies, rose 50 percent in the first half of 2026 compared with the same period a year earlier, while overall commercial bankruptcy filings rose 13 percent, according to data from Epiq and the American Bankruptcy Institute.
The hearing also unfolded against the backdrop of the Supreme Court's February ruling that President Trump's use of emergency powers to impose sweeping tariffs was unconstitutional, a decision that has kept trade policy, and its effect on small business costs, in the political conversation even as the administration pursues tariffs under other legal authorities.
What They're Saying
Rep. Dave Joyce (R-OH), the subcommittee chair, framed the administration's approach as a genuine tradeoff rather than a clear misstep, noting in his prepared remarks that the administration is proposing a $172 million rural fund while Congress continues to fund existing entrepreneurial development program awards. "Neither is the right or wrong answer," Joyce said, adding that Loeffler's testimony would help the panel understand SBA's priorities going forward.
Rep. Steny Hoyer (D-MD), the subcommittee's ranking member, raised concerns about the elimination of entrepreneurial development programs that have historically supported underrepresented business owners.
Senate Small Business Committee Democrats, led by Markey, have pressed SBA for months over the proposed cuts and unanswered oversight requests, including a June 3 letter noting Loeffler had not appeared before that committee in more than a year. Markey has called the reductions "a nightmare for Main Street," and that pressure carried into the House Appropriations hearing, where members from both parties pushed Loeffler for specifics on how the cuts would be implemented.
The Bottom Line
Loeffler's appearance did little to resolve the core disagreement over SBA's direction. Republicans on the subcommittee treated the budget plan as one of several legitimate paths to supporting small businesses, while Democrats pressed for a fuller accounting of how eliminating 15 of the agency's 16 entrepreneurial development programs would affect the businesses that rely on them. The House Appropriations Subcommittee on Financial Services and General Government will continue deliberating the SBA's fiscal year 2027 budget request as the fight over the agency's direction continues.
Access the Legis1 platform for comprehensive political news, data, and insights.
Spot something wrong? Report an issue with this article