Project 2025's SBA Reforms: A Gift to Big Manufacturing, a Loss for Disaster Survivors

Project 2025's SBA overhaul sounds like a technocratic fix but is actually a preference-engineering exercise that chooses winners and losers. The clearest loser is any household or farmer hit by a wildfire, flood, or tornado. The proposal to move the SBA disaster loan program to another agency or to explore private-sector channels ignores that 80% of SBA disaster loans go to homeowners and individuals, not businesses (CRS Report R44412). Private-sector disaster lending is virtually non-existent because it is unprofitable—there is no market that will step in to replace a direct government loan at 2.5% interest. The real effect of this proposal is to make disaster survivors wait longer for less certain aid, forcing them into FEMA bureaucracy or high-interest debt. The plan also explicitly says the government should prohibit new direct lending programs at SBA, which would lock in this cruelty for future disasters, including the climate-driven ones that are accelerating.

The second loser is religious liberty—but only for smaller or nontraditional faith communities. Project 2025 demands that SBA immediately notify Congress that it will not enforce religious-exclusion rules, take down the Religious Eligibility Worksheet (Form 1971), and finalize a Trump-era proposed rule. On its face, this sounds like a First Amendment victory. But the June 2022 final rule already removed the most offensive exclusions for business loan programs; the real fight is over a retained worksheet that still requires SBA to make eligibility determinations based on religious structure. The worksheet is not a blanket ban—it is an attempt to prevent taxpayer dollars from flowing to entities that openly discriminate in hiring or services (e.g., denying loans to a same-sex couple because of church doctrine). Project 2025's approach eliminates that protection entirely, using the Supreme Court's free-exercise expansion as a cudgel to force federal subsidy of any religious practice, no matter how discriminatory.

The winner in this blueprint is the advanced-manufacturing sector—but not small manufacturers. Project 2025 asks Congress to create a new 7(a) category with a maximum principal of $50 million—ten times the current cap. That money would finance facility construction and equipment upgrades for capital-intensive sectors like transportation and energy. But a $50 million loan guarantee is not a small-business tool; it is an industrial-policy subsidy for medium-to-large firms that can already access private capital. The program would operate through private lenders, meaning the government would take on risk for loans that venture capital finds too unprofitable while still charging fees. Meanwhile, the SBIC program would be refocused away from technology startups toward small businesses generally—but no new money is proposed to staff that broader mandate. The net effect is to concentrate SBA's firepower on the largest manufacturing firms while ignoring the Main Street businesses that actually create most jobs. The SBIR/STTR reauthorization, still pending in Congress as of March 2026, is the one piece that workers and innovators should fight to protect—it funnels 3.2% of federal R&D budgets to small firms and has a proven record of funding breakthrough technologies. But even there, Project 2025 would tighten domestic-spending rules, which could reduce partnerships with Canadian or Mexican researchers that supply critical inputs.

In sum, this is a plan to slash the safety net for disaster survivors, open the door to religious discrimination in federal lending, and redirect the agency's core mission away from mom-and-pop shops toward large manufacturing conglomerates. The alternative is clear: keep the disaster loan program at SBA with robust staffing and digital modernization; finalize a clean religious-eligibility rule that prohibits discrimination but requires transparency; and raise the 7(a) cap modestly (to $10 million, not $50 million) with strong oversight to prevent diversion. SBIR/STTR should be permanently authorized and expanded, not just maintained. Any expansion must be paired with enforceable labor standards—including wage theft prevention and domestic content rules—so that the tax dollars create good jobs here, not just equipment builds abroad.