The Small Business Administration announced it will close Fiscal Year 2025 with record-breaking capital delivered to small businesses, but policy experts are unimpressed by the news.
Heritage Foundation senior fellow in economic policy David Burton told The Center Square that “the primary purpose of the SBA should be to work to reduce regulatory and other impediments to small business formation and growth,” and explained that “the SBA Office of Advocacy does this.”
Burton said, however, that “the primary function of the SBA today is to provide taxpayer funds to businesses – in other words, corporate welfare.”
“While the SBA’s budget is a small fraction of the corporate welfare provided to large corporations, [its] budget should not be expanded and corporate welfare is not a wise use of taxpayer money,” Burton said.
Cato Institute policy analyst Tad DeHaven went a step further and told The Center Square that “the US Small Business Administration should be abolished.”
“It was created in 1953 to give politicians a way to claim they care about small businesses, and the administration’s self-laudatory press release shows that it hasn’t changed,” DeHaven said.
“At least, the lending programs should be ended because the benefits disproportionately flow to participating lenders and a small subset of firms,” DeHaven said. “Private markets can provide adequate credit without federal involvement.”
“Moreover, the federal government should be neutral,” DeHaven said. “There’s no reason, for example, for the government to back a loan for a particular pizza shop – especially when the competing pizza shop down the street relied on completely private financing.”
According to an SBA press release, the agency in total for Fiscal Year (FY) 2025 “has guaranteed 84,400 7(a) and 504 small business loans for $44.8 billion.”
“This includes 6,750 504 loans for $7.8 billion and 77,600 7(a) loans for $37 billion,” the release said.
“The majority of SBA’s FY25 small business loans were approved after President Trump took office in January 2025,” the release said, with “58,000 7(a) and 504 loans,” being approved under him, “representing more than $32 billion in capital delivered to America’s small businesses.”
DeHaven told The Center Square that “in the broader context of small-business finance, SBA loan-guarantee programs account for a small share of total credit flows.”
“Access to credit is typically not the top concern reported by small firms, compared with issues such as costs and labor,” DeHaven said.
“The federal loan guarantees primarily benefit participating lenders (e.g., through reduced risk and secondary market liquidity), and some loans would likely have been made even without the guarantee,” DeHaven said.
“It’s no coincidence that bank lobbyists are major advocates for the SBA’s loan guarantee programs on Capitol Hill,” DeHaven told The Center Square.
In its release, the SBA said that “since January, this Administration has created over 500,000 private sector jobs, increased real wages month after month, and boosted small business optimism above its 52-year average to a six-month high,” the release said.
At the same time, Tad DeHaven told The Center Square that “recent surveys show cautious improvement in sentiment, but small businesses continue to report concerns about inflation, input/material costs, and policy uncertainty.”
The SBA has not yet responded to The Center Square’s request for comment.
