On January 22, 2026, the Small Business Administration (“SBA”) issued a new “8(a) Program Mandate” that, according to the SBA, is intended to eliminate the use of any racial component to admission to the SBA’s 8(a) Program.

The mandate includes the following directives:

• • No applicant to the 8(a) Program shall be denied, nor given presumptive preference, based solely on his or her race. The 8(a) Program should be administered race neutrally.
  • SBA will not approve admissions to the program based on Biden-era “social disadvantage narratives,” nor will SBA utilize in any way or refer applicants to the related “Guide for Demonstrating Social Disadvantages”. Consistent with the SBA’s practice since January 2025, employees in the Office of Government Contracting and Business Development and the Office of Field Operations should not request or consider such “social disadvantage narratives,” nor utilize or encourage applicants to utilize the “Guide for Demonstrating Social Disadvantage.”
  • All employees in the office of Government Contracting and Business Development and the Office of Field Operations shall treat all Americans fairly and equally in compliance with President Trump’s Executive Orders 14151 and 14173.
  • When considering whether an individual has suffered social disadvantage, the Office of Government Contracting and Business Development and the Office of Field Operations shall consider, for example, such factors as whether such individual has been the victim of illegal or radical DEI policies or illegal affirmative action policies or has otherwise been the victim of discriminatory practices such as race-based quotas, set asides, or hiring targets, in each case, whether by governmental or non-governmental actors. The Office of Government Contracting and Business Development and the Office of Field Operations shall further consider, for example, whether an individual was formally, or in practice, excluded from SBA’s 8(a) Program while these unconstitutional laws, practices, and policies were in effect.

A small business must be a socially and economically disadvantaged business enterprise to enter the 8(a) Program. For small businesses owned by individuals, this means that the individual owner must establish that they are both socially and economically disadvantaged. The SBA’s new mandate only addresses the means by which individuals can establish their social disadvantage. As such, it should have no impact on entity-owned small businesses seeking to enter the 8(a) Program.

Small businesses owned by Alaska Native Corporations (“ANCs”), federally recognized Tribes (“Tribes”), and Native Hawaiian Organizations (“NHOs”) do not need to establish social disadvantage. Instead, the Small Business Act only requires entities owned by ANCs, Tribes, and NHOs to establish economic disadvantage, and the Alaska Native Claims Settlement Act further deems ANCs economically disadvantaged as a matter of law. The SBA’s regulations confirm this for ANCs, Tribes, and NHOs. Accordingly, the new mandate from the SBA should not have any impact on small businesses owned by ANCs, Tribes, and NHOs that are attempting to enter the 8(a) Program because those entities are not required to establish social disadvantage prior to entering the 8(a) Program.

While the new mandate does not directly impact ANCs, Tribes, or NHOs, the SBA’s announcement does provide some information regarding the SBA’s approval process for application to the 8(a) Program that may be interesting and concerning for some stakeholders.

In announcing the new mandate, the SBA touted the dramatic decline in the number of approved applications for entry into the 8(a) Program, stating:

The 8(a) Program was dramatically expanded under the Biden Administration as a vehicle for partisan and DEI preferences in federal contracting – crowding out legitimate job creators, especially white men. Since Day One, the Trump SBA has been working not only to hold bad actors accountable for abusing the program, but to ensure that it benefits only deserving entrepreneurs instead of favored minorities. As evidence of this fact, the Trump SBA accepted just 65 new 8(a) firms into the program last year – compared to over 2,100 who were accepted during the Biden Administration.

This reduction in the number of approved applications to the 8(a) Program was not limited to just individual applications. Approval of applications by entities owned by ANCs, Tribes, and NHOs was also dramatically reduced in 2025, even though those entities do not have to prove social disadvantage, and the SBA’s focus on eliminating “racial preferences” would not apply to them. This suggests that the SBA’s focus is not just on eliminating any racial preferences in the 8(a) Program, but on an overall reduction of the number of small businesses in the 8(a) Program, regardless of the statutory provisions governing the program.

The SBA also stated in its announcement that “[i]n January 2026, SBA suspended over 1,000 contractors from participation in the 8(a) Program after they failed to submit the documents SBA requested in December.” This is a substantial number of the total number of participants in the 8(a) Program, and may raise concerns for some existing 8(a) firms over how the SBA will use the ongoing audit to suspend or remove entities from the 8(a) Program.

This article summarizes aspects of the law and opinions that are solely those of the authors. This article does not constitute legal advice. For legal advice regarding your situation, you should contact an attorney.