SBA layoffs threaten small business support and loan oversight

The Small Business Administration (SBA) is facing backlash over its decision to fire approximately 720 employees—about 20 percent of its permanent workforce—a move that could weaken disaster relief efforts and small business lending oversight, as reported by the Washington Business Journal.

Democratic senators, led by Ed Markey, D-MA, have called on newly confirmed SBA Administrator Kelly Loeffler to explain the firings, questioning whether the cuts were driven by efficiency concerns or influenced by the Elon Musk-led Department of Government Efficiency (DOGE).

The layoffs come as the SBA’s flagship 7(a) loan program faces growing financial strain. A risk assessment revealed a negative cash flow of hundreds of millions of dollars in 2024 due to rising loan defaults and reduced fee revenue. Loeffler has prioritized addressing these issues, while Senate Small Business Committee Chair Joni Ernst, R-IA, is pushing for broader SBA reforms. Unions are currently challenging the firings in court.