1. CHAPTER OVERVIEW

Title: Small Business Administration (TL;DR Version)

Author: Karen Kerrigan, President and CEO of the Small Business & Entrepreneurship Council

Chapter 25 of “Project 2025: Mandate for Leadership” focuses on the Small Business Administration (SBA), arguing that it has become a “sprawling, unaccountable agency” plagued by “waste, fraud, and mismanagement.” Authored by Karen Kerrigan, a long-time advocate for small businesses and president of the Small Business & Entrepreneurship Council, the chapter criticizes the agency’s “mission creep” and its focus on “inclusivity” initiatives that she believes are actually creating “exclusivity” and hindering entrepreneurship. She outlines a plan to reform the SBA, making it more accountable, efficient, and focused on its core mission of supporting small business growth, primarily through reducing its size and scope, ending direct lending, and promoting a more market-oriented approach.

The chapter’s significance lies in its reflection of a broader conservative skepticism towards government intervention in the economy, even when it comes to supporting small businesses. Kerrigan’s recommendations could lead to a decrease in funding for SBA programs, a greater reliance on private lenders, and a weakening of efforts to promote diversity and inclusion in entrepreneurship. These proposals raise serious concerns among Democrats about the potential for a less supportive and less equitable environment for small businesses, particularly those owned by women and minorities, who often face greater challenges in accessing capital and resources.

2. KEY THEMES & FRAMEWORKS

  • Limited Government: Kerrigan emphasizes the need for a smaller and less intrusive SBA, arguing that the agency has expanded beyond its core mission and has become too involved in picking winners and losers in the marketplace. This reflects a broader conservative belief in limited government and a preference for free markets over government intervention.
  • Free Markets: The chapter advocates for a more market-oriented approach to supporting small businesses, arguing that the private sector is better equipped to provide capital and resources to entrepreneurs. This aligns with the conservative belief that the free market is the most efficient mechanism for allocating resources and promoting economic growth.
  • Accountability and Transparency: Kerrigan stresses the importance of accountability and transparency at the SBA, calling for stricter performance metrics, more rigorous oversight, and a full accounting of COVID-19 relief program spending. While accountability is important, this could also be used to justify cuts to SBA programs and to increase privatization.
  • Criticism of “Inclusivity” Initiatives: Kerrigan criticizes the SBA’s focus on “inclusivity” initiatives, arguing that they are actually creating “exclusivity” and are not reaching all eligible small businesses. This suggests a disregard for the importance of promoting diversity and inclusion in entrepreneurship and could lead to a decrease in support for minority-owned and women-owned businesses.
  • Focus on Core Functions: The chapter calls for the SBA to focus on its core functions of providing access to capital, entrepreneurial development, and government contracting support, suggesting that other programs should be eliminated or consolidated. This reflects a desire to streamline the agency and to reduce its involvement in areas that conservatives view as outside its core mandate.

3. DETAILED BREAKDOWN

3.1 Introduction: A “Sprawling” and “Unaccountable” Agency (776)

  • Kerrigan argues that the SBA has become a “sprawling, unaccountable agency” that is “plagued by waste, fraud, and mismanagement.”
  • She criticizes the agency’s “mission creep” and its expansion into areas that she believes are beyond its core mandate.
  • Quote: “The Small Business Administration has become a sprawling bureaucracy that is more interested in picking winners and losers than in helping all small businesses succeed.”

3.2 The Problem: Government Overreach (777)

  • Kerrigan argues that the SBA has become too involved in the economy, distorting markets and crowding out private investment.
  • She criticizes the agency’s direct lending programs, arguing that they are inefficient and susceptible to fraud.
  • Quote: “The SBA’s direct lending programs are a form of corporate welfare that benefits a select few at the expense of taxpayers.”

3.3 The Solution: A “Tighter, More Focused” SBA (783)

  • Kerrigan outlines a plan to reform the SBA by:
    • Ending Direct Lending: Ending the SBA’s direct lending programs and focusing on guaranteeing loans made by private lenders.
    • Strengthening the Office of Advocacy: Increasing the budget and authority of the Office of Advocacy, which represents the interests of small businesses in the regulatory process.
    • Increasing Accountability and Transparency: Implementing stricter performance metrics, conducting more rigorous oversight, and providing a full accounting of COVID-19 relief program spending.
    • Focusing on Core Functions: Focusing the SBA on its core functions of providing access to capital, entrepreneurial development, and government contracting support.

3.4 Specific Policy Recommendations (783)

  • End Direct Lending: Eliminate the SBA’s direct lending programs. (783)
  • Strengthen the Office of Advocacy: Increase the budget and authority of the Office of Advocacy. (784)
  • Increase Accountability and Transparency: Implement stricter performance metrics, conduct more rigorous oversight, and provide a full accounting of COVID-19 relief program spending. (785)
  • Focus on Core Functions: Focus the SBA on its core functions of providing access to capital, entrepreneurial development, and government contracting support. (783)
  • Reduce the SBA’s Budget: Reduce the SBA’s budget and staffing levels. (783)

3.5 Conclusion: Unleashing the “Engine of the American Economy” (786)

  • Kerrigan concludes by arguing that her recommendations will “unleash the engine of the American economy” by empowering small businesses to create jobs and drive economic growth.
  • She claims that a reformed SBA will be “more effective, more efficient, and more accountable to taxpayers.”

4. POLICY RECOMMENDATIONS

  • End Direct Lending: Eliminate the SBA’s direct lending programs. (783)
  • Strengthen the Office of Advocacy: Increase the budget and authority of the Office of Advocacy. (784)
  • Increase Accountability and Transparency: Implement stricter performance metrics, conduct more rigorous oversight, and provide a full accounting of COVID-19 relief program spending. (785)
  • Focus on Core Functions: Focus the SBA on its core functions of providing access to capital, entrepreneurial development, and government contracting support. (783)
  • Reduce the SBA’s Budget: Reduce the SBA’s budget and staffing levels. (783)

5. STRATEGIC OBJECTIVES

  • Shrink the SBA: Reduce the size and scope of the SBA and its involvement in the economy.
  • Promote Free Markets: Encourage private sector solutions to support small businesses and reduce reliance on government programs.
  • Increase Efficiency and Accountability: Streamline the SBA’s operations, reduce bureaucracy, and improve efficiency and accountability.
  • Reduce Government Spending: Cut government spending on small business programs.
  • Limit “Inclusivity” Initiatives: Reduce the SBA’s focus on “inclusivity” initiatives, arguing that they are ineffective and create “exclusivity.”

6. CROSS-REFERENCES

  • Agenda 47: The chapter’s emphasis on limited government, free markets, and accountability aligns with the broader goals outlined in Trump’s Agenda 47.
  • Project 2025, Chapter 2: This chapter, focusing on the Executive Office of the President, complements Chapter 25 by advocating for using the OMB to control agency spending and to implement the President’s budgetary priorities, potentially leading to cuts in funding for the SBA.
  • Project 2025, Chapter 3: This chapter, focusing on central personnel agencies, supports Chapter 25 by advocating for weakening civil service protections and making it easier to fire federal employees, potentially allowing for a purge of SBA employees who support a more expansive role for the agency.

7. POTENTIAL IMPACTS

  • Reduced Support for Small Businesses: The proposals to shrink the SBA, end direct lending, and focus on core functions could lead to a decrease in overall support for small businesses, making it more difficult for entrepreneurs to start and grow their businesses, particularly those in underserved communities or those owned by women and minorities.
  • Harm to Underserved Communities: The elimination of direct lending and the emphasis on private lenders could make it more difficult for small businesses in underserved communities to access capital, potentially exacerbating existing economic disparities.
  • Weakening of Regulations: A more powerful Office of Advocacy could be used to weaken regulations that protect consumers, workers, and the environment, potentially harming the public interest.
  • Decreased Focus on Diversity and Inclusion: The criticism of “inclusivity” initiatives suggests a disregard for the importance of promoting diversity and inclusion in entrepreneurship and could lead to a decrease in support for minority-owned and women-owned businesses.
  • Increased Reliance on Predatory Lenders: Ending direct lending could push small businesses towards predatory lenders who charge higher interest rates and fees, potentially trapping them in a cycle of debt.

8. CRITICISMS & COUNTERARGUMENTS

  • Harm to Small Businesses: Critics might argue that the chapter’s recommendations would harm small businesses by reducing access to capital, weakening regulatory protections, and undermining efforts to promote diversity and inclusion.
  • Increased Inequality: Opponents might argue that the chapter’s proposals would exacerbate inequality by making it harder for small businesses in underserved communities to succeed.
  • Corporate Capture: Critics might argue that the chapter’s emphasis on free markets and a reduced role for government would lead to corporate capture of the SBA, prioritizing the interests of large corporations over the interests of small businesses.
  • Short-Sighted Approach: Opponents might argue that the chapter’s focus on efficiency and accountability ignores the long-term benefits of investing in small businesses and supporting entrepreneurship.

9. KEY QUOTES

  • “The Small Business Administration has become a sprawling bureaucracy that is more interested in picking winners and losers than in helping all small businesses succeed.” (776) This quote reflects Kerrigan’s view of the SBA as being too large and too involved in the economy.
  • “The SBA’s direct lending programs are a form of corporate welfare that benefits a select few at the expense of taxpayers.” (777) This quote highlights Kerrigan’s opposition to direct lending.
  • “We need a tighter, more focused SBA that concentrates on its core functions.” (783) This quote emphasizes the chapter’s desire to shrink the SBA.
  • “We must end the SBA’s direct lending programs and focus on guaranteeing loans made by private lenders.” (783) This quote reveals the chapter’s preference for a market-based approach to small business lending.
  • “We must increase accountability and transparency at the SBA.” (785) This quote highlights the chapter’s focus on accountability.

10. SUMMARY & SIGNIFICANCE

Chapter 25 of “Project 2025: Mandate for Leadership” outlines a conservative vision for the SBA that prioritizes efficiency, accountability, and a reduced role for government in supporting small businesses. The chapter’s recommendations could lead to a decrease in funding for SBA programs, a greater reliance on private lenders, and a weakening of efforts to promote diversity and inclusion in entrepreneurship. These proposals raise serious concerns among Democrats about the potential for a less supportive and less equitable environment for small businesses, particularly those owned by women and minorities.

This chapter, like the previous chapters, reflects the conservative agenda to reduce the role of the federal government in supporting economic development and promoting social equity. The proposals outlined in this chapter could have a significant impact on the vitality of the small business sector, which is a major engine of job creation and economic growth, raising serious concerns among Democrats about the potential for a less dynamic and less inclusive economy under a future conservative administration.