SBA Suspends More Than 1,000 Companies From Federal Contracting Program

Authored by Kimberley Hayek via The Epoch Times,

The U.S. Small Business Administration (SBA) has suspended more than 1,000 companies from a key federal contracting program aimed at aiding disadvantaged businesses, after the firms failed to submit required financial documents, the agency announced Wednesday.

The SBA said it barred 1,091 firms from the 8(a) Business Development Program, which represents about 25 percent of the roughly 4,300 participants. The suspensions stem from a December 2025 order requiring all program members to provide three years of financial records by Jan. 19 to verify their legitimacy and root out potential shell companies or pass-through entities abusing the system.

About half of the suspended firms had received federal contract payments since 2021, totaling more than $5 billion over the past four years, according to the SBA.

The move is part of broader efforts under the Trump administration to overhaul the program, which supports small businesses owned by socially and economically disadvantaged individuals.

SBA Administrator Kelly Loeffler said the suspensions were a step toward eliminating corruption.

“The 8(a) Program was abused during the Biden Administration to benefit favored minority groups at the expense of every other legitimate small business owner in America, including white Americans,” Loeffler said in a statement.

“The Trump Administration has acted from Day One to dismantle the discriminatory agenda that put white small business owners at a disadvantage, and to crack down on the fraud and corruption that proliferates within DEI programs.”

Loeffler added that the agency is suspending companies that have refused to provide basic documents that every legitimate business should have on hand.

“As we continue to eliminate bad actors from this program, we also look forward to introducing robust reforms in the coming weeks to bring total integrity back to federal contracting,” she said.

The 8(a) program, which sets aside billions in federal contracts annually, has faced scrutiny over allegations of favoritism and misuse. Under the previous administration, more than 2,200 new firms joined the program over four years, compared with just 65 accepted by the SBA in 2025, the agency said.

In an effort to address those issues, the Trump-era SBA in February 2025 reduced the Small Disadvantaged Business contracting goal from 15 percent to the statutory 5 percent. It also stopped approving applications based solely on unsubstantiated claims of racial discrimination and clarified that white applicants are not denied entry, nor is minority status alone considered a social disadvantage.

The agency also launched the program’s first audit in June 2025, focusing on high-value and limited-competition contracts over the past 15 years. In July 2025, the SBA rescinded the U.S. Agency for International Development’s independent authority to award 8(a) contracts after a $550 million bribery scheme involving program participants.

That same month, the agency issued guidance to federal contracting officers on reporting fraud, waste, and abuse.

In October 2025, the SBA suspended several 8(a) contractors linked to $253 million in allegedly fraudulent awards. The following month, it cleared a backlog of 2,700 applications for Veteran Small Business Certification, which officials said had been neglected under the prior administration.

The December document request was issued to all 8(a) firms as part of the effort to combat abuse by illegitimate entities. Separately, the U.S. Department of War and the U.S. Department of the Treasury have begun their own audits of the program.

“We are taking a sledgehammer to the oldest DEI program in the federal government—the 8(a) program,” War Secretary Pete Hegseth wrote on X.