For entrepreneurs who want a loan, a government contract or just some advice, the Small Business Administration is generally a first stop. But over the past few months, getting the agency’s help has become more difficult.

Under its administrator, Kelly Loeffler, a corporate executive turned senator from Georgia and vocal supporter of President Donald Trump, the agency has aggressively cut staff. It is rolling back changes made during the Biden administration aimed at easing access to credit for the smallest enterprises, and has lowered targets for how much the federal government should buy from them.

The changes are especially problematic for Black, Hispanic and immigrant entrepreneurs. In the name of eradicating diversity, equity and inclusion practices, the Small Business Administration is shedding programs aimed at helping disadvantaged businesses, including those run by women.

While banks that administer the SBA’s major loan programs have welcomed some of the changes, Democrats and small-business advocates have decried them — especially as the agency is also supposed to inherit a $1.66 trillion student loan portfolio from the largely dismantled Education Department.

“It’s unconscionable that the Trump administration would treat such a vital agency so callously,” said Sen. Ed Markey of Massachusetts, the ranking Democrat on the Senate Committee on Small Business and Entrepreneurship.

He noted that Loeffler had ignored his requests for information about the changes. “They’re destroying the areas where they do have expertise and it’s vital to invest, and then moving over areas where the agency is going to wind up overwhelmed,” Markey said.

Sen. Joni Ernst of Iowa, the committee’s Republican chair, did not respond to requests for comment. But she has cheered the new policies in letters and hearings, saying the agency’s staff was bloated and that its underwriting standards were too lax.

The Small Business Administration, established in 1953, has long been supported by both parties. Its lending arm dispensed $56 billion in 2024, and its flagship loan program is generally supposed to operate without a government subsidy.

The last few years have been chaotic for the agency. Its responsibilities expanded drastically during the pandemic, when it received more than $1 trillion to distribute through emergency relief programs. Staffing temporarily doubled to nearly 10,000 employees to administer them. The number of workers fell to about 6,000 by the time President Joe Biden left office, and was slated to gradually contract a bit more as the pandemic loan portfolio shrank.

The Trump administration decided to fast-forward that culling. In March, it announced a 43% staffing reduction, amounting to 2,700 employees. Current and former employees say the cuts have not been carried out in an organized way. Probationary members of the staff were the first to be let go, followed by those who took advantage of the Department of Government Efficiency’s deferred resignation program. After that, workers were fired.

As a result, many district offices have been hollowed out, slowing response times. One corner of the agency that has been hobbled is the servicing of COVID-era disaster loans. The agency kept the loan operation in-house when it began in 2020, requiring hundreds of agents to handle payments and other issues.

Shelly Haywood took out a disaster loan to keep her vintage furniture store in Orange County, Calif., afloat during the pandemic. Business never quite recovered, and in March she decided to shutter her company. To do that, she needed to talk to the SBA to figure out what to do with her loan, which still carried a balance of $57,000.

“I’m calling and calling, but the phone number no longer gave you an option to talk to someone,” Haywood said. With nobody available to provide guidance, she is forced to consider closing her business while the agency still has a lien on her remaining inventory. The loan may then be referred to the Treasury Department’s collections office, which could garnish her Social Security payments or tax refunds.

“Every company has to cut. I’m OK with all of that,” Haywood said. “But if you’re going to do cuts, don’t just leave everybody hanging.”

Staff cuts may also affect the agency’s ability to police fraud in the disaster loan program, which has been plagued with abuse. In March, Loeffler fired the agency’s chief risk officer and his 11-person team, saying the function would be “elevated” under the chief financial officer.

As the agency loses workers, it’s also tightening requirements for those disaster loans, which were underwritten with little proof that the business would be able to repay. Previously, borrowers had been able to get a series of hardship accommodations that enabled them to make only minimum interest payments. That allowance was terminated in March.

Jason Milleisen, a consultant who advises SBA borrowers on how to navigate loan settlements, said many of his clients were now more likely to just default.

“So many people call me, they want to pay, they don’t want to walk away, but the SBA gives them no choice,” Milleisen said. “People are in an impossible position here, which is why there’s so much discussion around bankruptcy.”

Loeffler, while working to expand lending for manufacturers, is returning to stricter standards for the agency’s flagship program for loans of up to $5 million, known as 7(a). The Biden administration loosened credit requirements, granted lending licenses to more types of companies beyond traditional banks and waived fees in order to ease access to credit. As a result, the number of smaller loans to firms owned by women and people of color rose significantly.

Loeffler reversed course in April, saying the new rules had caused an increase in defaults, dragging the program into a deficit.

Katie Frost, who ran those programs for the Biden administration until January, argued that rising interest rates, not weaker underwriting standards, had driven higher defaults. (An independent analysis by Lumos Data found that both factors were at play.)

“I think it’s just going to tighten up the ability of small businesses to get credit,” Frost said. “The vast majority of borrowers are in fact able to make these loan payments. The whole point of the program is to encourage lenders to accept a little more risk than they would conventionally.”

Lenders’ views on the reversal vary, but larger banks tended to favor going back to the earlier rules. “I think in the end it’s going to be better,” said Tonya Mazurek, who runs SBA lending in Colorado for Midwest Regional Bank. About loans, she added, “The ones that are harder that aren’t going through probably shouldn’t have.”

While those changes affect all borrowers, many of Loeffler’s efforts are aimed at specific groups like immigrants. In March, she announced that the agency was relocating six district offices in “sanctuary cities,” which are jurisdictions that limit cooperation with federal immigration officials.

The agency also announced that all borrowers must now provide proof of their citizenship status. For some programs, 100% of the company must be owned by citizens or legal permanent residents. As a result, anyone who has an investor without a Social Security number does not qualify.

Loeffler has also focused on erasing programs that devote special attention to women or people of color, pursuant to a presidential executive order on diversity, equity and inclusion. For example, the Biden administration had started an initiative in California called the Inclusivity Project, teaming up with Wells Fargo to educate and mentor Black-owned businesses.

Jay King, the CEO of the California Black Chamber of Commerce, said the program was helping his members — and other businesses of all races — become good candidates for loans. A couple of months ago, the local Small Business Development Center told him that the Inclusivity Project was shutting down. King was disappointed, but not surprised.

“Donald Trump is trying to say, ‘We’re trying to make everybody equal — everybody’s the same,’” King said. “But we’re not. It’s never been equal.”

The anti-DEI drive also appears likely to claim the agency’s approximately 150 women’s business centers, which were established by statute in 1988 and offer one-on-one counseling to female entrepreneurs. The White House’s proposed budget, which calls for reducing the SBA’s annual funding by a third, would eliminate those centers, along with some 28 offices devoted to serving veterans.