The Trump administration proposed changes to how the Small Business Administration treats race and ethnicity while awarding contracts.
Kelly Loeffler, administrator of the U.S. Small Business Administration, speaks during a media briefing on Oct. 29, 2025, outside the Alaska Airlines Center in Anchorage.
The Trump administration said Thursday that it wants to drastically change how the Small Business Administration treats race and ethnicity in a major program geared toward minority-owned companies. The proposed rule change would impact small-business owners applying to the SBA’s 8 contracting program. But officials specified that it does not apply to “entity-owned” firms, a category that includes Alaska Native corporations.
SBA’s 8 Business Development Program is a cornerstone of many Alaska Native corporations’ businesses, granting them preferential access to federal contracts, including in the defense sector. It was established during the Civil Rights era to create opportunities for businesses owned by members of historically disadvantaged minority groups, including African Americans, Latinos and American Indians, among others.
In January, Defense Secretary Pete Hegseth said on social media that the Pentagon would be “taking a sledgehammer to the oldest DEI program in the federal government‚”“Under the new rule, individuals will no longer be considered ‘socially disadvantaged,’ and therefore eligible for the 8 program, simply because they are a member of a racial minority group. Likewise, no individual may be barred from the 8 program simply because they are white,” the SBA wrote in its SBA Administrator Kelly Loeffler said the change is intended to eliminate Biden-era “partisan and DEI preferences” in awarding federal contracts.
“This proposed rule will dismantle the race-based admissions framework of the past and replace it with one standard for all applicants, rooted in verifiable, fact-based evidence of social disadvantage,” Loeffler wrote in the announcement. “It will restore equal treatment under clear, objective criteria and help ensure the program serves legitimate job creators instead of political friends, shell companies, or bad actors.
” The modification to the contracting program could drastically upend business practices that have been in place for decades, expanding eligibility to new groups of people even as it makes it potentially harder for current participants to qualify.
“It will end a system of racial favoritism, restore equal treatment under clear and objective criteria, and keep the 8 program open to job creators of every race,” the agency wrote. “Americans discriminated against by unlawful DEI and race-based practices in the public and private sector can now qualify for 8 contracts.
”“The new test would allow any individual U.S. citizen to establish social disadvantage by showing that the government — including state and local governments, universities and corporations — discriminated against the individual’s own racial, ethnic or cultural group and the individual suffered material harm as a result," the firm wrote in a blog post Wednesday night.
“The SBA notes that an individual can establish social disadvantage not only showing that he or she was discriminated against by a federal, state or local government or a university or corporation, but also if such an entity ‘favored in any way a racial, ethnic, or cultural group of which the citizen is not a member. ’” Some of Alaska’s largest and most profitable companies are Alaska Native corporations that have aggressively leveraged 8 eligibility in the last several decades.
According to ato Alaska U.S. Sens. Dan Sullivan and Lisa Murkowski, Pentagon contracting with 8-eligible Alaska Native corporations will continue as it has been despite the federal government’s overhaul of the program. That letter was lauded by the ANCSA Regional Association, which represents the 12 for-profit corporations established under the Alaska Native Claims Settlement Act.
“We appreciate commitment to ANC participation in the 8 program, as well as their recognition that ANCs play a critical role in advancing the Department’s mission,” ANCSA Regional Association Chair Shauna Hegna said in a prepared statement from the organization this week. The eligibility status of other entity-owned 8 participants, including Native Hawaiian Organizations and Community Development Corporations, will not change if the proposed rules are approved.
“Ending race-based discrimination in 8 admissions is only one part of the Trump SBA’s broader effort to clean up a program distorted by favoritism, abuse, and weak oversight,” the agency wrote in its announcement, highlighting steps it has taken in recent months to boot companies from the program and increase scrutiny of their eligibility after highlighting a handful of fraud cases. Zachariah Hughes covers Anchorage government, the military, dog mushing, subsistence issues and general assignments for the Anchorage Daily News.
Prior to joining the ADN, he worked in Alaska’s public radio network, and got his start in journalism at KNOM in Nome.
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