SBA Layoffs: Small Business Funding Challenges

📆This Week’s Topic

This week we are talking about small businesses. Small businesses are very important as 99% of all businesses are considered small businesses. Amazon, Microsoft, Google, and every other large company started as an idea and that grew to where they are now. Most businesses will need to seek funding at some point and a common place to start is the SBA (Small Business Administration). The SBA allows you to start your businesses with free business plans, tools, advice, and funding.

💳 Cause & Effect

The SBA is a great place to get help for your business. Since the start of President Trump’s second term, the SBA has been having major issues. Getting the help and funding of the SBA has been difficult to secure as the agency has been laying off tons of workers, making the agency’s services hard to access. The Trump Administration is undoing the changes made by the Biden Administration to help even the smallest business get the proper funding and support they need. It has decreased the agency’s scope as a lot of staff have been laid off.

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📊 Statistics

In March, the Trump Administration announced a 43% staff reduction for the agency, which was about 2,700 employees. This was a real problem as it lowered the number of operations they could perform. In 2020, when the pandemic hit, the agency’s staff doubled to 10,000 employees as a result of receiving $1 trillion dollars for emergency relief. After serving so many small businesses, the agency is having trouble keeping up with the demand.

🔚 Outcome

The outcome is that SBA will likely not be a reliable place to get advice and funding. Small businesses will have to look for other places, like Shark Tank or venture capitalists, to take on their venture. This will likely result in a decrease in the growth rate of businesses in total. It will also be harder for minority groups to get funding at the SBA because the Trump Administration eliminated the part of the SBA that helped with minority owned businesses.

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⛱ Consumer Effect

This probably won’t affect the average consumer, but the burden will fall mostly on small business owners. This is because the SBA can offer more favorable loans to businesses operating in the public service. They control a lot of the loans that are put in for businesses that are in public service. Private banks can issue business loans, but they usually charge a higher interest rate. The potential loss of SBA financing could also reduce of new businesses per year could decrease.

🏢Business Effect

Businesses are the foundation of the economy. The more businesses there are, the more successful the economy will be. This is because these businesses create value, which contributes to the economy. If the SBA continues to decline its services, small business owners will likely be in trouble.

⏳ Final Summary

In summary, the SBA isn’t able to aid as many small businesses as it used to because of the major layoffs of 2,700 employees by the Trump Administration. The SBA has the potential to be a great place to seek funding, advice, and skills, like learning how to make a business plan. However, since the layoffs, it has been harder for small businesses to receive services from the SBA because they can’t serve as many as they used to. The economy will likely suffer because harder for entrepreneurs to get their small businesses off the ground.

🙏Thank You & Important Information

Thank you for reading this edition of Friday Finance. We have published over 20 articles, and I am proud to announce that we are still working hard to produce more high-quality articles. I am really glad that I have such a loyal audience, and I hope that all of you continue to read my articles. As we head towards summer, there may be one or two weeks where Friday Finance staff are unable to produce an article, but for the most part, we will be writing articles the entire summer. Anyway, have a great week, and I will see you next week.

Jacob Gans

Friday Finance