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Ranking Member Velazquez (D-NY) of the House Small Business Committee is raising concerns about the Small Business Administration’s (SBA) decision to eliminate longstanding procedures that provided small businesses with an opportunity to comment on federal policies and regulations affecting their operations.

In a letter to SBA Administrator Kelly Loeffler, the Ranking Member criticized the agency’s August 31, 2026, final rule rescinding its voluntary application of the Administrative Procedure Act’s (APA) notice-and-comment requirements to matters involving public property, loans, grants, benefits, and contracts. The letter argues that the decision removes an important avenue for small businesses to communicate directly with federal officials before new policies are adopted and implemented.

For more than 50 years, the SBA maintained procedures allowing small businesses and affected industries to provide input on proposed agency actions, even when the APA did not require formal public comment. According to the letter, nine previous administrations retained this approach because public participation helps ensure that federal regulations reflect the practical realities facing businesses.

The Ranking Member argues that eliminating these procedures creates a less transparent regulatory process and limits the ability of small businesses to identify potential problems before new requirements take effect. The concern is particularly significant given the SBA’s broad influence over federal lending and contracting programs.

The letter points out that SBA loan guarantee programs account for the second-largest share of commercial lending by the federal government. In addition, SBA contracting policies govern approximately one-quarter of federal contract spending, representing $179 billion of the $700 billion in federal contracts awarded during Fiscal Year 2025. The Ranking Member maintains that decisions affecting programs of this magnitude warrant meaningful input from the businesses that depend on them.

A central issue raised in the letter is the limited financial justification offered by the SBA for rescinding its notice-and-comment procedures.  The agency estimates that eliminating these procedures will save approximately $4,247 annually in employee time for each rulemaking, or roughly $28,029 per year based on an average of six or seven rules. The letter contrasts those projected savings with the more than $323 million Congress appropriated for the SBA’s salaries and expenses account in the current fiscal year.

According to the Ranking Member, the estimated savings represent approximately 0.008% of the agency’s annual salaries and expenses funding. The letter questions whether such a limited reduction in administrative costs justifies eliminating an established process for gathering input from small businesses. It also argues that the SBA already has regulatory tools available to move quickly when circumstances require immediate action. As an example, the letter cites a January 2026 interim final rule addressing the SBA’s disaster loan program. The agency used the APA’s good-cause exception to make the rule effective immediately while still providing a 30-day public comment period. The Ranking Member contends that this example demonstrates that the SBA can respond quickly to changing circumstances without eliminating opportunities for public participation altogether.

The letter raises additional concerns that the SBA’s action could weaken other safeguards designed to ensure small business representation in federal policymaking. Specifically, it points to the removal of the Office of Advocacy’s involvement and the elimination of requirements associated with the Regulatory Flexibility Act. These procedures have historically helped identify how proposed federal regulations may affect smaller businesses, which often have fewer financial and administrative resources than larger companies. The Ranking Member argues that removing these protections, combined with the elimination of voluntary public comment procedures, further limits small businesses’ ability to influence regulations that directly affect their operations.

While the letter calls on the SBA to withdraw its final rule, it also requests information about how the agency intends to determine when small businesses will be permitted to participate in future rulemakings. The SBA’s Federal Register notice states that the agency may continue to seek public comments on a case-by-case basis when it determines that public participation would be advantageous. In response, the Ranking Member is asking Administrator Loeffler to provide the Committee with:

  • The criteria SBA will use to determine which proposed regulations will be made available for public comment.
  • How the agency will define circumstances in which public participation is advantageous for engaging small businesses.
  • The internal guidance provided to SBA employees concerning when notice-and-comment procedures should be used.
  • The process SBA will follow to ensure small businesses and their stakeholders have an opportunity to provide input before regulations are implemented.
  • The letter also cites the substantial participation by small businesses in the SBA’s recent size standards proposal as evidence that public engagement can provide useful information and improve federal regulations.

The issue extends beyond the administrative procedures used by the SBA. The agency oversees programs that influence small business access to capital, federal contracting opportunities, disaster assistance, and other forms of federal support. Changes to these programs can have direct consequences for companies competing for government contracts, seeking financing, or navigating federal regulatory requirements.