A Senate panel is scheduled to review proposed small business eligibility changes and workforce cuts at the U.S. Small Business Administration. The September 30, 2026 hearing will examine the agency’s programmes before a public comment deadline closes.
The Senate Committee on Small Business and Entrepreneurship will hold the oversight hearing under Chair Sen. Joni Ernst and Ranking Member Sen. Ed Markey. The agenda covers changes affecting business size standards, agency staffing and federal contracting.
According to Legis1’s hearing preview, the agency’s proposed size rule would newly classify an estimated 114,541 businesses as small. The public comment period has been extended by 60 days to Nov. 20.
A Proposed Change To Business Eligibility
The proposed rule, published in the Federal Register on Aug. 20, would replace 978 existing industry size standards with 338 standards. Those current standards use six-digit industry classifications.
Many industries would move from revenue-based thresholds to employee-based thresholds. The proposal would therefore change the measure used to determine whether affected businesses qualify as small.
The SBA estimates that 37,002 firms holding federal contracts would become small businesses under the proposed standards. Those firms held more than 105,000 contracts worth more than $71 billion in fiscal 2025.
These figures describe the agency’s estimates for the proposed rule. The hearing and remaining comment period precede any final outcome described in the preview.
Workforce Savings Face Service Concerns
The committee’s review also comes after the SBA announced major staffing reductions in March 2025. The agency planned to eliminate approximately 2,700 positions from an active workforce of nearly 6,500.
The SBA described the reduction as about 43% and estimated annual savings exceeding $435 million. It said the restructuring would preserve core public services, including loan guarantees and disaster assistance.
Critics, including the Center for American Progress, have disputed that assurance. They argue the cuts could undermine services that small businesses depend on.
The two positions frame a service-delivery question for oversight: the agency expects savings while maintaining core programmes. Critics warn that fewer staff could weaken the support those programmes provide.
Contracting Rules And Fraud Recovery
A separate proposed rule concerns the 8(a) Business Development Program. Released June 11, it would remove the regulatory presumption of social disadvantage based on specified racial or ethnic membership.
Individually owned applicants would instead need fact-based evidence of social disadvantage. The racial presumption had already become inoperative following federal litigation in 2023, according to the preview.
Markey opposed the proposal, arguing it diminished the history of systemic racial and ethnic discrimination. He and Sen. Mazie Hirono submitted a formal comment letter against the change in July.
Ernst has focused separately on recovering potentially fraudulent pandemic-relief funds. She cited an SBA inspector general estimate exceeding $200 billion across Economic Injury Disaster Loan and Paycheck Protection Program funds.
That estimate concerns potentially fraudulent funding, not a finding that every dollar involved was proven fraud. Ernst has backed legislation extending the time available to pursue pandemic-relief fraud cases.
The Sept. 30 hearing will give senators an opportunity to question the agency before the size-rule comment period ends. Businesses reviewing that proposal have until Nov. 20 to comment.