SBA Issues "Day One" Memo – With A Particular Emphasis On Rooting Out Fraud

On February 24, 2025, the Small Business Administration (SBA) issued a "Day One" memo outlining SBA Administrator Kelly Loeffler's priorities.

The "Day One" memo highlights SBA's focus on the Trump administration initiatives—including implementing President Trump's executive orders; mandating that all non-exempt employees return to full-time, in-office work; and working closely with the Department of Government Efficiency (DOGE) in accomplishing accountability, transparency, and efficiency. SBA will relocate regional offices "currently based in sanctuary cities" to what it characterizes as "less costly, more accessible locations in communities that comply with federal immigration law."

Additionally, this "Day One" memo documents SBA's focus on the following initiatives:

1. SBA's loan programs. The memo states that fraud, delinquencies, defaults, and charge-offs have risen in the SBA loan programs. To address these issues, SBA will:
   1. Crack down on fraud. The memo states that the Biden Administration left "unaddressed fraud – including an estimated $200 billion in pandemic-era fraud." SBA is instituting a "zero-tolerance policy for fraud" and will investigate fraud across all programs. To this end, SBA has established a Fraud Working Group and will appoint a Fraud Czar to identify, stop, and claw back criminally obtained funds.
   2. Arrange an independent audit of its financials to address mismanagement, restore the credibility of financial statements, and preserve programs like the 7(a) lending program and the Small Business Investment Company program.
   3. Prevent non-U.S. citizens from benefiting from SBA's programs, placing a particular emphasis on restricting "hostile foreign nationals from accessing SBA assistance." SBA intends to add measures to prevent hostile foreign nationals, especially those with ties to the Chinese Communist Party, from accessing SBA assistance.
2. Supporting competition and equal access to federal contracting for all small businesses. The only action that SBA reports it has taken, or will take, in this memo is reducing the small disadvantaged business (SDB) prime contracting goal to the statutory level of 5%. As we've previously reported here, the Biden Administration set a goal of 15% for FY2025 for prime spend to SDBs, which the "Day One" memo describes as unfairly tipping the scales against non-disadvantaged small businesses and, in particular, negatively impacting many veteran-owned small businesses. This "Day One" memo does not otherwise address (or affirmatively indicate that there will be) other changes to SBA's federal contracting programs, including but not limited to the 8(a) Business Development Program, the Women-Owned Small Business Program, small business subcontracting plan requirements, etc.
3. Supporting an America First agenda. To rebuild American supply chains, the Office of International Trade is being transformed into an Office of Manufacturing and Trade focusing on powering a blue-collar boom, and the SBA will partner with other agencies to scale innovative manufacturing and technology startups.
4. Cutting regulations. SBA will call on the Office of Advocacy to utilize its power to identify and eliminate burdensome regulations promulgated by all federal agencies and will seek to cut regulations across the board.

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