On June 11, 2026, the Small Business Administration (SBA) released a proposed rule that, if finalized, will substantially change eligibility for the 8(a) business development program for businesses owned and controlled by individuals. SBA explained that the previous 8(a) rules, which included a rebuttable presumption of social disadvantage for members of certain designated groups, have "rendered white Americans almost totally unable to participate in the program." The proposed rule would remove the rebuttable presumption and revise the current test for demonstrating social disadvantage. Under the new test, applicants must (1) self-certify that they belonged to a group affected by a governmental or private policy or practice and suffered material harm as a result, and (2) provide evidence that the policy or practice favored other groups or disadvantaged the applicant's group.
The proposed rule specifically identifies government or private diversity, equity, and inclusion (DEI) activities as an example of discrimination demonstrating social disadvantage, including discrimination by college and university admissions. It would also establish past exclusion from the 8(a) program as itself an example of discriminatory conduct, allowing small businesses owned by white citizens to obtain 8(a) status.
Under the proposed rule:
- Social disadvantage would mean anyone "subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities"
- Any individual would be permitted to self-certify that they are a member of a particular group that was subject to government or private discrimination, bias, or prejudice and suffered "material harm" as a result
- Material harm can be established by showing evidence "that during the citizen's lifetime, a governmental or private entity in the United States, including but not limited to any federal, state or local government, university or corporation, through any action, policy, rule, regulation, or other practice of any of its agencies, subsidiaries, or authorized agents, discriminated or was biased against a clearly definable racial, ethnic, or cultural group of which the citizen is a member, or favored in any way a racial, ethnic, or cultural group of which the citizen is not a member" and that the actions harmed the individual
- The proposed rule identifies unlawful DEI practices, past exclusion from the 8(a) program, and college/university admissions as examples of government or private actions that have favored one group while disfavoring another group
If adopted, the rule would significantly expand the number of 8(a) small businesses and fundamentally change the perception of the 8(a) program as providing business assistance to businesses owned only or predominantly by "Black Americans, Hispanic Americans, Native Americans . . . , Asian Pacific Americans . . . , Subcontinent Asian Americans . . ." 13 C.F.R. § 124.103(b)(1).
The proposed rule would not change 8(a) eligibility and criteria for entity-owned concerns, such as tribally owned concerns and Alaska Native Corporations. In addition, SBA does not currently intend to apply the new test to current participants at their next annual review.
Comments on the proposed rule will be due on July 10, 2026.