The Small Business Administration plans to cut 43%, a decision the agency head says is needed to cut down on “mission creep” and employees no longer needed to support pandemic-era stimulus programs.

SBA announced the cuts Friday, saying it will eliminate nonessential roles and return staffing to pre-pandemic levels.

The agency expects to cut about 2,700 positions from its current workforce of nearly 6,500 employees.

“SBA will refocus its resources on the core missions of supplying capital, fostering innovation, supporting veteran small business owners, providing field support, and delivering timely disaster relief,” the agency wrote in a press release.

SBA expects to reduce its headcount mostly through voluntary resignations and expiring pandemic-era and other term appointments. The agency said it will only seek a limited number of layoffs through a nonvoluntary Reduction in Force (RIF).

SBA grew to nearly 10,000 employees in 2020 and 2021 — more than doubling its pre-pandemic levels. The agency has since reduced its headcount but still has thousands more employees than in 2019.

SBA says core services, including disaster assistance and loan guarantees and programs, will not be affected by these cuts. It will also keep existing staffing levels within the Office of Veterans Business Development and the Office of Manufacturing and Trade.

SBA Administrator Kelly Loeffler said in a statement that the agency will return to its core mission as a “launchpad for America’s small businesses,” that gives small companies access to capital.

“In the last four years, the agency has veered off track — doubling in size and turning into a sprawling leviathan plagued by mission creep, financial mismanagement, and waste. Instead of serving small businesses, the SBA served a partisan political agenda — expanding in size, scope, and spending,” Loeffler said.

An SBA contracting employee told Federal News Network that the agency is shutting the whole office down.

“Some employees will have to stay behind to close out contracts and cancel contracts. Leadership within our office is trying to keep the minimum here to help with those functions, so not everyone will have to be here going a job before you’re laid off,” he said.

Earlier this month, Federal News Network reported that the General Services Administration is looking to take over the contracting functions of several agencies, including SBA.

Former deputy SBA administrator Dilawar Syed, who served under the Biden administration, said SBA was “already stretched thin” in its field offices, and that these workforce cuts will make it harder for SBA to connect with small businesses.

“I saw an unmet need, if you will, from the small business owners to be able to get support from the agency, access to loans. And we need to deliver on that,” Syed said. “Cutting staff in the face of that unmet need… tells you that this is not going to help.”

Syed said that, including the recent firing of probationary employees, SBA is cutting nearly half its total workforce.

SBA fired about 300 probationary employees, but reinstated nearly all of them, according to documents the Trump administration filed with a U.S. District Court of Northern California. Politico, however, reported in February that SBA fired more than 700 probationary employees. 

Some agencies have put employees on paid administrative leave, instead of returning them to their jobs.

SBA says it will ensure 30% of its employees work in field locations beyond the D.C. metro area. Senate Small Business and Entrepreneurship Chairwoman Joni Ernst (R-Iowa) proposed relocating 30% of SBA’s workforce to duty stations outside the D.C. metro area in a bill she introduced last month.

SBA announced earlier this month it’s shutting down regional offices in Atlanta, Boston, Chicago, Denver, New York City, and Seattle “to less costly, more accessible locations that better serve the small business community.”

Syed said SBA saw record growth in new small businesses in some of those cities during his tenure and raised concerns about moving out of them.

“These are big metro areas. They are the engines of economic growth. The announcements of shutting down offices and more than half of the workforce being taken out do not give me confidence that these entrepreneurs across the country will have access to the resources they need,” he said.

Among its roles, SBA ensures the federal government meets its small business contracting goals. A record 28.4% of all federal contracting dollars went to small businesses in fiscal 2023.

Syed warned that the Trump administration’s policies could shift more federal contracting dollars to large tech companies, and away from smaller startups.

“We have a few big players who have, quite frankly, the inside track, and they are going to get access to these federal government enterprise-wide contracts at the expense of the next generation of great brands,” he said. “It’s always a startup that is coming up with an innovative product. It doesn’t normally come from big companies. So, it concerns me that we will, unfortunately, choke off access to federal government contracts for smaller companies — for startups.”

SBA says it will also exempt its Office of Advocacy and inspector general’s office from staffing cuts. President Donald Trump fired SBA Inspector General Hannibal “Mike” Ware in January — along with 16 other agency IGs.

SBA says it will get rid of “redundant pandemic-era positions” that processed loans for COVID-19 relief programs in the Office of Capital Access.

The agency said it will transfer disaster loan servicing functions and additional personnel into the Office of Disaster Recovery and Resilience. Employees there will also train other SBA personnel on disaster recovery efforts.

The SBA estimates $200 billion from its two biggest pandemic-era programs — the COVID-19 Economic Injury Disaster Loan (EIDL) and Paycheck Protection Program (PPP) — went to “potentially fraudulent” recipients. That’s about 16% of the agency’s total spending on the EIDL and PPP programs.

SBA’s inspector general office and federal law enforcement agencies have recovered about $30 billion in fraudulent EIDL and PPP spending.

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