A Call for Thoughtful Consideration: Protecting Small Business Support Amid Federal Budget Conversations

By Natalie Madeira Cofield
President & CEO, Association for Enterprise Opportunity (AEO)

The release of President Donald Trump’s Fiscal Year 2026 discretionary budget request presents a pivotal moment for America’s small business ecosystem. While presidential budgets serve primarily as policy frameworks, the proposed shifts across key federal agencies present both opportunities for rethinking government efficiency and challenges that deserve careful review—particularly when it comes to sustaining the infrastructure that supports the nation’s entrepreneurs.

The budget outlines more than $163 billion in reductions to non-defense discretionary spending. Among these changes are significant adjustments to programs and agencies that have long served as cornerstones for economic development, capital access, and business resilience—particularly in rural and historically undercapitalized communities.

At the U.S. Small Business Administration (SBA), the proposal includes a $167 million reduction by eliminating 15 entrepreneurial development programs, such as Women’s Business Centers and SCORE. These programs have provided vital technical assistance, mentorship, and targeted support for early-stage and growth-oriented businesses. While the Administration aims to consolidate services under the Small Business Development Centers (SBDCs)—which would see a $10 million increase to enhance support for veteran-owned businesses—ensuring continuity and reach for specialized support services will be critical.

The budget also proposes a $111 million reduction to SBA’s Salaries and Expenses (S&E), rolling back nearly 34% of the agency’s operational funding growth since 2021. This is especially noteworthy given the agency’s expanded mandate to manage the Education Department’s student loan servicing portfolio—a significant new responsibility. At a time when the SBA is being asked to broaden its scope, reductions in staffing and operational resources may strain the agency’s ability to deliver on its core mission and these new obligations.

In the Department of the Treasury, the budget proposes to eliminate $291 million in discretionary awards from the Community Development Financial Institutions (CDFI) Fund, citing a belief that the industry has matured beyond the need for federal “seed” capital. While some operational funding remains—for certification, New Markets Tax Credit oversight, and the Bond Guarantee Program—removing flexible grant support could limit the ability of CDFIs to serve high-need markets with tailored, affordable financing.

To its credit, the Administration also proposes a new $100 million Rural Financial Award Program, designed to expand access to capital, infrastructure financing, and main street development in rural communities. The program would require 60% of investments to be directed to rural areas and would be managed through the CDFI Fund. This targeted investment is promising and underscores the importance of place-based strategies—but it does not fully replace the broader discretionary tools that have helped drive inclusive economic development across both rural and urban markets.

Though budget reform is a necessary and ongoing process, this moment requires measured, practical decision-making. As entrepreneurs face rising costs, tighter lending standards, and continued economic volatility, it is essential that the federal infrastructure built to support small businesses remains robust, responsive, and well-resourced.

At the Association for Enterprise Opportunity (AEO), we believe in the power of entrepreneurship to transform communities and catalyze upward mobility. Federal investments in technical assistance, access to capital, and regional economic development aren’t just line items—they are lifelines. We urge Congress and the Administration to ensure that as fiscal priorities shift, small businesses remain at the center of the nation’s economic strategy.