SBA Ditches Race Rules in Programs: Constitution Wins, Bureaucrats Pivot
Published Date: 9/29/2026
Rule
Summary
The SBA is updating its rules to remove parts that could cause legal problems by requiring race-based actions without clear reasons. This change affects anyone applying for or receiving SBA programs and starts right away on September 29, 2026. The update makes the rules fairer and simpler, with no new costs involved.
Analyzed Economic Effects
3 provisions identified: 2 benefits, 0 costs, 1 mixed.
SBA stops pursuing disparate-impact liability
Starting September 29, 2026, the SBA rescinds 13 CFR 112.3(b)(3) and 13 CFR 112.7(d) and makes clear that its Title VI regulations prohibit only intentional discrimination. SBA states it will not pursue Title VI disparate-impact liability against its Federal funding recipients.
Employment rule narrowed for SBA recipients
As of September 29, 2026, SBA revises 13 CFR 112.4 by removing the sentence that extended Title VI employment prohibitions to recipients when the primary objective of Federal financial assistance was not employment. The revised first sentence limits employment nondiscrimination to assistance described in 13 CFR 112.2(b)(1) and (2).
No new compliance or reporting costs
SBA states this rule imposes no new compliance requirements, reporting obligations, or operational changes on small businesses, applicants, or recipients, and that estimated annualized compliance costs are negligible.
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