On June 11, 2026, the Small Business Administration (“SBA”) published a proposed rule that would fundamentally alter how individuals qualify as “socially disadvantaged” under the 8(a) Business Development Program (“8(a) BD Program” or “Program”). The comment period will be underway until July 13, 2026.
This five-page proposed rule states that it aims to align the 8(a) BD Program with constitutional and statutory requirements and remedy what it characterizes as the discriminatory effect of the program in the past.
Notably, the proposed rule does not overhaul the Program as a whole. It instead targets a foundational concept: how social disadvantage is defined and how individually owned firms can prove they are socially disadvantaged. The proposed rule only applies to small businesses that are owned and controlled by individuals, not entity-owned small businesses.
SBA does not currently intend to apply these new changes to participants who are already admitted to the 8(a) BD Program, but is requesting comments on this point.
Below, we highlight some of the most consequential changes and open questions.
Background
The SBA 8(a) BD Program, established in 1953 under the Small Business Act, is designed to help small businesses owned by socially disadvantaged individuals compete in the federal contracting space. The statute aims to award at least five percent of federal contracting dollars to these businesses. To qualify for the Program, a business must be at least 51% owned and controlled by socially and economically disadvantaged individuals (or certain qualifying entities).
Historically, individuals belonging to certain enumerated racial and ethnic groups were presumed to be socially disadvantaged absent credible evidence to the contrary (“the Rebuttable Presumption”). Applicants outside of those enumerated groups who were interested in applying under the Program were required to submit evidence demonstrating personal experiences of discrimination or bias that impacted their “entry into or advancement in the business world,” and entitled them to “socially disadvantaged” status.
In 2023, a federal district court held that the Rebuttable Presumption violated the Fifth Amendment’s right to equal protection and enjoined SBA from continuing to use it when administering the Program. See Ultima Servs. Corp. v. U.S. Dep’t of Agric., 683 F. Supp. 3d 745 (E.D. Tenn. 2023). In 2025, the Department of Justice stated that it would no longer defend the Rebuttable Presumption in court.
The primary change to the SBA 8(a) BD Program under the proposed rule is a shift away from presuming certain enumerated racial or ethnic groups to be “socially disadvantaged.” Instead, the proposed rule provides that any U.S. citizen may establish social disadvantage by demonstrating that, during the applicant’s lifetime, a governmental or private entity (including, but not limited to, any federal, state, or local government, university, or corporation) enacted policies, rules, or regulations that:
- Discriminated or were biased against a definable racial, ethnic, or cultural group (“defined group”) of which the applicant is a member, or favored a defined group of which the applicant is not a member, and
- Resulted in material harm to the applicant.
Material harm is defined as “loss of access to or diminished opportunities related to economic advancement.”
- Were a member of the defined group at the time of the government or private entity’s discriminatory policy, rule, or regulation, and
- Experienced material harm as a result of those policies, rules, or regulations.
The applicant must also provide evidence (as opposed to a self-certification) that the discriminatory policy, rule, or regulation favored another defined group, disadvantaged the applicant’s defined group, or that the government or private entity took adverse actions against or otherwise disfavored the applicant’s defined group.
Examples of such discriminatory policies, rules, and regulations include “unlawful diversity, equity, and inclusion programs or policies; unlawful affirmative action programs or policies; race-based quotas, set-asides, or hiring targets; or, any government or private entity policies or programs that favored some groups over others on the basis of race.”
The proposed rule further highlights “two specific examples”:
- Being excluded under the 8(a) BD Program as a result of the Rebuttable Presumption.
- Being “disadvantaged in college or university admissions decisions or otherwise discriminated against by a private entity in an unlawful manner. . . .”
The proposed rule describes “[s]ufficient evidence” of such discriminatory policies, rules and regulations as including:
- Materials on government, university, and corporate websites
- Government, university, and corporate policies, regulations, guidance, procedures, or documents
- Statements by government, university, or corporate officials
- Government, university, and corporate reports, audits, or findings
- Court decisions
- Administrative rulings
What Questions Remain
The proposed rule raises a number of questions. For example, the scope of the new regulatory test to qualify as socially disadvantaged is potentially expansive. Will this new standard mean that virtually any small business owner could potentially qualify for the Program by pointing to alleged discrimination affecting a group? And will there be any cap on the number of participants in the Program?
In addition, it appears that the components that need to be self-certified — including having experienced material harm — do not need to be accompanied by evidence. Will there be any review or diligence of those self-certification components? And what False Claims Act exposure may be associated with these applications, including the self-certifications?
Finally, it appears that the applications will contain the equivalent of allegations of discriminatory treatment against both private and public entities. Will the government use the contents of these applications to form the basis of investigations and enforcement activity separate and apart from the 8(a) BD Program? Stakeholders should continue to closely monitor the rulemaking process.