Even as the Trump administration moves forward with plans to sharply cut the Small Business Administration's workforce, the agency is being asked to add a major new responsibility: managing the federal government's student loan portfolio.
Speaking to reporters Friday from the Oval Office, President Trump said the SBA "will handle all of the student loan portfolio … a pretty complicated deal." He did not provide any details about how the transfer of responsibility would proceed, including whether workers would be transferred to the SBA to administer student loan programs.
Reaction to Trump's announcement — which represents a major expansion of SBA's mission, and is part of his push to shutter the Department of Education — ranged from acceptance to outrage.
The National Association of Government Guaranteed Lenders, which represents banks and credit unions active in SBA lending, said in a press release that shifting responsibility for student lending "is not expected to impact SBA's existing business loan programs."
But Rep. Nydia M. Velazquez, D-N.Y., the ranking minority member of the House Small Business Committee, blasted the idea in a press release, calling it "baffling and irresponsible."
"The mission of the SBA is to aid, counsel, assist and protect small businesses, this decision will do nothing to advance these goals," Velazquez said. "In fact, it will actively hurt both American entrepreneurs and student loan borrowers."
Heidi Pickman, vice president of engagement and external relations at the San Francisco-based CAMEO Network, which provides various kinds of assistance to small businesses, also expressed concern.
"The focus to help small businesses is very different than helping on student loans," Pickman told American Banker on Monday.
For her part,
Posting Friday afternoon on X, Loeffler stated SBA "is prepared to work with Congress and the Administration to bring accountability back to America's student loan program."
Loeffler's proposal to significantly downsize the agency's workforce is part of a reorganization she claims will save more than $400 million annually without impacting mission-critical services.
While Loeffler has not yet provided specific details about the approximately 2,700 full-time positions she plans to eliminate, an SBA press release issued Friday was critical of several programs launched during the Biden administration.
Staffing cuts will be achieved "through voluntary resignations, the expiration of COVID-era and other term appointments, and a limited number of reductions in force," the release stated.
Loeffler insisted the staff reductions would leave vital programs, including disaster assistance and the flagship 7(a) loan guarantee program, unaffected. The SBA's Office of Veterans Business Development and Office of Manufacturing and Trade, as well as its advocacy office and its inspector general's office, were specifically exempted from any job losses.
"Just like the small business owners we support, we must do more with less," Loeffler said in the press release. "We will return our focus to driving private sector growth and delivering disaster relief with accountability, efficiency, and results."
Congressional Republicans praised Loeffler's reorganizational blueprint.
"These actions will trim the fat and right-size what has become an out-of-touch agency," Senate Small Business and Entrepreneurship Committee Chairwoman Joni Ernst, R-Iowa, said Friday in a press release.
Beyond downsizing, Loeffler intends to centralize risk management and fraud prevention functions under the supervision of SBA's chief financial officer, expand the Office of Disaster Recovery and Resilience and mandate that at least 30% of the agency's staff is based in its 68 field offices.
There is no question that the SBA's workforce, which currently numbers about 6,500, according to Loeffler, has grown in size since the start of Trump's first term. It totaled about 3,300 employees in fiscal year 2017. Even so, some observers expressed concern the deep cuts the administrator is proposing may hit bone.
"These cuts in the public infrastructure that are supporting small businesses are really jeopardizing a critical engine of our economy," Pickman said. "In the last four years there's been 21 million new business applications filed. That's more than 5 million a year. Before COVID, those numbers were 3.5 million a year. "
Pickman added that SBA women's business centers in California are serving "80% more clients" than they were in 2019.
The SBA's planned reorganization appears to have been prompted, at least in part, by a Feb. 11 executive order from President Trump directing heads of federal agencies to "undertake preparations to initiate large-scale reductions in force consistent with applicable law."
Since then, a number of agencies have announced workforce reduction plans. The Federal Deposit Insurance Agency said last month that it would
