SBA 8(a) Loan Program, No Qualified Applicants, AI Executive Order

Hey everybody, it's Gene Marks, and welcome to this week's episode of the Paychex THRIVE Week in Review. This is where we take a few items from the news, and we discuss them because they impact your small business and mine.

Before we get started, just as you and I both know, managing your team does not have to be complicated, right? I mean from hiring the right people to getting them onboarded, keeping things running smoothly, Paychex has the HR tools and support you need to do it all. It's like having an extra set of hands when really need it.

Curious? Visit paychex.com. Go to paychex.com/meetpaychex. That's P-A-Y-C-H-E-X dot-com forward slash meet paychex. Okay, let's get to the news.

The first bit of news comes from the Federal News Network and it's about new audits that are putting the SBA, Small Business Administration, Section 8(a) program deeper in the crosshairs. Let's dig into this a little bit.

The U.S. Small Business Administration's 47-year-old Section 8(a) Small Business Contracting Program is under intense scrutiny from multiple fronts. According to the report, a conservative legal group, the Center for Individual Rights, and the Wisconsin Institute for Law and Liberty filed a lawsuit in federal court seeking to strike down what they argue are unconstitutional racial preference regulations embedded in the program, a challenge that could upend long-standing eligibility criteria.

At the same time, the SBA has launched a sweeping audit, sending letters to over 4,300 recipients in the 8(a) program, demanding extensive financial and operational records as part of compliance reviews amid concerns about fraud and misuse of set-aside contracts. Sen. Joni Ernst urged federal agencies to pause Section 8A sole-source awards until the audit concludes, citing cases of bribery and allegations of improper pass-through contracts.

Taken together, these legal and administrative actions of industry experts warning that the future of the 8(a) program is at risk.

How does that impact you if you are looking for federal contracts? This 8(a) program for years, more than four decades, has been a very popular way to go about getting federal money, but as you can tell from this report is under intense scrutiny. It has not been ended but just be aware that you want to have all of T’s crossed and I's dotted if you want to apply for this program. You probably want to hire an expert – an attorney – or somebody very familiar with the program to guide you through the process and make sure that you're not going to get flagged for any type of misuse or problem.

So, Section 8(a) program for those looking for federal contracting numbers, er, contracts if you're a small business definitely under scrutiny. Be very careful. And if you are under that program already again make sure your records are in order.

Okay, the next bit of news comes from the National Federation of Independent Businesses. Small business hiring challenges persist, they reported as part of their NFIB latest jobs report. In November 2025, 33% of small business owners reported job openings that they could not fill, slightly up from the prior month and well above the long-term historical average of 24%.

A majority of owners – 56% – were hiring or trying to hire but half of those owners reported few or no qualified applicants for the positions they sought to fill. Skilled positions remained harder to staff than unskilled ones, with 26% of owners seeking skilled workers and 12% looking for unskilled workers.

While the labor market shows some signs of softening with a slight increase in owners reporting few qualified applicants relevant to none, the mismatch between job openings and qualified applicants continues to hamper growth for many small firms. The data highlights ongoing recruitment difficulties, even as many owners plan job creation.

The takeaway for this is that despite all the news that we hear about lost jobs and lots of layoffs among corporations and a softening job market, according to the NFIB, small business owners are struggling to find skilled and qualified applicants for the jobs that they are offering.

AI may play a role in helping to ease the burden for these small business owners; not to replace employees, which obviously we can see that business owners are having a hard time locating in the first place.

The final story comes from The Guardian, a place where I write for every week, has to do with President Trump's recent executive order aimed at preventing states from regulating AI. According to The Guardian, on Dec. 11, President Trump issued a high-profile executive order designed to pre-empt state-level regulation of artificial intelligence. The order seeks to block states from implementing their own AI safety and government laws, such as California's disclosure requirements and Colorado's algorithmic bias safeguards, on the grounds that a patchwork of state regulations would hinder technological innovation and burden AI developers.

It establishes a federal AI litigation task force tasked with challenging conflicting state AI laws. While the order doesn't carry the force of new legislation, it represents a considerable effort of federal authority and a win for major tech companies that lobbied for uniform national standards.

Critics, including civil liberties advocates and state leaders, argue that the policy centralizes power with Silicon Valley, weakens consumer protections, and potentially exposes vulnerable communities to unchecked AI harms. Supporters frame it as essential for U.S. competitiveness in the global AI race.

Now, first of all, let me tell you that there's no winners or losers here. There's no right or wrong in this debate. There are good arguments on both sides. Should you let states regulate? Should it be a federal government thing? What's interesting about this executive order is that it's fairly inconsistent with a lot of the Trump administration's positions on issues where they have pushed more of this kind of stuff down to the states to be locally decided and had more of a hands-off approach at the federal level.

But when it comes to AI, AI is not necessarily a local issue. It is a national issue. It's a global issue, and so the Trump administration feels that it should be dealt with at a national level and not at the state level because it will cause that much more confusion among people trying to implement and use AI solutions.

It's a tough issue, but if you are using AI solutions in your business just be aware your state may have some oversight in what you're doing. It may not. The federal government will be coming out with its own rules sooner rather than later, so you want to pay special attention to make sure that you are in compliance.

This has been the Paychex THRIVE Week in Review and you've been watching and listening to me, Gene Marks, give you some of the news items that impact your business and a few thoughts on why and how.

If you need any advice or tips or help in running your business, sign up for our Paychex THRIVE newsletter. Go to paychex.com/thrive. You can sign up and get some help for running your business and also links to prior episodes of this podcast.

Thanks so much for watching everybody. We will see you again next time. Take care.

Do you have a topic or a guest that you would like to hear on THRIVE? Please let us know. Visit payx.me/thrivetopics and send us your ideas or matters of interest. Also, if your business is looking to simplify your HR payroll benefits or insurance services, see how Paychex can help. Visit the resource hub at paychex.com/worx. That's W-O-R-X. Paychex can help manage those complexities while you focus on all the ways you want your business to thrive.

I'm your host, Gene Marks, and thanks for joining us.

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