SBA Reverses Course on Veteran Contracting, Citing Delays and Policy Shift

WASHINGTON, D.C. – November 11, 2025 – The Small Business Administration (SBA) announced today that a significant backlog of over 2,700 Veteran Small Business Certification (VetCert) applications has been cleared, effectively restoring processing times to pre-2024 levels. The move, spearheaded by newly appointed SBA Administrator Kelly Loeffler, reverses a policy shift implemented during the previous administration that prioritized resources towards broader diversity, equity, and inclusion (DEI) initiatives, allegedly at the expense of veteran-owned businesses. The change is already being hailed by veteran advocacy groups, while sparking debate over federal contracting priorities and the balance between targeted support and broader inclusion efforts.

Backlog Cleared, Processing Times Drastically Reduced

The SBA confirmed that processing times for VetCert applications have plummeted from an average of 81 days to just 12 days. This improvement follows months of criticism regarding significant delays that hampered the ability of veteran entrepreneurs to compete for federal contracts. The agency attributes the turnaround to a renewed focus on veteran-specific programs and the allocation of additional staffing and funding. “We recognize the sacrifices made by our veterans, and it is our duty to ensure they have the resources they need to succeed in the business world,” stated Administrator Loeffler in a recent press briefing. “Clearing this backlog and streamlining the certification process is a critical step in fulfilling that commitment.”

Prior to the policy reversal, the delays caused considerable frustration among veteran business owners. “The backlog was crippling,” said a veteran-owned business owner in the manufacturing sector, speaking anonymously. “We rely on the VetCert to even be considered for federal opportunities. The months-long wait meant lost contracts and a real strain on our business.” Data from the National Veteran-Owned Business Association (NaVOBA) showed a measurable decline in the number and value of federal contracts awarded to veteran-owned businesses during the peak of the backlog, further illustrating the impact of the delays.

Policy Shift and the DEI Debate

The current course correction stems from a policy shift implemented in January 2024, which redirected resources towards the 8(a) Business Development Program and broader DEI goals. The previous administration increased the federal goal for contracts awarded to “socially disadvantaged” businesses from 5% to 15%, aiming to address historical inequities in federal contracting. However, this move drew criticism from Republican lawmakers and veteran advocacy groups, who argued that it came at the expense of other deserving small business groups.

“The previous administration’s focus on a single demographic goal created an uneven playing field,” explained a congressional aide familiar with the policy debate. “While DEI is important, it shouldn’t come at the expense of other vital programs like VetCert, which specifically supports those who have served our country.” The re-allocation of resources led to reduced staffing and funding for the VetCert program, contributing directly to the growing backlog and prolonged processing times. This change is now being reframed as an overreach, with the new administration emphasizing a broader definition of small business support, and restoring the 5% contracting goal.

Impact on Veteran Entrepreneurs and Future Outlook

The clearance of the backlog is already providing relief to veteran entrepreneurs who had been waiting months for their certifications. The renewed focus on VetCert is expected to increase opportunities for veteran-owned businesses to compete for federal contracts. “We’re seeing a positive shift,” said a representative from NaVOBA. “The faster processing times will allow our members to bid on more opportunities and grow their businesses.”

However, the policy reversal has also ignited a debate about the broader implications of prioritizing certain small business groups over others. Proponents of DEI argue that targeted support is necessary to address historical inequities and ensure a more inclusive economy. Critics contend that such policies can create unintended consequences and distort the market. “There’s a legitimate conversation to be had about how to balance DEI goals with the need to support all small businesses,” said a business ethics professor. “It’s not an either/or situation, but finding the right balance is crucial.”

The SBA’s decision to restore the 5% contracting goal for ‘socially disadvantaged’ businesses is likely to fuel this debate. The agency is emphasizing a more holistic approach to small business support, aiming to create a level playing field for all entrepreneurs. The long-term impact of this policy reversal remains to be seen, but it’s clear that the conversation about federal contracting priorities is far from over.