WASHINGTON, D.C. — The U.S. Small Business Administration is moving to let Los Angeles wildfire survivors bypass stalled local permitting and tap billions in approved disaster loans, while separately suspending more than 1,000 firms from its signature 8(a) federal contracting program in what the agency called a crackdown on fraud and abuse.
On Tuesday, January 27, SBA Administrator Kelly Loeffler applauded President Donald J. Trump for signing an executive order titled “Addressing State and Local Failures to Rebuild Los Angeles After Wildfire Disasters,” directing the agency to develop regulations aimed at breaking what the SBA described as crippling state and local bureaucracy that has slowed recovery from the Eaton and Palisades wildfires.
Loeffler accused California leaders of failing to clear permitting backlogs that, she said, have prevented survivors from rebuilding for more than a year. “Governor Gavin Newsom and Mayor Karen Bass had over a year to clear the permitting backlogs that kept California in ruins by preventing survivors from spending billions in federal relief funds,” Loeffler said. “Today, while local officials continue to delay, the Trump Administration is stepping in to do what the Governor and Mayor did not: offer Californians an immediate onramp to recovery by bypassing the bureaucracy.”
The SBA said it approved 12,600 disaster loans totaling $3.2 billion for Los Angeles wildfire recovery last year, describing it as an unprecedented level of assistance and more than half of all disaster aid the agency approved in fiscal year 2025. Yet the agency said less than 25% of that funding has been drawn by borrowers because contractors and survivors have been unable to move forward amid permit delays.
More than a year after the wildfires destroyed more than 16,000 homes and businesses, the SBA said fewer than 3,000 rebuild permits have been issued across the City and County of Los Angeles and fewer than ten homes have been rebuilt, citing county figures. It also said that as of last year, 75% of Pacific Palisades residents and 67% of Altadena residents remained in temporary housing.
Typically, the SBA said, disaster survivors have six months from loan approval to fully use approved funds, but the agency said it repeatedly extended disbursement deadlines in California because delays prevented borrowers from accessing their loans. The SBA said the most recent extension runs through June 30, 2026.
On Thursday, January 29, the SBA said it published regulatory guidance under Executive Order 14277 that will allow builders to self-certify compliance with substantive state and local rebuilding requirements when SBA disaster borrowers have waited 60 or more days for permits or other approvals. Under the new approach, borrowers can seek to amend their loan agreements so rebuilding can begin without waiting for delayed local approvals, provided builders certify that permit applications and approval requests were properly submitted more than 60 days earlier, the holdup is due to government inaction, and all applicable building codes, health and safety requirements, inspections, and certificate-of-occupancy processes will be met.
Borrowers pursuing the self-certification option must submit two documents to the SBA: a Disaster Loan Modification application and a Builder’s Certification, the agency said. It warned that false statements or misrepresentations can trigger significant civil and criminal penalties. The SBA said the same process will apply in the future to any local jurisdiction where permitting systems block recovery after presidentially declared disasters.
Borrowers seeking information about SBA disaster assistance can visit sba.gov/disaster, call (800) 659-2955, or email disastercustomerservice@sba.gov. The SBA said more details on the permit-bypass option are available at https://www.sba.gov/funding-programs/disaster-assistance/options-bypass-permitting-delays.
Separately, on Wednesday, January 28, the SBA announced the suspension of 1,091 firms from the 8(a) Business Development Program after they failed to meet a Monday, January 19 deadline to submit three years of financial documents. The agency said the 1,091 firms represent about 25% of the roughly 4,300 firms registered to participate in the contracting program.
The SBA said about half of the suspended firms have received payments for federal contracted work since 2021 and collectively have received more than $5 billion over the last four years.
“The 8(a) Program was abused during the Biden Administration to benefit favored minority groups at the expense of every other legitimate small business owner in America, including white Americans,” Loeffler said. “The Trump Administration has acted from Day One to dismantle the discriminatory agenda that put white small business owners at a disadvantage, and to crack down on the fraud and corruption that proliferates within DEI programs.”
The SBA said it will pursue broader reforms to the 8(a) program in coming weeks, and it pointed to actions it said it has taken since early 2025, including launching what it described as the first audit of the program in its nearly 50-year history and issuing multiple suspensions tied to allegations of fraud.
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