Comment on FR Doc # 2026-11765

The proposed revision to 13 C.F.R. 124.103(b) is unworkable for many legitimately disadvantaged applicants and departs from how discrimination actually operates in the marketplace.<br/>The rule conditions social disadvantage on an applicant&rsquo;s ability to identify a specific &ldquo;action, policy, rule, regulation, or other practice&rdquo; by a government or private entity that favored some groups over others and caused &ldquo;material harm.&rdquo; In practice, this standard privileges applicants who can point to formal, written programs while discounting the individualized but pervasive discriminatory conduct that many entrepreneurs face from supervisors, lenders, contracting officials, and customers.<br/>Most disadvantaged business owners experience discrimination as a series of concrete incidents: being passed over for contracts without explanation, being held to higher standards than similarly situated competitors, being denied credit or mentoring opportunities, or being steered away from lucrative work based on stereotypes. These harms are real and cumulative, but they are rarely memorialized in neatly worded policies that can be attached to an application. By insisting on proof of a formal &ldquo;action, policy, rule, regulation, or other practice&rdquo; as the gateway to 8(a) eligibility, the proposed rule imposes an evidentiary burden that many legitimately disadvantaged firms cannot meet, even though their experiences fall squarely within the statute&rsquo;s core concern: individuals who have &ldquo;been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.&rdquo;<br/>The proposed rule also is unlikely to help many of the very people it purports to protect. DEI related practices are often tacit, informal, or poorly documented. Likewise, discrimination in fields dominated by particular demographics rarely appears in official policies. For instance, an IT programmer who has been consistently discriminated against in a field dominated by one demographic that favors its own will be unable to furnish a written policy, even though they may have suffered real harm. Similarly, a veteran who has been disfavored in industries or organizations that take a less flattering view of military service may face serious disadvantage without ever being able to point to a written policy. In both cases, the proposed rule&rsquo;s insistence on documented &ldquo;policies&rdquo; as the core proof of social disadvantage would exclude exactly the kinds of real world discrimination that Congress intended 8(a) to address.<br/>The standard is also operationally unworkable. It asks line level SBA analysts, handling thousands of applications, to identify and interpret an open ended universe of governmental and private policies, determine which of them are &ldquo;unlawful&rdquo; or &ldquo;biased,&rdquo; and then link them to specific harms experienced by individual applicants. That expectation is unrealistic and virtually guarantees inconsistent, arbitrary decisions across regions and over time.<br/>I urge SBA to reconsider this approach and instead adopt an individualized, race neutral standard for social disadvantage that is grounded in credible sworn narratives, evaluated for consistency, rather than in access to formal written policies. Under this alternative, an applicant could establish social disadvantage through a detailed sworn statement that (1) describes specific incidents of prejudice or cultural bias in education, employment, or business; (2) explains how those incidents materially impaired the applicant&rsquo;s ability to enter or advance in the business world; and (3) is internally consistent and consistent with the applicant&rsquo;s education, employment, and business history as reflected in the record.<br/>Under this approach, the sworn narrative is the primary and sufficient evidence of social disadvantage. Applicants may but are not required to submit supporting documents. The absence of documentation (such as complaints, emails, or written denials) should not weigh against the applicant or be treated as evidence that discrimination did not occur. Given the practical realities facing small and disadvantaged business owners, it is neither reasonable nor fair to assume that a lack of paperwork means a lack of discrimination.<br/>This model is race neutral: all applicants, regardless of race or ethnicity, must make an individualized showing of social disadvantage based on their own experiences. At the same time, it remains responsive to evidence of discrimination against any group and is more consistent with the statute&rsquo;s purpose than the proposed &ldquo;policy based&rdquo; test.<br/>For these reasons, I respectfully request that SBA withdraw or substantially revise the proposed rule and instead adopt an individualized, sworn narrative standard for establishing social disadvantage, in which documentation is entirely optional and credible sworn statements are sufficient absent specific evidence of inconsistency.