Small Business Regulation Is Cratering - Here’s The Hidden Catch

Politicians of both parties often proclaim small business the engine of the economy.

But during the Biden administration, red tape proliferated. The Small Business & Entrepreneurship Council noted, for example, the toll from credit card late fee rules, freight rail regulations, antitrust activism and the Labor Department’s independent contractor and franchising rules.

By contrast, under Trump 2.0 there’s a drought in conventional notice-and-comment rulemaking. There are 2,029 final rules in the Federal Register as of Columbus Day, a pace set to deliver the lowest tally since record-keeping began in the 1970s. Many of these are deregulatory “unrules” and recissions: pauses, delays, enforcement relaxations, narrowed scopes, expanded flexibilities and the like.

While Congress has enacted no comprehensive reforms to make this new non-interference agenda permanent, nearly half (16) of 36 public laws through September were resolutions of disapproval signed by Trump to overturn late-term Biden rules. That authority stems from a process afforded by the Congressional Review Act, enacted as part of the Small Business Regulatory Enforcement Fairness Act in 1996.

Small Business Regulatory Relief

Of the 2,029 finalized rules so far, 510 are flagged as affecting small business, a number of them deregulatory. Just 21 are deemed “significant,” typically implying economic effects of at least $100 million annually.

On a straight linear projection, we can expect to see "only" about 652 final rules affecting small business and 27 significant final rules by December 31, besting Trump’s first term averages of 701 and 70 respectively, as seen here.

The last time significant small business rules were that low was—well, never. For comparison (and recognizing that transition year overlap):

• Biden averaged 846 rules per year affecting small business, 82 significant.
• Obama averaged 694 per year, 117 significant.

Some of Trump’s 21 significant small business rules are in fact unrules including:

• TCE (trichloroethylene) rule delay: postpones costly chemical-use restrictions, retaining prior standards;
• Telemedicine buprenorphine expansion: allows opioid-treatment prescribing via phone or nternet, ending in-person visit requirements;
• Federal Aviation Administration testing pause: suspends certain new foreign repair-station drug-testing rules, easing compliance burdens;
• “Beneficial Ownership” relief: extends filing deadlines and exempts certain small firms from new reporting mandates.

Other significant small business rules might be regarded as neutral, such as trademark adjustment fees, or plainly regulatory, such as certain agency Buy American requirements and marine cybersecurity mandates for some U.S.-flagged vessels. Overall many Trump changes are temporary; Congress must act to make streamlining permanent. The biggest shift is simply the absence of new regulation.

As icing on the cake, the Small Business Administration’s (SBA) Office of Advocacy under Trump has actively pushed deregulation across government, notably submitting comments in response to the Office of Management and Budget’s Request for Information on regulations that are "unnecessary, unlawful, unduly burdensome, or unsound." SBA has also suggested cuts and improvements in regulatory processes in response to queries from from the Department of Health and Human Services, the Department of Interior and the Federal Communications Commission. The SBA even took a taste of its own medicine, announcing a 43 percent staff reduction during the early Department of Government Efficiency (DOGE) era.

Small Business Swampiness

Now, the warning. Especially in the wake of COVID, the Inflation Reduction Act, the Infrastructure Law and the CHIPS and Science Act, “ordinary” notice-and-comment rulemaking reflected in the chart above is no longer necessarily the primary channel of federal influence. Apart from today’s welcome Trump interlude, Washington’s tendency is to disregard regulatory burdens and to draw small business into the Washington vortex, undermining the autonomy and self-sufficiency that should define entrepreneurship

Too many firms—large and small alike—exist mainly to chase federal grants, contracts, preferences and federal partnerships rather than serve market demand. This top-down steering of business remains visible even in the Trump era via antitrust intervention, tariffs, price interference and partial nationalizations such as recent equity stakes in private firms. Conditions and strings attached to the hundreds of billions in federal subsidies and grants each year are regulations in all but name.

Even the SBA’s deregulation push to deregulate is accompanied by celebration of loan guarantees. While the agency restored more robust lending criteria from weakened Obama-era standards (ironically, a “regulatory” move), it remains in a business that shouldn’t involve taxpayers.

The SBA boasted in April of a 74 percent spike in manufacturing loans compared with Biden and, in September, rolled out its first-ever manufacturing line-of-credit program. So while the SBA eyes cutting cut red tape, it’s simultaneously expanding government’s footprint in small business finance, just as Joe Biden used once boasted of record procurement and government-backed lending.

Trump’s expansion of SBA engagement will come back to bite with a change in power. While SBA has long steered contracts and loans toward small and disadvantaged businesses, progressives’ taxpayer-funded moonshots such as Biden’s climate and social-equity campaigns exploit already deep dependency on government favor and distract from what should be the real mission: cutting red tape.

The latest National Federation of Independent Business (NFIB) survey finds abundant job openings, but also owners struggling to find qualified applicants and facing continued wage pressures amid what looks like a resilient but “jobless” recovery. The consolation: if the recovery is jobless, it isn’t because of new regulation published in the Federal Register.

Notice-and-comment rulemaking has cratered. That’s a welcome trend but it’s only part of the story. A vast array of federal interventions—from antitrust to Obamacare to tariffs—escape our conventional definition of regulation. If all such interventions were translated into rule equivalents, those short Trump bars in the chart above would stand taller.

Small business and all business need relief from the entire sweep of federal intervention. This year’s just announced Nobel Prize in Economic Sciences, recognizing Joel Mokyr, Philippe Aghion, and Peter Howitt, underscores how freedom, openness, and the transfer of scientific discovery into practical innovation drive prosperity. That lesson applies directly to small business: growth depends less on federal programs than on removing barriers that stifle experimentation and creative destruction.

As Congress grapples with the shutdown, fiscal year 2026 budget negotiations, and a looming debt ceiling, it should take everything into account and reduce the federal footprint once and for all.