Small business regulations create craters – here’s the hidden catch

Politicians from both parties often tout small business the engine of the economy.

But red tape increased during the Biden administration. The Small Business and Entrepreneurship Council notedfor example, the tolls imposed by credit card late payment rules, rail freight regulations, antitrust activism, and the Department of Labor’s independent contractor and franchise rules.

In contrast, under Trump 2.0 there is a drought in conventional notice and comment rules. There are 2,029 final rules in the Federal Register from Columbus Day, a pace that will see the lowest numbers since records began in the 1970s. Many of these are deregulatory “unrules” and recessions: pauses, delays, relaxations in enforcement, reduced scope, expanded flexibility and the like.

Although Congress has not passed comprehensive reforms to make this new agenda of non-interference permanent, nearly half (16) of the 36 public laws through September, disapproval resolutions had been signed by Trump to reverse the Biden late-term rules. That authority comes from a process enabled by the Congressional Review Act, which was enacted in 1996 as part of the Small Business Regulatory Enforcement Fairness Act.

Regulatory relief for small businesses

Of the 2,029 final rules to date, 510 have been identified as impacting small businesses, several of which are deregulatory. Only 21 are considered “significant,” which typically implies economic impacts of at least $100 million per year.

Based on a straight linear projection, we can expect to see “only” about 652 final rules impacting small businesses and 27 major final rules by December 31, surpassing Trump’s first-term averages of 701 and 70, respectively, as seen here.

The last time major small business regulations were this low was – well, never. For comparison (and taking into account the overlap of the transition year):

• Biden averaged 846 rules per year affecting small businesses, 82 of which were significant.
• Obama averaged 694 per year, 117 significant.

Some of Trump’s 21 major small business rules are in fact unregulated, including:

• TCE (trichloroethylene) control delay: Postpones costly restrictions on chemical use and maintains previous standards;
• Telemedicine buprenorphine expansion: Allows prescribing of opioid treatments via telephone or internet, ending requirements for in-person visits;
• Federal Aviation Administration pause testing: Suspends certain new rules for drug testing at foreign repair stations, easing compliance burdens;
• “Property law” relief: Extends filing deadlines and exempts certain small businesses from new reporting mandates.

Other important rules for small businesses can be considered neutral, such as trademark alignment reimbursementsor clearly regulatory, such as a particular agency Buy US Requirements and maritime cybersecurity mandates for some ships flying the American flag. In general, many Trump changes are temporary; Congress must take action to make the streamlining permanent. The biggest shift is simply the lack of new regulations.

To top it all off, the Small Business Administration’s (SBA) Office of Advocacy under Trump has actively promoted deregulation across the government, especially submit comments in response to the Office of Management and Budget’s request for information on regulations that are “unnecessary, unlawful, unduly burdensome, or defective.” SBA has also proposed cuts and improvements in regulatory processes in response to questions from of the Department of Health and Human Services, the Ministry of the Interior and the Federal Communications Commission. The SBA even got a taste of its own medicine and announced a 43 percent staff reductions during the early era of the Department of Government Efficiency (DOGE).

Small business quagmire

Now the warning. Particularly in the wake of COVID, the Inflation Reduction Act, the Infrastructure Act, and the CHIPS and Science Act, the “normal” notice and comment regulations shown in the chart above are no longer necessarily the primary channel of federal influence. Today’s welcome Trump interlude aside, Washington’s tendency is to ignore regulatory burdens and pull small businesses into the Washington vortex, undermining the autonomy and self-sufficiency that should define entrepreneurship.

Too many companies – both large and small – exist primarily to pursue federal subsidies, contracts, preferences and federal partnerships rather than to meet market demand. This top-down corporate governance remains visible even in the Trump era through antitrust intervention, tariffs, price interference, and partial nationalizations such as recent equity stakes in private companies. Conditions and obligations attached to the hundreds of billions in federal grants and grants each year are regulations in all but name.

Even the SBA’s deregulation effort involves a celebration of loan guarantees. While the agency restored with more robust lending criteria based on the weakened Obama-era standards (ironically a “regulatory” move), it remains an issue in which taxpayers should not be involved.

The SBA boasted one in April 74 percent spike in manufacturing loans compared to Biden and rolled out in September very first production line credit program. So while the SBA wants to cut red tape, it is simultaneously increasing the government’s footprint in small business financing, just like Joe Biden used. once bragged of record purchasing and government-backed loans.

Trump’s expansion of SBA involvement will suffer another blow in the event of a change of power. While the SBA has long targeted taxpayer-funded contracts and loans to small and underserved businesses moonshots Like Biden’s climate and social equity campaigns abuse the already deep dependence on government assistance and distract from what the real mission should be: cutting red tape.

The newest National Federation of Independent Businesses (NFIB) survey finds plentiful job openings, but also owners struggling to find qualified candidates and facing continued wage pressures amid what appears to be a resilient but “jobless” recovery. The consolation: If the recovery is jobless, it is not due to new regulations published in the US Federal Register.

Notice and comment rules have collapsed. That’s a welcome trend, but it’s only part of the story. A host of federal interventions—from antitrust measures to Obamacare and tariffs—escape our conventional definition of regulation. If all such interventions were translated into line equivalents, those short Trump bars in the chart above would be larger.

Small businesses and all businesses need relief from the full range of federal interventions. This year just announced The Nobel Prize in Economic Sciences, in recognition of Joel Mokyr, Philippe Aghion and Peter Howitt, underlines how freedom, openness and the transfer of scientific discoveries into practical innovation promote prosperity. That lesson applies directly to small businesses: Growth depends less on federal programs than on removing barriers to experimentation and creative destruction.

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