The "Small Business Technological Act of 2025" amends the Small Business Act, enabling the Small Business Administration to provide loans to small businesses for modern business software and cloud computing services. It clarifies that these loans are intended to improve business operations, but not for research and development purposes.
Todd Young
Senator
IN
The "Small Business Technological Act of 2025" amends the Small Business Act, enabling the Small Business Administration to provide loans for modern business software and cloud computing services. These loans will help small businesses improve operations, manage resources, and utilize AI-powered tools. The act clarifies that it does not authorize loans for research and development.
SBA Loan Program Gets a Tech Upgrade: New Bill Allows Funding for Software and Cloud Services Starting 2025
The "Small Business Technological Act of 2025" is shaking up the Small Business Administration (SBA) loan program. This bill, effective immediately, greenlights SBA loans for a range of tech upgrades that can help small businesses run smoother and smarter.
Tech Boost for Main Street
This law directly amends the Small Business Act, allowing businesses to use SBA loans to purchase software, cloud computing services, and other similar technologies, including AI-powered tools. Think tools for managing payroll, handling HR tasks, boosting sales, streamlining billing, keeping track of inventory, or just making day-to-day operations more efficient. For example, a local bakery could use a loan to implement a cloud-based inventory system, or a freelance graphic designer could invest in new design software. This change recognizes that technology is no longer a luxury, but a necessity for small businesses to compete. While the bill explicitly includes AI-powered tools, it's important to understand the limitations (see below).
Real-World Rollout
The bill is crystal clear: this isn't a green light for funding research and development (R&D) projects (SEC. 2). So, while a construction company could get a loan for project management software, they couldn't use it to develop their own new software. The bill also maintains the existing definition of "working capital" under the Small Business Act. This means the loans are intended for acquiring and implementing these tech tools, not for speculative ventures or unrelated business expenses. It also clarifies that using loans for these purposes wasn't prohibited before, just not explicitly stated.
Potential Challenges
While this bill opens doors for small businesses, there are a few things to keep an eye on. For instance, there's the potential for businesses to misrepresent their needs to get loans for things not actually covered. A clear understanding of the eligible technologies and strong oversight will be crucial to prevent misuse. Overall, though, the Small Business Technological Act of 2025 is a significant step toward modernizing small businesses and making them more competitive in today's digital economy.