HR 2965: Small Business Regulatory Reduction Act of 2025

HR 2965 in plain English: This bill requires the Small Business Administration to maintain an annual regulatory budget for small businesses at zero or below, meaning any new regulatory costs imposed on small businesses must be offset by reducing or eliminating existing regulatory costs by an equal amount.

Stated purpose

The bill requires the Small Business Administration (SBA) to ensure that any costs its rules impose on small businesses do not exceed zero in a given year, meaning new regulatory costs must be fully offset by reducing or repealing existing ones. It also requires annual public reports to Congress on the regulatory costs that all federal agencies impose on small businesses.

Key points

• Requires the SBA's annual small business regulatory budget to be no greater than zero each fiscal year.
• Counts all costs to small businesses from new rules, modified rules, or repealed rules toward the budget cap.
• Any new regulatory costs on small businesses must be fully offset by cutting existing regulatory costs.

Arguments supporters make

• Regulations cost small businesses time and money, and capping net regulatory costs at zero prevents those burdens from growing year after year.
• Requiring the SBA to offset new rules with cost savings forces the agency to prioritize what rules are truly necessary, cutting red tape rather than adding to it.
• Annual public reports give Congress and the public real visibility into how federal rules affect small businesses, creating accountability across all agencies.

Arguments opponents make

• Some new SBA rules protect workers, consumers, or the public, and a hard cap on costs could force the agency to delay or weaken needed protections just to stay within budget.
• The bill only applies to the SBA itself, leaving the vast majority of federal agencies that regulate small businesses uncovered, so the practical relief for small businesses may be very limited.
• Calculating the exact cost of rules to small businesses is difficult and disputed, so the zero-budget requirement may be hard to enforce or easy to game depending on how costs are measured.

Tradeoffs

Limiting regulatory costs on small businesses may reduce their compliance burden, but it could also constrain the SBA's ability to issue new rules even when those rules serve a protective or beneficial purpose. The bill covers only the SBA directly while leaving other agencies' regulatory costs on small businesses unaddressed.

Current status in Congress: Passed House.

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