The Brief

California’s small businesses — employers to more than half the state’s workforce — are staring down what some owners, experts and advocates say could be immense negative consequences from President Donald Trump’s slew of executive orders.

Trump’s embattled federal funding freeze and anti-diversity push have seeded uncertainty about the economy, jobs and spending on infrastructure and innovation.

The freeze, imposed on Jan. 27, affected hundreds of billions of dollars for thousands of federal programs, including many aimed at small businesses. After states including California filed suit, a federal judge issued a temporary restraining order putting the freeze on hold. Since then there has been more legal wrangling, including a court order stating that Trump failed to comply with the initial ruling.

The administration has said funding for small business would not be paused, but owners and advocates are not sure if that will prove true, and say uncertainty about the freeze may already be doing damage.

Liz Perez, who owns a small general contracting firm in San Diego County, said news of the funding freeze gave some people in her Native American community “heart attacks.” She said some projects that were under construction had to be temporarily halted while those in charge tried to figure out what was going on.

“I’ve never seen tribal leaders — the most put-together leaders — so frazzled,” Perez said.

Perez and other small business owners, allies and experts worry that a freeze could mean fewer opportunities for entrepreneurs to start and grow businesses, which could lead to fewer jobs and less spending and investment for communities, industries and larger businesses.

Small businesses with fewer than 20 employees accounted for 29% of jobs in California, and businesses with 20 to 100 employees accounted for 30% of jobs in the state as of the end of 2022, according to an analysis of Bureau of Labor Statistics data by the Public Policy Institute of California.

California, the nation’s most populous state, is the biggest recipient of Small Business Administration loans, with $1.15 billion in loans approved for this year. Not all loans from the agency are federally funded, but they are guaranteed by the government. The loans funded by the agency, which could be most at risk from the freeze, include disaster loans and microloans.

Other federal funds that help small businesses and were on the list of programs to be frozen include the $25 million for the State Small Business Credit Initiative, which the Finance Department said is in the state’s 2025-2026 fiscal year budget. Community development financial institutions, which provide banking services to small businesses, are also facing a “real and immediate threat” to their funding that includes possible cancellation of contracts, the CDFI Coalition said in an email to its members this week that was seen by CalMatters.

Simon Brown, spokesperson for national advocacy group Small Business Majority, said small business owners, who “struggle to access capital from all institutions at all levels,” count on the Small Business Administration as a key source of help. Although he is unclear about whether funding from the agency will be affected, he is concerned. “If SBA funding was choked off in some way, it would be a major blow to the entire ecosystem,” Brown said.

Representatives from the Small Business Administration did not return multiple requests for comment, and neither did the White House.

Alex Bloom, economic development manager for Central Sierra Economic Development District as well as Mother Lode Job Training — which handles training funded by the federal Workforce Innovation and Opportunity Act — said the effects of a federal funding freeze could be far-reaching.

“Overall there’s a level of uncertainty,” that could lead to a drop in investor confidence, he said. And “a funding freeze or delay could halt infrastructure projects, which would affect job creation and development that are critical to our region,” Bloom added.

Others say a freeze or pullback on funding will have an impact on equity — that it could hurt those who need the most help.

How federal aid and policies have boosted small business 

Perez said she served in the U.S. Navy for nine years, then “transitioned right into a recession.” At one point, she was pregnant and had nowhere to live. She began working in construction and eventually started a business.

“My business helped get me out of poverty,” said Perez, owner of GC Green, a general contracting and consulting firm that focuses on clean energy, and subsidiary Veterans Energy Services Company.

Liz Perez, owner of GC Green, a general contracting and consulting firm that focuses on clean energy, walks around an electric vehicle charging station that was recently completed at a Sonic location in Vista on Jan. 31, 2025.

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On the list of programs the Trump administration is examining include funds for small business development centers, development loans and technical assistance for small businesses.

The budget office also said it wanted to root out “Marxist equity, transgenderism, and green new deal social engineering policies.”

California Attorney General Rob Bonta, who with other state attorneys general won a temporary restraining order against the freeze, said last week during a press conference that, if enacted, it would affect 34% of the state’s budget, which he called “a massive, irreplaceable chunk.”

As a woman, veteran and Native American, Perez said she has been helped by some DEI initiatives. But she said “starting my company didn’t mean I cut in line, or got in front of everybody. It means I got my foot in the door.”

Perez also was able to secure a federal loan to help Native American-owned businesses during the pandemic, during President Joe Biden’s administration, which she said helped her expand her business.

“You roll back these initiatives, what is that going to do to our economy, our supply chains, our workforce?” she asked.

The budget office followed up its original memo with another one that said “funds for small businesses, farmers, Pell grants, Head Start, rental assistance, and other similar programs will not be paused.” But there is evidence that at least one of the things on that list has not been spared: Some Head Start programs have had trouble accessing funding and at least one has been forced to shut down in Washington, according to media reports and the states’ lawsuit.

At least one expert CalMatters spoke with said he thinks small business is “probably one of the last places the spigot will be turned off.” Robert Dekle, an economics professor at the University of Southern California, said “it would actually be suicidal for the Republican party to continue with” cutting off aid to small businesses because he said small business owners make up “a large part of Trump’s base.” (A poll after Trump won the election showed changes in optimism among small business owners differed along party lines.)

‘We’re going backwards’ 

But Catalina Amuedo-Dorante, an economics professor at UC Merced, said this administration has made its priorities clear. “We’re going backwards (in terms of) rights for different minority groups, groups that need more assistance in medical care, food, education,” she said.

The professor added that “harming human capital” is a recipe for disaster. She called the possible rollback of funding to small business, medical research and other programs a threat to this generation and next.

Line cook Leticia Andrade, left, puts together a lunch order at Creative Ideas Catering, a small business, in San Francisco on June 11, 2024.

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Another one of Trump’s executive orders — titled “Ending Illegal Discrimination And Restoring Merit-Based Opportunity” — includes a directive to the Office of Federal Contract Compliance Programs within the Department of Labor to stop “promoting diversity” and “allowing or encouraging Federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.”

The president’s anti-diversity push rides a wave of similar sentiment that has swept the country in recent years, including through lawsuits against affirmative action in government. Last year, a judge ruled that a small business lending program meant to help Black, Latino and other underrepresented entrepreneurs should be open to white people.

In late January, the Small Business Administration reportedly decreased its goals for federal contract awards to small and disadvantaged businesses to 5%, apparently because of the Trump directive on DEI. Under Biden, the goal was 15%.

What all this could mean, regardless of what happens with the funding freeze, is that some small businesses that might otherwise have been considered for federal government contracts may no longer get those chances.

Perez, the small business owner, said DEI initiatives can help when it comes to landing general contracting work, but not always: “Just because these policies are in place, it doesn’t mean you’re going to get the job. It’s so difficult. It’s grinding all the time.”

Carolina Martinez, chief executive of CAMEO Network, a small business advocacy group, said procurement opportunities were already limited, and the Trump administration’s new policies will make things worse. “It seems clear they’re opening the door to discrimination and racism,” she said.

Randell Leach is CEO of Beneficial State Bank in Oakland, a community development financial institution, which serves low-income customers and small businesses that may not be able to get loans elsewhere. Leach said he is concerned about the intersecting effects of “the curtailment of funding and anti-DEI measures that could come together and impact women entrepreneurs and communities of color.”

Not only does that directly affect historically underrepresented small businesses but also, potentially, “a whole host of vendors and tech companies that support them,” he said.

The bottom line: “It’s important to be aware that discrimination in any form is not only bad for communities, but for the economy,” Martinez said.

The developer of ICEBlock, an iPhone app that anonymously tracks the presence of Immigration and Customs Enforcement agents, has sued the Trump administration for free speech violations after Apple removed the service from its app store under demands from the White House.

The suit, filed on Monday in federal court in Washington, asks a judge to declare that the administration violated the First Amendment when it threatened to criminally prosecute the app's developer and pressured Apple to make the app unavailable for download, which the tech company did in October.

Following Apple ejecting ICEBlock, Attorney General Pam Bondi said in a statement that "we reached out to Apple today demanding they remove the ICEBlock app from their App Store — and Apple did so."

Lawyer Noam Biale, who filed the suit against the administration, said Bondi's remarks show the government illegally pressuring a private company to suppress free speech.

"We view that as an admission that she engaged in coercion in her official role as a government official to get Apple to remove this app," Biale said in an interview with NPR.

The Justice Department did not return a request for comment, but Trump administration officials have said the app puts the lives of ICE agents in danger.

When reached for comment, Apple also did not respond. The lawsuit, which does not name Apple, says the tech giant bowed in the face of political pressure.

"For what appears to be the first time in Apple's nearly fifty-year history, Apple removed a U.S.-based app in response to the U.S. government's demands," according to the suit.

Developer calls immigration crackdown 'abhorrent'

Joshua Aaron, the Austin, Texas-based developer of ICEBlock, said he launched the app as a way to empower those opposed to Trump's immigration crackdown.

"It was just the best idea I had to do everything I could to fight back against what was going on," Aaron said in an interview, describing Trump's immigration enforcement blitz as "abhorrent."

The app allows people to report an ICE agent sighting within a 5 mile radius, similar to how map apps, like Waze and Google and Apple Maps and others, alert drivers to police setting up speed traps. The ICE sighting alerts do not include photographs or videos and expire in four hours.

Yet the Trump administration has portrayed the app as being used to incite violence against ICE agents, something Aaron denies. An analysis of federal court records does not back up the administration's claim that violence against ICE agents has spiked.

Aaron's lawsuit says Bondi is mischaracterizing the purpose of the app.

"Fundamentally, ICEBlock neither enables nor encourages confrontation — it simply delivers time-limited location information to help users stay aware of their surroundings in a responsible and nonviolent way," according to the lawsuit.

Attorney General Bondi, in a July interview with Fox News, suggested Aaron was under investigation and had committed a crime. "We are looking at it, we are looking at him, and he better watch out, because that's not protected speech," Bondi said.

To legal experts, ICEBlock is latest "jawboning" example

To First Amendment advocates, the White House's pressure campaign targeting ICEBlock is the latest example of what's known as "jawboning," when government officials wield state power to suppress speech. The Cato Institute calls the practice "censorship by proxy."

ABC's suspension of Jimmy Kimmel after FCC Chair Brendan Carr threatened regulatory action and Bondi promising a crackdown on hate speech following the killing of conservative activist Charlie Kirk are two other prominent instances.

"The use of a high-level government threat to force a private platform to suppress speech fundamentally undermines the public's right to access information about government activities," said Spence Purnell, a resident senior fellow at R Street, a center-right think tank. "If high-level officials can successfully silence political opposition, it sets a dangerous precedent for the future of free expression in this country."

Genevieve Lakier, a First Amendment scholar at the University of Chicago Law School, said the White House's campaign against ICEBlock shows the administration using what has become a familiar playbook: "To use threats of adverse legal and financial consequences, sometimes vague sometimes not so vague, to pressure universities, media companies, law firms, you name it, into not speaking in the ways they like," she said.

One potential weak spot for the lawsuit, however, is a lack of direct evidence that Attorney General Bondi, or other administration officials, made threats against Apple to have the app removed, rather than merely convinced the tech company to do so.

"And government officials do not violate the First Amendment when they persuade private speech platforms to suppress speech because that speech poses a national security risk or is harmful in some other way," Lakier said. "They only violate the First Amendment when they coerce or attempt to coerce the private platform to suppress the speech."

Since Apple kicked ICEBlock out of its app store, it cannot be downloaded now, but those who had it on their phones before the ban can still use it. Being removed from the app store prevents Aaron from sending the app software updates, which could eventually make it glitchy.

Aaron said he hopes the suit will lead to ICEBlock being restored to the iPhone app stores and for a clear message to be sent to the Trump administration that prosecuting him for his role in developing the app would be illegal.

Aaron said he and his legal team "have been preparing for this fight," adding that "we will take it as far as it needs to go to ensure this never happens again."
Copyright 2025 NPR

Twelve FBI agents who were fired this year for taking a knee during racial justice protests in the heated summer of 2020 are suing the Bureau and its director, alleging unlawful retaliation.

The former special agents—who together have nearly 200 years of experience—once received awards for helping disrupt mass shootings, expose foreign spies and thwart cyber attacks.

But they say as elite federal law enforcement agents, they never received training on crowd control, nor did they have riot shields, gas masks, or helmets when they faced down volatile crowds in the streets of Washington, D.C., in June 2020.

The lawsuit, filed in federal court in Washington on Monday, described the small group of FBI agents as vastly outnumbered and literally backed against the wall of the National Archives building as unrest swept the country over the murder of George Floyd by a Minneapolis police officer. Court papers said they kneeled not to reflect a left-wing political point of view, but rather to de-escalate a situation that threatened to spin out of control.

"Mindful of the potentially catastrophic consequences, Plaintiffs knew that a split-second misjudgment by any of them could ignite an already-charged national climate and trigger further violence and unrest," said the lawsuit, filed by former Justice Department prosecutor Mary Dohrmann of the Washington Litigation Group.

Accused of 'lack of impartiality'

The Justice Department inspector general reviewed the incident in 2024 and found no misconduct. But the episode went viral on social media, attracting critics who cast the kneeling as a political act. Before he returned to the White House, President Trump also posted a negative story about the matter.

Soon after new FBI Director Kash Patel joined the Bureau this year, the lawsuit said he began targeting the agents involved in the episode for retaliation. Several of plaintiffs were yanked from supervisory roles at the FBI. Officials launched a new investigation. The matter was still pending when they were all fired in September, shortcutting typical procedures for FBI misconduct probes.

In their dismissal letters, Patel wrote: "You have demonstrated unprofessional conduct and a lack of impartiality in carrying out duties, leading to the political weaponization of government."

During his confirmation hearing, Patel told senators he would honor the internal review process. But the lawsuit accuses him of breaking that pledge for his own political purposes.

The abrupt departure of the fired agents disrupted important work, including evidence collection in Utah following the assassination of conservative activist Charlie Kirk and efforts to support the Trump administration's executive order on "Making the District of Columbia Safe and Beautiful," court papers said.

The case alleges violations of the agents' First Amendment rights to free association and their Fifth Amendment right to due process. They're asking to be reinstated to their jobs and for back pay.

The FBI declined to comment on pending litigation.

Copyright 2025 NPR

A drawn out battle over a city law boosting the minimum wage for tourism workers in Los Angeles seemed like it was finally over this fall when a referendum to overturn it failed to gather enough signatures.

Now there's another twist in the road. City Council President Marqueece Harris-Dawson previously voted to raise airport and hotel worker pay from $22.50 to $30 an hour by 2028, when L.A. will host the Olympics. But in a motion filed Friday, he's proposing that the increase take effect more slowly, instead reaching $30 an hour in 2030.

Harris-Dawson's proposal sparked outcry from hotel workers union Unite Here Local 11 and other labor advocates.

“These workers fought for more than two years to improve their working conditions, only to have the very people who should defend them try to take it all away," Yvonne Wheeler, president of the Los Angeles County Federation of Labor, said in a statement. "It’s heartless, it’s callous, and it deepens the crisis of working poverty that is gripping our city.”

Labor advocates say Harris-Dawson is succumbing to pressure from corporate interests.

Over the summer, a coalition of business leaders filed a ballot proposition to repeal the city business tax, which brings in hundreds of millions of dollars to the city. The L.A. Area Chamber of Commerce told LAist the proposition was partly in response to the City Council boosting the minimum wage for tourism workers.

Unite Here Local 11 filed its own raft of proposals, including raising the minimum wage citywide and requiring Angelenos to vote on building new hotels and event center developments. This war via ballot proposition led city leaders to encourage both sides to come to a compromise.

A spokesperson for Harris-Dawson said the city is currently in talks with business and labor interests, and declined to comment further on his recent motion. Mayor Karen Bass's office did not respond to a request for comment.

The motion now goes to council committees on tourism and jobs.